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Cassava markets, value chains and livelihoods in Asia: when uncertain is the only certainty

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Presentation at GCP21 Conference in the session of Cassava Mosaic Disease in Asia to highlight what is at stake with disease potentially impacting the productivity of this important commercial crop.

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Cassava markets, value chains and livelihoods in Asia: when uncertain is the only certainty

  1. 1. Cassava markets, value chains and livelihoods in Asia: when uncertain is the only certainty Dr. Jonathan Newby Cassava Program Regional Coordinator - Asia International Center for Tropical Agriculture (CIAT)
  2. 2. Cassava markets, value chains and livelihoods in Asia: when uncertain is the only certainty Contonou, Benin, June 2018 Jonathan Newby, Cu Thi Le Thuy, Dominic Smith j.newby@cgiar.org
  3. 3. Introduction to cassava in Southeast Asia across scales As we work through the different scales, consider what a major disease outbreak mean for various stakeholders in the cassava value chain. 1. The global market and trade 2. Local processors and national exports 3. Rural Livelihoods Cassava farmers and processors in Asia are involved in a constant battle to be competitive VS
  4. 4. On the demand side – the market outlook for cassava in Asia needs to be considered in the context of substitutes in different applications 1. Cassava for direct consumption or sale into short value chains as fresh roots for food. Competition with other food such as rice based on price and consumer preferences. 2. Global markets where cassava chips compete with other forms of carbohydrate for processing animal feed or ethanol such as maize, sorghum, wheat, molasses – oil, gas. 3. Markets where cassava starch competes largely on price with substitutes such as maize and potato starch, sugarcane. 4. Markets where the functional properties of the starch are desired. Consumer preferences, clean label segment, gluten free etc.
  5. 5. And on the supply side – the relative competitiveness against other land use in the context of different trends and shocks • Own price and relative prices to other commodities that can be produced in agroecological zones • Changes in costs of production • Changing labour costs and ease of mechanization • Long term climate trends • Floods and droughts • Changes in land suitability and land degradation • IMPACT OF PEST AND DISEASE
  6. 6. How much cassava is currently grown in Asia? How much next year? • National statistics typically 2 years out of date. • Difficult to disaggregate to lower administration levels due to traditional reporting processes. • Cases of ‘political’ statistical reporting to achieve policy objectives.0 0.5 1 1.5 2 2.5 3 3.5 4 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 2015 Areaofcassavaproduction(Millionha) Indonesia Philippines Malaysia Thailand Viet Nam Cambodia Lao PDR Myanmar Other Indonesia continues to decline Determined on relative prices Expansion speed based on prices FAO Stats
  7. 7. Value of cassava trade and relative importance of cassava starch in global trade Source: Comtrade Global trade largely is Southeast Asia exporting to East Asia and Southeast Asia 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Valueofexports(BillionUSD) Cassava starch Cassava (fresh&dried) 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Valueofexports(BillionUSD) Other Potato starch Wheat starch Corn starch Cassava starch
  8. 8. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 Valueofcassavaexports(billionusd) Value of cassava exports (2009-2017) Total (USD) China A billion dollar export crop for Vietnam for the past 6 years • A billion dollar USD export earner for Vietnam for starch and chips • Domestic utilisation in • MSG, • Paper and cardboard • Animal feed (chips and starch) • Noodles • Sweeteners and syrups • Traditional food
  9. 9. Rising incomes in Asia: changing diets and consumption 0 2,000 4,000 6,000 8,000 10,000 12,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 GDPpercapita(constant2010US$) WorldBank Stats Malaysia China Indonesia Thailand East Asia (-pacific) World Averages hide rural poverty, particularly in marginal upland areas
  10. 10. Demand for animal feed in Vietnam (not self-sufficient) Consumption of meat per capita 0 0.5 1 1.5 2 2.5 3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Valueofimports(BillionUSD) Maize (1005) Soy (1201) 0 10 20 30 40 50 60 70 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Foodsupplyquantity(kg/capita/yr) Pigmeat Poultry Meat Bovine Meat Mutton & Goat Meat Import of maize and soy FAO Stats Vietnam imported $3.2 Billion USD of animal feed in 2017
  11. 11. Sweeteners 44% Monosodiu m Gultamate (MSG) 18% Whole Salers 13% Modified Starch 10% Paper 7% Tapioca Pearls 4% Textile 1% Other 3% Domestic utilisation of starch in Thailand (14.5% Root Equivalents) Source: TTTA Sweetener 30% MSG 17% Wholesaler 15% Modified Starch 10% Paper 6% Sago 4% Textiles 1% Ethanol 15% Other 2% 2017 – 1.66 Million MT Starch2015 – 1.495 Million MT Starch
  12. 12. Vietnam trade in syrups, sweeteners and fermentation products 0 10 20 30 40 50 60 70 80 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Valueofimports(MillionUSD) D-glucitol (sorbitol) Chemically pure fructose Glucose, glucose syrup (20-50 % dry weight fructose) Other fructose and fructose syrup, <50 % by dry weight of fructose Glucose, glucose syrup, < 20 % fructose 0 20 40 60 80 100 120 140 160 180 2006 2008 2010 2012 2014 2006 2008 2010 2012 2014 Export ImportTradevalue(MillionUSD) Glutamic acid and its salts Lysine and its esters Comtrade Import of sweeteners Trade in Glutamic acid (MSG+) & Lysine
  13. 13. Market uncertainty goes with being part of a global market
  14. 14. The regional value chain for cassava products involves large amounts of cross border trade
  15. 15. 0 50 100 150 200 250 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ThaiImportValuefromCambodia(MillionUSD) 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 50 100 150 200 250 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec VietnamimportsfromCambodia(MillionUSD) 2010 2011 2012 2013 2014 2015 2016 2017 2018 Thailand 2017 = 281.7 million USD Vietnam 2017 = 282.2 million USD Cumulative monthly value of imports of cassava (fresh or dried)
  16. 16. Including large volumes of planting material moving around the region FANTASTIC IN THE ABSENCE OF PEST AND DISEASE
  17. 17. Smallholders cassava farmers part of a larger global carbohydrate market -300 -200 -100 0 100 200 300 400 500 600 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 USDPERMT Difference US Gulf Maize CNF China + VAT Chinese Futures (DCE) US Gulf Maize (FOB) Large stockpile remains: Rabobank still forecasts a 230m MT of stocks Reduction in price support Removal of scheme
  18. 18. Cassava root and starch prices in Thailand and Indonesia 200 250 300 350 400 450 500 550 600 650 20 30 40 50 60 70 80 90 100 110 120 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Domesticstarch(USD/t) Rootprice(USD/t) Lampung Roots ($US/MT) Indonesia Starch (East Java) 20 30 40 50 60 70 80 90 100 110 120 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 200 250 300 350 400 450 500 550 600 650 Freshroot25%(USD/T) StarchFOBBangkok(USD/T) Cassava Starch (FOB Bangkok) Roots USD/t (25%) Thailand Indonesia Reduction in planted area Flooding in Thailand Maize price in China DISEASE ?
  19. 19. Logistics and freight cost are important (back freight helps) $30MT $15-20/t + $10-20 truck and clearance
  20. 20. Comparison between Thai and Indonesian prices -80 -60 -40 -20 0 20 40 60 80 100 200 250 300 350 400 450 500 550 600 650 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Difference(Thai-Domestic@Factorygate) StarchPrice(USD/t) Difference Thai Starch (FOB Bangkok) Indonesia Starch (East Java) Thai + Freight -40 -30 -20 -10 0 10 20 30 40 20 40 60 80 100 120 140 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 Difference(Thai-Lampung) Rootprice(USD/t) Difference Lampung Roots ($US/MT) Thai Roots ($US/MT) Fresh roots Starch
  21. 21. Cumulative monthly exports from Thailand and Vietnam to Indonesia (million USD) 0 50 100 150 200 250 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ThailandcassavastarchexportstoIndonesia (MillionUSD) 2012 2013 2014 2015 2016 2017 2018 0 5 10 15 20 25 30 35 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec VietnamcassavastarchexportstoIndonesia (MillionUSD) 2012 2013 2014 2015 2016 2017 2018 Thailand Vietnam
  22. 22. Difference in Thai cassava and US maize starch • Cassava starch has again become a relatively more expensive feed stock for deep processing • Eg. Manufacture of sweeteners • Short term options for Indonesian deep processors to remain competitive • Use alternative feed stock (maize) • Import processed products (glucose etc). -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 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 USD/MT Difference Tapioca starch (Super High-Grade) FOB Bangkok Corn starch, Midwest 2012 2018
  23. 23. Biofuel prices and root equivalent price 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 USD/Litre Root cost in Ethanol (Indonesia) Root cost in Ethanol (Thai) CBOT Ethanol (USD/litre)
  24. 24. Smallholder livelihood outcomes impacted by these global market trends and shocks
  25. 25. Grown by upland farmers to support livelihood security (Eastern Cambodia) 0 2 4 6 8 10 12 14 16 18 Chitr_borie Siem_bouk Snuol Total Riel/Year Millions Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income 6m Riel = $1500 USD 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Total Income Quartiles Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Total Income Quartiles Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income Gross total income % share of total income % share of cash income
  26. 26. Grown by upland farmers to support livelihood security (Lao PDR) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Total Income Quartiles Total Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Total Income Quartiles Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income 0 10 20 30 40 50 60 KIP/Year Millions Total Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income 20m Kip = $2350 USD Gross total income % share of total income % share of cash income
  27. 27. Grown by upland farmers to support livelihood security (DakLak Province - Vietnam) 0 20 40 60 80 100 120 140 160 180 Cukty Dang kang Ea sar Ea so Total VND/Year Millions Total Cassava Income Non-Cassava Cropping Income Total Livestock Income Off-farm Income Coffee 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q2 Q3 Q4 Cassava Coffee Other crops Livestock Off-farm Income Sugarcane 40m Kip = $1745 USD Gross total income % share of cash income Marginal land & Limited resources
  28. 28. 0 20 40 60 80 100 120 140 160 Freshroot(USD/t) Jan-17 Apr-18 Farm gate = $28 Large price uncertainly - Fresh root prices at collection points & factory 25% SC 30% SC 30% SC
  29. 29. 0 10 20 30 40 50 60 70 80 Kratie Stung Treng Bolikhamxay Sayabouly Dak Lak Son La Cambodia Lao PDR Vietnam USD/T(Farmgatefreshroot) Shut down price Lowest price Most likely price Best price Farmer experience and perception of farm gate prices (past 5 years) Survey conducted in July – October 2017
  30. 30. Adding another level of production risk from emerging pest and disease will significant impacts rural livelihoods, industry and national economies
  31. 31. Cassava witches broom disease
  32. 32. Conclusion 1. Market and production risk contribute to the vulnerability of smallholder cassava farmers in Asia – debt, distressed land sales, migration by necessity, and other undesirable livelihood choices… (collection of UXO, logging, etc). 2. An understanding of the global market context in which localised cassava value chains operate (farmer-trader-processor) helps recognize the market risk that farmers and processors are exposed to – but timely information and decision support tools are necessary. 3. The addition of disease pressure will impact the competitiveness of smallholder cassava farmers in the global carbohydrate market 4. The poorest households in communities are the most reliant on cassava for their livelihoods and the less able to quickly adapt their livelihood portfolio in the face of new constraints.
  33. 33. Join the conversation at : https://www.facebook.com/groups/1462662477369426/ ACIAR Cassava Value Chain and Livelihood Program
  34. 34. Thank you!

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