Tapioca traders urge govt not to intervene in cassava market
Amid rising concern that cassava farmers will copy other farmers and call for a government subsidy, tapioca traders have urged the authorities not to intervene in the cassava market, arguing that supply should meet demand, which would ensure suitable inco
The comments came following a survey indicating that cassava output in the 2013/14 growing year would increase by 1.66 per cent, although the plantation area would be 1.92 per cent lower than in 2012/13.
Niyom Chulaserekul, president of the Thai Tapioca Producers Association, said the government should allow the market mechanism to do its work by not intervening in the price of cassava following the upcoming harvest season.
“The cassava price should be traded at about Bt2.50-Bt2.60 a kilogram. If the government were to set a pledging price too high, to almost Bt3 per kilo as in the past, then trading of tapioca would be seriously impacted, due to tougher competitiveness in neighbouring countries and greater supply of other cereal crops to replace cassava usage,” he said.
Although Thailand is the world’s leading tapioca supplier, traders are currently battling for business with other countries, with higher supply from Indonesia and Vietnam, both of which have lower production costs.
If Thai traders quoted prices that were too high, the Kingdom would face difficulty in selling its tapioca products next year, he warned.
The next harvest season for cassava is expected to start next month. In December, most of the crop will be harvested, and the price of cassava will fall. Traders are, therefore, afraid that the government may intervene in the market by setting up a pledging scheme, should cassava growers then call for increased prices.
According to the survey of four cassava and tapioca traders, conducted in cooperation with the Agriculture Ministry, cassava output for 2013/14 is expected to increase by 1.66 per cent to 28.74 million tonnes, from 28.27 million tonnes in 2012/13.
The plantation area, meanwhile, is forecast to drop 1.92 per cent from 8.13 million rai (1.3 million hectares) to 7.98 million rai. The yield is expected to increase by 3.66 per cent, from 3.47 tonnes per rai to 3.6 tonnes per rai.
Boonchai Srichaiyongpanich, committee member and adviser to the Thai Tapioca Traders Association, said the plantation area is expected to continue to fall as farmers shift to growing other crops – mainly sugar cane, rubber and maize, for which there is lower risk but a higher return.
Moreover, some of the land previously set aside for cassava production is now being used to establish industrial plants.
He said cassava farmers’ overall costs had increased each year due to the rising cost of labour and production. If the government wanted to assist farmers, it should directly help by reducing the cost of production, he said, adding that if it intervened on price, then it could cause problems for tapioca exports. The average cost of cassava is about Bt2.08 per kilo.
Suree Yodprachong, president of the Thai Tapioca Traders Association, said exports of tapioca chips next year are expected to grow to 5.3 million tonnes. The average export price of tapioca chips should be US$230 (Bt7,400) per tonne, so that exporters could compete with other countries, she said.
Export warning
She stressed that if the government were to subsidise cassava at too high a price level, it would push up the export price of tapioca chips to $240 a tonne. Thai exporters would then be unable to meet their expected deliveries, as China would turn to purchasing chips from other countries.
Manoch Veerakul, president of the North Eastern Tapioca Trade Association, said the government should set a ceiling price before deciding to intervene in the market.
However, if the trading price of cassava was not hurting farmers, then the government should not subsidise the price of the crop. It would face huge losses and high spending if it intervened in every farm crop amidst falling prices during the harvest season, he added.
Vichit Charuwatkul, president of the Tapioca Starch Producers Association, said the export price of tapioca starch should not go beyond $460 a tonne, so that Thailand could export up to 3 million tonnes next year. If the cassava price were to increase, starch exports could fall below the expected amount, he warned. covering an area of 45 rai.
