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Cassava: Hidden Ingredient in Global Supply Chains

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Presentation at the World Root and Tuber Congress and GCP21 Conference. Jan 2016

Published in: Government & Nonprofit
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Cassava: Hidden Ingredient in Global Supply Chains

  1. 1. Cassava in Asia: Exposing the drivers and trajectories of the hidden ingredient in global supply chains Dr Jonathan Newby CIAT Asia, Hanoi j.newby@cgiar.org World Congress on Roots and Tubers 18th – 22nd January 2016 Nanning, China
  2. 2. Cassava production in Southeast and East Asia Western Africa 30% Middle Africa 14% Eastern Africa 13% South- Eastern Asia 28% South America 10% Eastern Asia 2% Western Africa 30% Middle Africa 20% Eastern Africa 18% South- Eastern Asia 18% South America 11% Share of global cassava area Share of global cassava production • Introduced to Asia in the late 18th to early 19th Century • While initially an important food crop, early stages of commercialisation began during the late 19th Century FAO Stats
  3. 3. Diverse cassava production system in Southeast Asia Cambodia 10% Indonesia 28% Lao PDR 2% Malaysia 0% Myanmar 1% Philippines 6% Thailand 38% Viet Nam 15% Share of Southeast Asia’s 3.6 million hectares of cassava FAO Stats
  4. 4. Phases of development driven by policy and market changes 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 AreaofcassavainAsia(millionha) Philippines Myanmar Lao People's Democratic Republic India China, mainland Cambodia Viet Nam Thailand Indonesia Asia Phase 1 – Post war Phase 2 – European livestock feed market Phase 3 – Starch utilisation Phase 4 – China demand FAO Stats
  5. 5. Consumption of cassava in Asia (FAO) 0 100 200 300 400 500 600 700 800 Congo Ghana Mozambique Angola Benin CentralAfricanRepublic Liberia Togo Côted'Ivoire Madagascar Paraguay Cameroon Nigeria Uganda Guinea SierraLeone Rwanda Zambia Gabon Malawi UnitedRepublicofTanzania Indonesia Peru Guinea-Bissau SaoTomeandPrincipe Brazil Fiji Colombia Haiti Cambodia LaoPeople'sDemocraticRepublic Cuba Philippines Chad Timor-Leste Zimbabwe DominicanRepublic Kenya Bolivia(PlurinationalStateof) SriLanka Thailand Venezuela(BolivarianRepublicof) Myanmar Senegal FrenchPolynesia CaboVerde VietNam BruneiDarussalam Nicaragua Niger kcal/capital/day Indonesia = 47kg/year Thailand = 13kg/year Vietnam = 8kg/year
  6. 6. Rice centric nations of Southeast Asia 0 500 1000 1500 2000 2500 (kcal/capita/day) Wheat and products Rice (Milled Equivalent) Potatoes and products Millet and products Maize and products Cassava and products Beans FAO Stats
  7. 7. Cassava food value chains in Southeast Asia
  8. 8. Over 306,000 cassava households in Nusa Tenggara Timur – 85% sell no cassava Still plays an important role in the upland subsistence oriented livelihoods Percent of households not marketing any cassava production G.Smith
  9. 9. Remains a hidden ingredient in global supply chains • Cassava still has a reputation of being grown as a secondary refuge crop grown by poor upland farmers • Little appreciation of its modern application, with consumers unaware of their consumption and interactions with cassava starch • Historically, a low priority of national governments • Largely off the donor radar • Limited private sector investment beyond the processing industry
  10. 10. Population, economic growth and demand in Asia 0% 10% 20% 30% 40% 50% 60% China India Indonesia Bangladesh Japan Philippines Vietnam Thailand Myanmar Korea,Rep. Malaysia Nepal Korea,Dem.Rep. Cumulativeshareofglobalpopulation
  11. 11. Rising incomes in Asia and changing consumer preferences 0 5 10 15 20 25 30 35 40 GNIpercapita(PPP)-ThousandInternationalDollars China Indonesia India Cambodia Korea, Rep. Lao PDR Philippines Thailand Vietnam World World Bank Stats G.Smith
  12. 12. Not an “economic inferior” good • Livestock feed • Paper industry and glues • Textiles • Sweeteners • Processed food sector • Pharmaceuticals • Alcohol • Bioplastics • Biofuel Desirable functional traits: Meat products, sauces, frozen foods, dairy products, noodles • High viscosity, firm and elastic texture • Freeze thaw stability. • Provide short texture and reduce water separation • Smooth texture and paste clarity • Prevent cracking, good freeze thaw • Smooth and improve mouth feel Cost competitive compared to substitutes? • Maize, sorghum, sugarcane, potatoes, etc • Oil
  13. 13. Growing demand for protein in Asia China, mainland 0 5 10 15 20 25 30 35 40 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 Kg/capita/year Bovine Meat Pigmeat Poultry Meat Vietnam 0 5 10 15 20 25 30 35 40 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 Kg/capita/year Bovine Meat Pigmeat Poultry Meat FAO Stats
  14. 14. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Valueofexports(BillionUSD) Cassava (fresh and dried) Cassava Starch Multi-billion dollar export industry Comtrade
  15. 15. Cassava Roots (40.76) Cassava chips and pellets (17.19) Domestic (1.13) Export (16.06) Cassava starch (21.81) Domestic (5.88) Export (15.93) Ethanol (1.76) 280 Million Litres (1.76) 42% 54% 4% 3% 39% 39% 4% 14% Thailand cassava domestic and export utilisation (million tons) 78% exported Source: TTTA
  16. 16. 0 2 4 6 8 10 12 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 ImportQuantity(milliontons) Eastern Asia South-Eastern Asia Western Europe World 0 0.5 1 1.5 2 2.5 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Importvalue(billionUSD) Eastern Asia South-Eastern Asia Western Europe World Impact of policies on orientation of cassava trade FAO Stats
  17. 17. Trade in cassava (fresh and dried 2013) Comtrade China – 89% Thailand – 1.3 billion USD Vietnam– 387 million USD
  18. 18. 0 50 100 150 200 250 300 350 400 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 CassavaArea(thousandha) Cambodia Lao PDR Myanmar Cross-border trade and investment G.Smith
  19. 19. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ExportValue(BillionUSD) Manioc (cassava) starch Maize (corn) starch Potato starch Wheat starch Other starches Globally the most widely traded starch Comtrade G.Smith
  20. 20. Trade in cassava starch (2013) 1st - 61% 2nd - 5.8% Comtrade Vietnam – 707 million USD Thailand – 1.14 billion USD
  21. 21. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2001 2003 2005 2007 2009 2011 2013 2015 (to Nov) ExportofCassavastarch(Milliontons) Native Starch Modified Starch 0 5 10 15 20 25 30 35 40 45 2001 2003 2005 2007 2009 2011 2013 2015 (to Nov) Starchexportvalue(Billionbaht) Native Starch Modified Starch Growth in export of Thai native and modified starch Source: TTSA
  22. 22. Sweeteners 44% Monosodium Gultamate (MSG) 18% Whole Salers 13% Modified Starch 10% Paper 7% Tapioca Pearls 4% Textile 1% Other 3% Starch Sweeteners 46% Sugar-hol 5% Modified Starch 7% Polyol 2% Citric Acid 7% Lactic acid 1% glutanate 18% Lysine 5% Other amino acids 1% Food 8% Utilisation of starch in Thailand and China Thai Domestic use of cassava starch Chinese use of all starch Source: TTTA Source: Jin Shu-ren
  23. 23. -300 -200 -100 0 100 200 300 400 500 600 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 USDperMT Difference US Gulf Maize (FOB) US Gulf Maize CNF China + VAT Chinese Futures (DCE) Has it been too good to be true?: Impact of grain policy Stockpile = ???
  24. 24. Who has been doing well? Farmers when connected to competitive value chains 0 20 40 60 80 100 120 140 160 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 PriceIndex(Jan2012=100) Cassava Starch Cassava Roots (Factory gate) Central Highlands Vietnam N.Palmer
  25. 25. Falling global prices in alternative land uses 0 50 100 150 200 250 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 PriceIndex(Jan2010=100) Palm oil Maize Sugar, world Rubber, SGP/MYS WorldBank PinkSheets
  26. 26. 0 100 200 300 400 500 600 700 0 100 200 300 400 500 600 Jun-08 Oct-09 Mar-11 Jul-12 Dec-13 Apr-15 ThaiTapioca(USD/t) Maizeprice(USD/t) US Corn (FOB GULF) US Corn + Freight +VAT DaLian (China) Nearby Futures Thai Tapioca (FOB Bangkok) Cassava following the correction in maize prices
  27. 27. • Small-scale labor intensive starch processors have found it difficult to compete for raw material unless they have a niche market • E.g. Small-scale processors in Cambodia closed as they struggled to compete for roots • Large processors of raw material, but not linked to Chinese market • E.g. Biofuel industry in Vietnam • Deep processors depending on cassava starch, but competing against maize based products • E.g. Glucose, sorbitol producers • Limited utilisation in domestic livestock sector Who has been doing it tough? G.Smith
  28. 28. -200 -100 0 100 200 300 400 500 600 700 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 StarchPrice(USD/t) Difference Corn starch, Midwest Tapioca Starch (Super High-Grade) Bangkok Tapioca starch versus corn starch USDA, TTTA G.Smith
  29. 29. Productivity will be critical for maintaining competitiveness: particularly with current freight costs 0 5 10 15 20 25 0 2 4 6 8 10 12 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 Rootyield(t/ha) Grainyields(t/ha) US Maize Grain Yield Thai Maize Grain Yield Thailand cassava Root Yield 0 1 2 3 4 5 6 7 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 StarchYield(t/ha) Thailand Cassava US Maize Currently less than $25 USD/t bulk freight from the US to China FAO Stats
  30. 30. Private sector engagement • Evaluate and stimulate adoption of existing technologies • Different incentive to invest in some value chains, eg. Cassava starch versus cassava chip trade • Some technologies provide less ability to capture the returns on investment, eg. Variety dissemination versus soil conservation • Competition for feedstock and ability to capture returns on investment • Collective action and lobby for government support for the industry • Cassava association and regional learning alliances a good start • Invest in R&D to lift starch yield potential and functional traits? Factory and traders conducting variety assessment with researcher – North Sumatra, Indonesia Factory experimenting with cassava varieties and management to produce raw material throughout season, Central Highlands, Vietnam
  31. 31. Public sector support • Private sector involvement not a panacea • Recognise that there are threats to productivity on the horizon that need public sector leadership • Land degradation • Emerging pests and diseases in Asia • Opportunity for national governments to deliver both improve rural livelihoods for smallholders and economic development • Conditions for inclusive development • Be proactive rather than let the trajectory of the cassava sector oscillate based on developments in substitute commodities • Strengthen linkages and partnerships between research, industry, governments and farmers G.Smith

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