Indonesia: Prospect, challenges and opportunities for cassava in a global market
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Presentation to the International Conference on Root and Tuber Crops for Food Security - Malang, October 2017
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Indonesia: Prospect, challenges and opportunities for cassava in a global market
- 1. Prospects, Challenges, and Opportunity for cassava in a global market Jonathan Newby j.newby@cigar.org Malang, Indonesia 10-11th October 2017
- 2. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 CassavaArea(Millionha) Indonesia Philippines Thailand Viet Nam Cambodia Lao PDR Myanmar Other Indonesia: formerly the largest cultivation of cassava in Asia
- 3. The most diverse utilization of cassava in Asia
- 4. Markets outlook for cassava 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 or gaplek. Competition with other purchased food such as rice. 2. Global markets where cassava chips compete with other forms of carbohydrate for processing animal feed or ethanol such as maize, sorghum, wheat - oil. 3. Markets where cassava starch competes largely only price with substitutes such as maize and potato starch, sugarcane. 4. Markets where the functional properties of the starch are desired.
- 6. Rising incomes in Asia: changing diets and consumption 0 2000 4000 6000 8000 10000 12000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 GDPpercapita(constant2010US$) World Malaysia East Asia & Pacific (excluding high income) China Thailand Indonesia Philippines India Vietnam Lao PDR Myanmar Cambodia
- 7. 0 2 4 6 8 10 12 14 16 (KG/CAPITA/YR) Pigmeat Mutton & Goat Meat Bovine Meat Poultry Meat 0 2 4 6 8 10 12 14 16 18 (KG/CAPITA/YR) Demand for animal feed and sweeteners in Indonesia Consumption of meat per capita Consumption of sugar per capita (Raw Equivalent)
- 8. 0.5 0.7 0.9 1.1 1.3 1.5 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Areaofcultivationn(millionha) Cassava Cassava National area of cassava and maize in Indonesia 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Areaofcultivationn(millionha) Maize Maize
- 9. Indonesian imports of maize, maize starch and cassava starch 0 50 100 150 200 250 300 350 400 450 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Tradevalue(millionUSD) Maize starch Cassava starch 0 200 400 600 800 1000 1200 Inportvalue(millionUSD) Import of maize Import of starch
- 10. Trade in syrups and sweeteners (Indonesia) 0 20 40 60 80 100 120 Export Import Export Import Export Import Export Import Export Import Export Import Export Import Export Import Export Import Export Import 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Tradevalue(millionUSD) D-glucitol (sorbitol) Fructose, syrup > 50% fructose, not pure fructose Fructose, chemically pure Glucose including syrup of 20%-50% dry weight fructose Glucose, glucose syrup < 20% fructose
- 11. Logistics and freight cost are important $30MT $15-20/t + $10-20 truck and clearance
- 12. Market distortions, global commodities, local prices -300 -200 -100 0 100 200 300 400 500 600 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 USDPERMT Difference US Gulf Maize (FOB) US Gulf Maize CNF China + VAT Chinese Futures (DCE) Rabobank estimated that there was 232 million tons of Chinese maize stock in 2015/16Floor price
- 13. 40 50 60 70 80 90 100 110 120 300 350 400 450 500 550 600 650 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 CassavaChips-FOBBangkok(USD/t) Starch-FOBBangkok(USD/t) Tapioca Starch Roots USD/t (25%) Cassava prices in Thailand respond to changing maize policy in China
- 14. Cassava market in Indonesia is connected to the world price 200 250 300 350 400 450 500 550 600 650 20 40 60 80 100 120 140 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Starch(FOBBangkokUSD/t) Rootprice(USD/t) Lampung Roots ($US/MT) Thai Roots ($US/MT) Thai Starch (FOB Bangkok)
- 15. 0 20 40 60 80 100 120 140 Oct-09 Jun-10 Feb-11 Oct-11 Jun-12 Feb-13 Oct-13 Jun-14 Feb-15 Oct-15 Jun-16 Cassavaroot(USD/t) Cassava root price (Jan 2017) 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% 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% Thai root price (25%) Farm gate = $28
- 16. -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 USD/MT Difference Tapioca starch (Super High-Grade) FOB Bangkok Corn starch, Midwest Tapioca and maize starch prices =
- 17. 0 50 100 150 200 250 300 350 400 Jan-98 Dec-98 Nov-99 Oct-00 Sep-01 Aug-02 Jul-03 Jun-04 May-05 Apr-06 Mar-07 Feb-08 Jan-09 Dec-09 Nov-10 Oct-11 Sep-12 Aug-13 Jul-14 Jun-15 May-16 Apr-17 USD/t 80%Cassava+20%Soymeal (USD) Thai Corn (USD) US Maize (FOB Gulf) Feed prices in Thailand: cassava x soymeal
- 18. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 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 USD/Litre Root cost in Ethanol (Indonesia) Root cost in Ethanol (Thai) CBOT Ethanol (USD/litre) Biofuel prices and root equivalent price
- 19. Farmer incomes, livelihoods and productivity • The correction in the root price has made cassava a more competitive feed stock for industry applications where previously they competed against low maize and other commodity prices. • However, cassava farmers have suffered significant reductions in farm gate prices and household incomes • Caution against market interventions that reduce the competiveness of the crop relative to substitutes and alternative markets (eg. price floors) • Advocate for policies that drive innovation and competitiveness • Enhancing productivity and reducing costs will be key to viable smallholder cassava in Indonesia and the region
- 20. Current location of cassava and maize production
- 21. Crop suitability under current climate conditions
- 22. Change in crop suitability under climate change
- 23. Pest and disease a new challenge for food security and the cassava industry in Indonesia
- 24. Assessment of existing technologies 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)
- 25. New varieties for new markets help smallholder cassava remain competitive
- 26. Conclusion 1. Indonesia remains one of the largest producer of cassava in Asia 2. Indonesia has the highest consumption of cassava per capita of any country in Asia 3. Indonesia is a large importer of cassava starch (Tapioca) and starch based products 4. This consumption of products derived from starch will continue to increase in Indonesia (and within the region) as incomes rise 5. Climate change will impact cereal crop production in Indonesia while cassava is relatively resilient 6. While there are new challenges for cassava on the horizon 7. Many new opportunities for cassava in Indonesia and Southeast Asia
- 27. Join the conversation at : https://www.facebook.com/groups/1462662477369426/ ACIAR Cassava Value Chain and Livelihood Program