Study sees threat to Thai tapioca

Thai cassava production and yield per rai have dropped gradually over the past 10 years, while the budget for shoring up the price of the commodity has doubled this year under the government’s pledging scheme, according to a study by the UTCC’s Centre for International Trade Studies.

The centre’s director, Aat Pisanwanich, said cassava subsidies had grown dramatically from Bt1.6 billion in the 2003-04 harvest season to Bt33 billion in 2011-12. 

Several governments, including the current one, have opted to subsidise the cassava price, spending more than Bt61.34 billion in the past decade. However, such spending can only guarantee the price in the short term, while cassava production has not been developed, Aat said.

“The government will need to spend more to subsidise the price of cassava in the coming years if it continues to ignore production and marketing development. The pledging price will have to increase continuously from the current Bt2.90 per kilogram to Bt4-Bt5 in the coming harvest seasons,” he said. 

Thailand is currently the world’s leading cassava supplier because of domestic oversupply. However, many countries, particularly Asean nations such as Cambodia, Indonesia and Vietnam, have rapidly developed cassava production to serve demand in the world market. 

Aat pointed out that many foreign firms, mainly from South Korea, had invested in Cambodia for growing cassava. The rapid development of cassava production in Cambodia could affect Thailand’s competitiveness and cost it its top export spot soon, he said.

Several million rai of land in Cambodia has been devoted to growing cassava by Korean investors. Although Cambodia still has a relatively small area of cassava plantation – 1.3 million rai (208,000 hectares), compared with 7.3 million rai for Thailand – Korean investment will rapidly expand the plantation areas and increase yield per rai there, Aat said.

According to the centre’s study, yield per rai of Thai cassava is lower than in Cambodia and Indonesia. Cambodia has the highest yield per rai of 3.4 tonnes, following by Indonesia (3.2 tonnes) and Thailand (3 tonnes). The cost of cassava production in Thailand, excluding breeding costs, is 85 satang per kilogram, compared with 77 satang per kilo in Vietnam and 61 satang in Cambodia.

This is the result of a lack of a long-term plan for cassava production and marketing development. Politicians have always looked to benefit from commodities, since their production involves significant budgetary support each year, Aat said. However, he added, politicians are only concerned about boosting prices to gain popularity among farmers, while neglecting to develop the whole supply chain.

Pledging leads to corruption, distortion of the market mechanism, and lower competitiveness for Thai products, he said.

To ensure export competitiveness, Aat suggested the government stop the pledging scheme. Otherwise, he said, Thailand would continue to waste large amounts of money subsidising the price. 

The government should spend the money on long-term development focusing on increasing yield per rai, promoting use of non-chemical fertiliser among farmers, and encouraging farmers and traders to grow cassava in other Asean countries. Thailand should always look to export to various markets such as India, rather than relying solely on China, to balance export risks, Aat said.

The government should allocate part of its budget to support research and development to increase value-added for tapioca and to support other industries that use tapioca as raw materials, he said.

It should also promote the use of biodiesel to encourage more consumption of cassava domestically, he said.