Global cassava markets: understanding the drivers and market dynamics

Jonathan Newby and Cu Thi Le Thuy

ACIAR Mid-term ReviewVientiane, Lao PDR15-19th January 2017

Framework for Objective 1

CROPS

LIVESTOCK

FOREST

OFF-FARM

FARM SYSTEM

VILLAGE SYSTEM

AGRARIAN SYSTEM

TRENDS

SHOCKS

LAN

D

WA

TER

MARKETS

OR

GA

NISA

TION

S

SOC

IAL

REL

ATI

ON

S

TRAJECTORIES

INTERVENTIONS

Project objectives

ASEM

Objective 1 – Assess the current production, marketing, and institutional arrangements for cassava in

major agroeconomic zones and value chains in Laos and Cambodia.

1.1 Understand the macro-level drivers for the development of the local cassava industry in different

agroeconomic zones in each country, including changing market conditions and policy settings.

AGB

Objective 1 – Assess opportunities and constraints for smallholder production and

marketing of cassava within different value chains

1.1 Understand the macro-level drivers for the development of the cassava industry

including changing market and policy arrangements for cassava (starch, feed, chips) and

substitutes (e.g., maize, potato, and sugar) and the potential benefits and risks to value chain

actors

Activity and output

Activity Review information on global and national cassava production, utilisation, trade, and policies.

Original outputAnnual market update

Actual outputAnnual market updates, blogs, presentations, Facebook group, website

Market 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 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.

0

50

100

150

200

250

300C

on

go

Mo

zam

biq

ue

Gh

ana

An

gola

Mad

agas

car

Par

agu

ay

Cen

tral

Afr

ican

Rep

ub

lic

Lib

eria

Sier

ra L

eon

e

Nig

eria

Togo

Ben

in

CÃ

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d'Iv

oir

e

Cam

ero

on

Rw

and

a

Gu

inea

Mal

awi

Uga

nd

a

Tan

zan

ia

Gab

on

Zam

bia

Ind

on

esia Fiji

Co

lom

bia

Bra

zil

Lao

PD

R

Per

u

Hai

ti

Cam

bo

dia

Cu

ba

Ken

ya

Ph

ilip

pin

es

Tim

or-

Lest

e

Ch

ad

Bo

livia

Zim

bab

we

Do

min

ican

Rep

ub

lic

Gu

inea

-Bis

sau

Thai

lan

d

Ven

ezu

ela

Nic

arag

ua

Mya

nm

ar

Sri L

anka

Fre

nch

Po

lyn

esia

Sen

egal

Suri

nam

e

Nig

er

Vie

t N

am

Cab

o V

erd

e

Bru

nei

Dar

uss

alam

Kg

/cap

ita/

year

At the national scale: cassava not a large contributor to calories

FAO Stats

Sub-national level it is an important food crop

FAO Stats

Over 306,000 cassava households in Nusa Tenggara Timur –85% sell no cassava

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

Cas

sava

Are

a (M

illio

n h

a)

Indonesia Philippines Thailand Viet Nam Cambodia Lao PDR Myanmar Other

Cultivation of cassava in Southeast Asia has long history of association with markets, trade and policy

Phase 1 – Imperial trade

Phase 2 –European livestock

Phase 3 – Starch & East Asia

Phase 4 - China and maize policy

FAO Stats

0

0.5

1

1.5

2

2.51

96

1

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

20

05

20

09

20

13

Imp

ort

val

ue

(Bill

ion

USD

)

Eastern Asia Europe

South-Eastern Asia World

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

19

61

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

20

05

20

09

20

13

Imp

ort

val

ue

(Bill

ion

USD

)

Policy induced re-orientation of cassava trade from Europe to Asia

Value of cassava (fresh and dried) Value of cassava starch

FAO Stats

Value of cassava trade and relative importance of cassava starch in global trade

WorldBank Stats

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

Rising incomes in Asia: changing diets and consumption

0

2,000

4,000

6,000

8,000

10,000

12,000

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

GD

P p

er

cap

ita

(co

nst

ant

20

10

US$

)

World

Malaysia

East Asia & Pacific (excluding highincome)

China

Thailand

Indonesia

Philippines

India

Vietnam

Lao PDR

WorldBank Stats

Sweeteners44%

Monosodium Gultamate

(MSG)18%

Whole Salers13%

Modified Starch10%

Paper7%

Tapioca Pearls4%

Textile1%

Other3%

Starch Sweeteners

46%

Sugar-hol5%

Modified Starch7%

Polyol2%

Citric Acid7%

Lactic acid1%

glutanate18%

Lysine5%

Other amino acids1% Food

8%

Utilisation of starch in Thailand and China

Thai Domestic use of cassava starch Chinese use of all starch

Source: TTTASource: Jin Shu-ren

Demand for animal feed in Vietnam

Consumption of meat per capita

0

0.5

1

1.5

2

2.5

3

Val

ue

of

imp

ort

s (B

illio

n U

SD)

Soy (1201)

Maize (1005)

0

10

20

30

40

50

60

70

19

61

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

20

01

20

05

20

09

20

13

Foo

d s

up

ply

qu

anti

ty (

kg/c

apit

a/yr

)

Pigmeat Poultry Meat

Bovine Meat Mutton & Goat Meat

Import of maize and soy

FAO Stats

Trade in syrups and sweeteners and fermentation products

0

10

20

30

40

50

60

70

80

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Val

ue

of

imp

ort

s (M

illio

n U

SD)

D-glucitol (sorbitol)

Chemically pure fructose

Glucose, glucose syrup(20-50 % dry weightfructose)

Other fructose andfructose syrup, <50 % bydry weight of fructose

Glucose, glucose syrup,< 20 % fructose

0

20

40

60

80

100

120

140

160

180

20

06

20

08

20

10

20

12

20

14

20

06

20

08

20

10

20

12

20

14

Export ImportTr

ade

valu

e (M

illio

n U

SD)

Glutamic acid and itssalts

Lysine and its esters

Comtrade

Import of sweeteners Trade in Glutamic acid (MSG+) & Lysine

0

2

4

6

8

10

12

14

16

(KG

/CA

PIT

A/Y

R)

Pigmeat Mutton & Goat Meat Bovine Meat Poultry Meat

0

2

4

6

8

10

12

14

16

18

(KG

/CA

PIT

A/Y

R)

Demand for animal feed and sweeteners in Indonesia

Consumption of meat per capita Consumption of sugar per capita (Raw Equivalent)

Trade in syrups and sweeteners (Indonesia)

0

20

40

60

80

100

120

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

Exp

ort

Imp

ort

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Trad

e va

lue

(mill

ion

USD

)

D-glucitol (sorbitol)

Fructose, syrup > 50% fructose, not pure fructose

Fructose, chemically pure

Glucose including syrup of 20%-50% dry weightfructose

Glucose, glucose syrup < 20% fructose

Logistics and freight cost are important

$30MT

$15-20/t +$10-20 truck and clearance

Indonesian domestic market connected to regional market

Indonesian imports of cassava starch from Thailand

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000Ja

n

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Thai

lan

d c

assa

va s

tarc

h e

xpo

rts

to In

do

ne

sia

(To

ns)

2010

2011

2012

2013

2014

2015

2016

2017

0

50

100

150

200

250

300

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Thai

lan

d c

assa

va s

tarc

h e

xpo

rts

to In

do

ne

sia

(Mill

ion

USD

)

2010

2011

2012

2013

2014

2015

2016

2017

Maintaining connection with private sector partners in Myanmar

-100

0

100

200

300

400

500

600

Jul-

12

No

v-12

Mar

-13

Jul-

13

No

v-13

Mar

-14

Jul-

14

No

v-14

Mar

-15

Jul-

15

No

v-15

Mar

-16

Jul-

16

No

v-16

Mar

-17

Jul-

17

No

v-17

Cas

sava

sta

rch

pri

ce (

USD

/t)

Difference Wholesale Ayeyarwady (USD/t) FOB Bangkok (USD/t)

Myanmar sweetener trade

0

2

4

6

8

10

12

14

2011 2012 2013 2014 2015

Val

ue

of

exp

ort

s to

Mya

nm

ar (

mill

ion

USD

)

Sorbitol (Indonesia)

Glucose syrups (China)

Other sugars nes (Thailand)

Market distortions, global commodities, local prices

Rabobank estimated that there was 232 million tons of Chinese maize stock in 2015/16

Floor price

-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

USD

PER

MT

Difference US Gulf Maize CNF China + VAT Chinese Futures (DCE) US Gulf Maize (FOB)

Cassava prices in Thailand respond to changing maize policy in China

150

170

190

210

230

250

270

290

310

300

350

400

450

500

550

600

650

Jan

-10

Jun

-10

No

v-10

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

Dec

-12

May

-13

Oct

-13

Mar

-14

Au

g-14

Jan

-15

Jun

-15

No

v-15

Ap

r-1

6

Sep

-16

Feb

-17

Jul-

17

Cas

sava

Ch

ips

-FO

B B

angk

ok

(USD

/t)

Star

ch-

FOB

Ban

gko

k (U

SD/t

)

Tapioca Starch (Super High-Grade) Export Price (USD/T)

Tapioca Chips Export Price (USD/T)

Cassava root spot prices(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%

Farm gate = $28

0.5

0.7

0.9

1.1

1.3

1.5

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15A

rea

of

cult

ivat

ion

n (

mill

ion

ha)

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

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

Are

a o

f cu

ltiv

atio

nn

(m

illio

n h

a)

Maize

Maize

1200

1400

1600

1800

2000

2200

2400

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

VN

D/K

G (

30

% S

TAR

CH

)

WEEK

Daklak (2016) Daklak (2017) Tay Ninh (2016)

Tay Ninh (2017) Cambodia to Tay Ninh (2016) Cambodia to Tay Ninh (2017)

Sonla Sonla (2017)

Fresh root price in Vietnam

1 starch factory

41 starch factory

4 starch factory + ethanol

Thailand and Vietnam export of cassava starch (cumulative monthly)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5Ja

n

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Cu

mu

lati

ve m

on

thly

Th

ai s

tarc

h e

xpo

rts

(Mill

ion

to

ns)

2010

2011

2012

2013

2014

2015

2016

2017

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

DecCu

mu

lati

ve m

on

thly

Vie

tnam

sta

rch

exp

ort

s (M

illio

n t

on

s)

2010

2011

2012

2013

2014

2015

2016

2017

Thai export of cassava chips by volume and value (cumulative monthly)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0Ja

n

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Cu

mu

lati

ve m

on

th T

hai

ch

ip e

xpo

rts

(Mill

ion

to

ns)

2010

2011

2012

2013

2014

2015

2016

2017

0.0

0.5

1.0

1.5

2.0

2.5

Jan

Feb

Mar

Ap

rM

ay Jun

Jul

Au

gSe

pO

ctN

ov

DecCu

mu

lati

ve m

on

thly

Vie

tnam

ch

ip e

xpo

rts

(mill

ion

to

ns)

2010

2011

2012

2013

2014

2015

2016

2017

Tapioca and maize starch prices

-200

-100

0

100

200

300

400

500

600

700

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

USD

/MT

Difference Tapioca starch (Super High-Grade) FOB Bangkok Corn starch, Midwest

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Oct

-09

Mar

-10

Au

g-1

0

Jan

-11

Jun

-11

No

v-1

1

Ap

r-1

2

Sep

-12

Feb

-13

Jul-

13

Dec

-13

May

-14

Oct

-14

Mar

-15

Au

g-1

5

Jan

-16

Jun

-16

No

v-1

6

Ap

r-1

7

USD

/Lit

re

Root cost in Ethanol (Indonesia) Root cost in Ethanol (Thai)

CBOT Ethanol (USD/litre)

Biofuel prices and root equivalent priceThe new policies on the horizon that will influence the short-term and long term trajectory of the cassava sector and smallholder farmers

Conclusion

• When deciding which crop to grow, farmers do not consider factors such as: the global

price of oil, sugar, wheat, maize; changes in the demand for pork, or paper and

cardboard; or whether a biofuel mandate is developed.

• Yet as a global commodity trade, understanding the connection between cassava and

these markets in essential to understanding the outlook for the crop.

• An understanding of the global market context in which localised value chains

(farmer-trader-processor) operate helps recognize the market risk that farmers and

processors are exposed to.

• This can help develop informed scenarios regarding the potential for intensification

and diversification strategies improve farmer livelihoods.

Join the conversation at : https://www.facebook.com/groups/1462662477369426/

ACIAR Cassava Value Chain and Livelihood Program