Govt may reintroduce cassava-pledging scheme

After meeting with four tapioca traders’ associations and ethanol producers, Deputy Commerce Minister Poom Sarapol yesterday said the ministry was conducting a study with cassava farmers and tapioca traders on whether to adopt the pledging scheme.
The study should be completed in the next two weeks, ahead of the harvesting of the new cassava crop in November.
The pledging project for cassava was cancelled three years ago during the Surayud Chulanont government.
Although the Abhisit Vejjajiva administration later launched an income guarantee for cassava, farmers did not participate in the project as the market price was higher than the guaranteed price due to a shortage of cassava following drought and pest infestation.
However, the new government policy’s on fuel subsidies has resulted in reduced ethanol production, as consumers have turned to using more petrol due to the more attractive prices now available.
Poom said the government would carefully consider whether to adopt the pledging scheme for cassava, as it would entail additional budgetary funding to subsidise crop production over and above the cost of the rice-pledging programme.
Chen Wongboonsin, vice president of the Thai Tapioca Trade Association, said that if the project were to go ahead, the government should carefully consider a fair pledging price to ensure trading growth along with a fair return for farmers.
Farmers want pledging at Bt3.50 per kilogram, while traders say the pledging price should be Bt2.50-Bt3 a kilo, Chen said.
Currently, the market price of cassava is Bt2.40-2.50 a kilo, while the production cost is Bt1.90-Bt1.99.
Niyom Julasereekul, president of the Cassava Traders Plant Products Association, said the government might not need to reintroduce pledging for cassava, as supply would still be lower than demand.
The plantation area is expected to increase slightly from 7.1 million rai to 7.3 million rai (1.17 million hectares) for the next harvest (2011-12), after recovery from pest infestation and some farmers shifting to growing the crop after the good prices achieved last year.
However, expected output of 26 million tonnes would still be lower than predicted domestic and export demand, he said. Of the total, 15 million tonnes would be for starch production, 2 million tonnes for ethanol production, 1.5 million tonnes for the feed-meal industry and 7.5 million tonnes for export.
Normally, annual cassava output should be 30 million tonnes.
Tapioca export volume is expected to be 6 million to 7 million tonnes this year, after exports came in at 4.4 million tonnes in the first eight months with a value of US$1.7 billion (Bt52.9 billion), Niyom added.

RELATED POLICIES
Sirivuthi Siamphakdee, chairman of the Thai Ethanol Manufacturing Association, said the government should carefully consider related policies, as some measures could affect the development of cassava farming and ethanol production.
For instance, he said ethanol output had dropped significantly in the past month after the government lowered petrol prices.
So far, production has dropped from 2.925 million litres a day last year to between 1.1 million and 1.2 million litres daily after the government’s move on fuel subsidies.
He said more people had changed to using petrol as the price gap with gasohol had been narrowed.
To promote stable growth of the industry and to ensure that cassava farmers benefit from good prices, the government should ensure an appropriate price gap between gasohol and petrol prices, he suggested.
Sirivuthi added that tapioca traders, ethanol producers and cassava farmers should strengthen their cooperation to set a fair price for cassava. The price should not be too low or too high, as either extreme would damage the interests of farmers and traders.