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Sustainable cassava value chain for
smallholder farmers in the ASEAN region:
Is there opportunities for economic
growth?
J...
1. Update of cassava global and regional
markets.
2. Local value-chain assessments in
2016
3. What does it mean for the pr...
Why does CIAT work on cassava in Asia?
Strategic Objectives
• Make affordable, high-quality food readily available to the rural and urban poor
by boosting agricu...
Let’s get straight to the point
Is there opportunities for economic growth?
In the short-term:
No. Expect low returns, deb...
Cassava global market: ASEAN, East Asia and the World
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Billions
Cassava starch
Cassava (fresh and dried)
Increase in production and trade (the good...
Not an “economic inferior” good
• Livestock feed
• Paper industry and glues
• Textiles
• Sweeteners
• Processed food secto...
Sweeteners
44%
Monosodium
Gultamate
(MSG)
18%
Whole Salers
13%
Modified Starch
10%
Paper
7%
Tapioca Pearls
4%
Textile
1%
O...
Why Chinese market outlook matters …. (the nervous)
Data source: Comtrade 2015
*Reported by exporters
Cassava (fresh, drie...
Importer Rank Country
Import trade
value (US$) % of imports Cumulative %
1China 781 M 50% 50%
2Indonesia 256 M 16% 66%
3Ot...
Change in Chinese maize price support (the bad)
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
Jun-08
Oct-09
Feb-...
That’s a lot of maize in storage!
Rabobank estimates 232 million tons of
Chinese maize stock in 2015/16, forecast
to incre...
150
170
190
210
230
250
270
290
310
300
350
400
450
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650
Jan-10
Oct-10
Jul-11
Apr-12
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Oct-13
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Apr-1...
Fall in chip exports from Thailand and Vietnam
-
100
200
300
400
500
600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
V...
Less dramatic fall in starch exports from Thailand
and Vietnam
Thailand Vietnam
0
200
400
600
800
1,000
1,200
1,400
Jan Fe...
Logistics are important!
$30MT
$15-20/t +
$10-20 truck and clearance
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.0...
Local value chain assessments
Activities in 2016: From global to local value chains
Flores
North Sumatra
Daklak
SonlaXayabouli
Kratie
Ayeyarwady
Region ...
Cassava root price
(The ugly)
Location Price USD/t (factory/collect
point)
Starch content
Thailand $49 USD/T 25%
Tay Ninh ...
Increasing labor costs in a crop
difficult to mechanize to date
Location Daily wage rate
(local currency)
Daily wage rates...
What does this mean for smallholder?
Central Highlands
Vietnam (Ea Sar)
Xayabouli
Lao PDR
(No fertilizer)
Higher prices sc...
Assessments with farmers, traders, processors
• Understanding of the value chain and production
systems is setting the pri...
Why is a nuanced impact pathway needed?
Relationship building with private sector
Develop models for
industry funding on
research and evaluation of
technologies.
...
Fertility management
Large areas of cassava
production occurring
with NO fertilizer used
Declining yields
Contributing to ...
9
10
11
12
13
14
15
0.0 0.5 1.0 1.5 2.0
Netbenefit
Million(kip)
Fertiliser treatment cost
Million (kip)
3.50
0.69
4.50
1.5...
Generally, these results are stable even with falling prices
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0.0 0.5 1.0 1.5 2.0
Netbenefit
M...
Back to the future? Does livestock feed warrant another look?
0
0.5
1
1.5
2
2.5
3
3.5
4
2011 2012 2013 2014 2015
Importval...
2017 Workplan
• Household surveys: understand the current
farming systems and livelihoods of cassava
farmers throughout ou...
Join the conversation.
Newby Cassava Retreat (2017)
Newby Cassava Retreat (2017)
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Newby Cassava Retreat (2017)

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Presentation at CIAT Cassava Retreat 2017

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Newby Cassava Retreat (2017)

  1. 1. Sustainable cassava value chain for smallholder farmers in the ASEAN region: Is there opportunities for economic growth? Jonathan Newby j.newby@cigar.org Cassava Retreat 8-10 February 2017 Hanoi, Vietnam
  2. 2. 1. Update of cassava global and regional markets. 2. Local value-chain assessments in 2016 3. What does it mean for the program Outline The term value chain refers to the full range of activities that are required to bring a product from conception, through the different phases of production to delivery to final consumers and disposal after use (Kaplinsky 1999; Kaplinsky and Morris 2001).
  3. 3. Why does CIAT work on cassava in Asia?
  4. 4. Strategic Objectives • Make affordable, high-quality food readily available to the rural and urban poor by boosting agricultural productivity and enhancing the nutritional quality of staple crops • Promote rural income growth by making smallholder agriculture more competitive and market oriented through improvements in agricultural value chains • Provide the means to make a more intensive and competitive agriculture both environmentally sustainable and climate smart Mission
  5. 5. Let’s get straight to the point Is there opportunities for economic growth? In the short-term: No. Expect low returns, debt, decline in areas In the medium-term: Maybe. Underlying demand for final products remains. Adoption of existing technologies can boost/maintain yields and income Need to keep pace with substitutes across scales (farm – deep processing) In the long-term: Yes, New technologies and markets THIS SEASON EXISITING TEC. NEW TEC
  6. 6. Cassava global market: ASEAN, East Asia and the World
  7. 7. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Billions Cassava starch Cassava (fresh and dried) Increase in production and trade (the good) Source: Comtrade (1989-2015) The demand for carbohydrates continues to expand as incomes in Asia grow. Changing food preferences and changing diets New starch applications being developed Some decline in traditional areas (such as paper) Younger generation in changing preferences in traditional cassava eating locations
  8. 8. 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
  9. 9. 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
  10. 10. Why Chinese market outlook matters …. (the nervous) Data source: Comtrade 2015 *Reported by exporters Cassava (fresh, dried) Cassava starch Total World To China World To China World To China All exporters 2,059 M 1,910 M 2,175 M 1,360 M 4,234 M 3,269 M 100.0% 92.8% 100.0% 62.5% 100.0% 77.2% Thailand 1,539 M 1,536 M 1,191 M 539 M 2,729 M 2,075 M 74.7% 74.6% 54.8% 24.8% 64.5% 49.0% Vietnam 399 M 360 M 914 M 808 M 1,312 M 1,168 M 19.4% 17.5% 42.0% 37.2% 31.0% 27.6% Thailand + Vietnam 94.1% 92.1% 96.8% 62.0% 95.5% 76.6%
  11. 11. Importer Rank Country Import trade value (US$) % of imports Cumulative % 1China 781 M 50% 50% 2Indonesia 256 M 16% 66% 3Other Asia, nes 138 M 9% 75% 4Malaysia 75 M 5% 80% 5USA 70 M 4% 84% 6Japan 58 M 4% 88% 7Philippines 35 M 2% 90% 8Singapore 27 M 2% 92% 9Rep. of Korea 11 M 1% 93% 10Netherlands 10 M 1% 93% 11Germany 8 M 1% 94% Cassava starch: Currently largely an Asian market *Reported by importersData source: Comtrade 2015
  12. 12. Change in Chinese maize price support (the bad) 0 100 200 300 400 500 600 700 0 100 200 300 400 500 600 Jun-08 Oct-09 Feb-11 Jul-12 Nov-13 Apr-15 Aug-16 CASSAVASTARCH(USD/T) MAIZEPRICE(USD/T) US Maize (FOB Gulf) US Maize +Freight+ VAT Chinese Maize (DCE Nearby Futures) Cassava Starch (FOB Bangkok) -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 USD/MT Difference Tapioca starch (Super High-Grade) FOB Bangkok Corn starch, Midwest Rabobank estimates 232 million tons of Chinese maize stock in 2015/16, forecast to increase to 264 million tons.
  13. 13. That’s a lot of maize in storage! Rabobank estimates 232 million tons of Chinese maize stock in 2015/16, forecast to increase to 264 million tons. 1 cubic metre of maize = 0.76tons Wembley stadium has a capacity of 4 million cubic metres = 76 Wembley stadiums of maize in storage
  14. 14. 150 170 190 210 230 250 270 290 310 300 350 400 450 500 550 600 650 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Jan-16 Oct-16 CassavaChips-FOBBangkok(USD/t) Starch-FOBBangkok(USD/t) Tapioca Starch Cassava Chips Intermediate product prices fall (starch and chips)
  15. 15. Fall in chip exports from Thailand and Vietnam - 100 200 300 400 500 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Valueofchipexports(millionUSD) 2010 2011 2012 2013 2014 2015 2016 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thaichipexportvalue(MillionUSD) 2010 2011 2012 2013 2014 2015 2016 Thailand Vietnam
  16. 16. Less dramatic fall in starch exports from Thailand and Vietnam Thailand Vietnam 0 200 400 600 800 1,000 1,200 1,400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ThaiStarchexportvalue(MillionUSD) 2010 2011 2012 2013 2014 2015 2016 - 100 200 300 400 500 600 700 800 900 1,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Valueofstarchexpots(MillionUSD) 2010 2011 2012 2013 2014 2015 2016
  17. 17. Logistics are important! $30MT $15-20/t + $10-20 truck and clearance $- $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 Bulkfreightrate(USD/t) US Gulf to China
  18. 18. Local value chain assessments
  19. 19. Activities in 2016: From global to local value chains Flores North Sumatra Daklak SonlaXayabouli Kratie Ayeyarwady Region *** Bolikhamxai Assessment of cassava value chains in different production and value chain settings • Food security zone (Flores) • Frontier and cross border trade (Cambodia, Laos) • Upland sloping systems (Sonla) • Lead firms (North Sumatra, DakLak) • Myanmar still awaiting sign-off • Missing cases • Intensive processing zones (Thailand, Tay Ninh and Lampung) • Feed market (San Miguel Philippines) Tay Ninh Lampung Bukidnon Isabela Thailand
  20. 20. Cassava root price (The ugly) Location Price USD/t (factory/collect point) Starch content Thailand $49 USD/T 25% Tay Ninh (Vietnam) $74 – 77 USD/T 30% Central Highlands (Vietnam) $64-65 USD/T 30% Sonla (Vietnam) $58 – 60 USD/T 30% Lampung (Indonesia) $38 USD/T (Dec) Before refraction North Sumatra (Indonesia) $47 USD/T 10 month min. Bolikhamxai (Laos) $37 USD/T Champasak (Laos) $37 USD/T Xayabouli (Laos) $36 – 49 USD/T Tboung Khmun (Cambodia) 49-52 USD/T Battambang (Cambodia) $42 – 45 USD/T Below and above 25% Ayeyarwady Region (Myanmar) $72 USD/T Thai root price (25%) Farm gate = $28 0 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 Lampung Roots (USD/T) Thai Roots (USD/T)
  21. 21. Increasing labor costs in a crop difficult to mechanize to date Location Daily wage rate (local currency) Daily wage rates (USD/day) Thailand 300 THB/day $8.50 USD/DAY Vietnam (Daklak and Sonla) 150,000 VND/day $6.60 USD/DAY Indonesia North Sumatra 70,000IR/day $5.30 USD/DAY Lao PDR Bolikhamxai and Xayabouli) 50,000LAK/day $6.10 USD/DAY Cambodia (Southeast Provinces) 20,000KHR/day $5.00 USD/DAY Myanmar (Ayeyarwady Region) 3,000MMK/day $2.20 USD/DAY
  22. 22. What does this mean for smallholder? Central Highlands Vietnam (Ea Sar) Xayabouli Lao PDR (No fertilizer) Higher prices scenario Price $66 USD/T $58 USD/T Yield 15t/ha 30t/ha 11t/ha 30t/ha Net returns -$ 15 USD/ha $976 USD/ha -411 USD/ha $694 USD/ha Lower price scenario Price $53 USD/T $23 USD/T Net returns - $215 USD/ha $580 USD/ha -795 USD/ha -353 USD/ha Increasing productivity (or at least maintaining it) will be key to cassava continuing to be ‘pathway out of poverty’ for upland farmers Is increasing the area of cultivation to meet demand a priority?
  23. 23. Assessments with farmers, traders, processors • Understanding of the value chain and production systems is setting the priorities for: • What we do: establishing demonstration trails based on demand from farmers, traders, processors. • Where we do it: locating activities where possible on factory or trader land or where other stakeholders (next users) can utilize it for scaling. • How we evaluate: what is the value proposition or business case of this next-user scaling it to final users (farmers)
  24. 24. Why is a nuanced impact pathway needed?
  25. 25. Relationship building with private sector Develop models for industry funding on research and evaluation of technologies. Can not be on an individual factory basis. Unleash the power of big data, spatial analysis Need to develop packages and membership payments
  26. 26. Fertility management Large areas of cassava production occurring with NO fertilizer used Declining yields Contributing to poor reputation of the crop and limited government support
  27. 27. 9 10 11 12 13 14 15 0.0 0.5 1.0 1.5 2.0 Netbenefit Million(kip) Fertiliser treatment cost Million (kip) 3.50 0.69 4.50 1.50 2.00 0.88 0.88 Low balanced Medium balanced Low balanced + OF High balanced Attractive rate of return from improved fertility management Example from Lao PDR (3 locations 2014) The application of a low balanced fertilizer regime gave a 200 – 450% rate of return In some locations still attractive returns on pushing this into higher application rates
  28. 28. Generally, these results are stable even with falling prices 4.0 5.0 6.0 7.0 8.0 9.0 10.0 0.0 0.5 1.0 1.5 2.0 Netbenefit Million(kip) Fertiliser treatment cost Million (kip) 1.50 -0.06 2.06 0.39 0.67 0.04 0.04 Low balanced Medium balanced Low balanced + OF High balanced Example from Lao PDR Even at current prices, these results would give a 67 – 206% MRR on investment Industry and government support • Understand local environment (site specific) • Get information to farmers • Make the correct fertilizer available in local stores
  29. 29. Back to the future? Does livestock feed warrant another look? 0 0.5 1 1.5 2 2.5 3 3.5 4 2011 2012 2013 2014 2015 Importvalue(BillionUSD) Animal prep nes DDGS Other fodder Lucern and alfaalfa Soybean meal Soybean other Soybean seed Soybean Fish and meat meal Maize Vietnam import of animal feed 0 5 10 15 20 25 30 35 40 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Kg/capita/year Bovine Meat Pigmeat Poultry Meat
  30. 30. 2017 Workplan • Household surveys: understand the current farming systems and livelihoods of cassava farmers throughout our 5 country project sites across typology of value-chains. • Conduct demonstration trials with value chain actors: Use our understanding of the value chain to conduct demonstration trials to determine the incentives of value chain actors to adopt or promote technologies • Develop models for scaling across the typology: Across the matrix of technologies, value chains and production systems develop nuanced impact pathways • Policy dialogues and learning alliances: evidence based policy analysis
  31. 31. Join the conversation.

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