Thai tapioca exports threatened by rush to biofuel
By Jon Fernquest
Tapioca is a proven export
crop in Thailand. This crop generates over 70 billion baht per year in
export revenue for Thailand after being processed into different forms
such as flour, starch, pellets
and chips. Cassava offers farmers profit
margins just as good as maize and rice.
After production costs of 1.20 baht a kilogramme, cassava can be sold
for more than two baht.
The price and quantity of tapioca exports is variable depending on such factors as EU grain prices, exchange rates and transport costs. Currently, the European Union (EU) purchases around 5.25 million tonnes each year. Tapioca chips exports to China rose to a whopping 3.9 million tonnes in 2006 after duties were reduced under the Thailand-China free trade agreement. Each year 1.5 million tonnes of chips are also used within Thailand for animal feed.
The roots of the Cassava plant have long been used to make tapioca. Recently, Cassava roots have also become a promising biofuel crop used to make ethanol. Excessive support for biofuels by government policy may harm established agricultural export commodities like tapioca by causing rising prices and shortages. Chen Wongboonsin, president of the Thai Tapioca Trade Association and senior assistant managing director of STC Tapioca Group, has urged policy makers: "Let the market run freely and ethanol producers have to race for supplies the same as other manufacturers do."
Only one ethanol plant is currently operating, with a demand of 500,000 tonnes of cassava per year, but at least 25 ethanol plants are scheduled to open in the next few years mostly in the Northeast, Thailand's main cassava growing area.
The breakeven point for using cassava roots in ethanol production is 1.5 baht per kilogramme, but recently cassava prices have risen to as much as 2.00 to 2.60 baht per kilogramme. This has driven the price of ethanol in Thailand up to 21-22 baht per liter, far above the 17 baht per liter charged in Brazil, which has become a world benchmark that ethanol producers measure themselves by.
New and better varieties of tapioca have been developed for decades so they are available and can be used by farmers in Thailand. There is no guarantee that farmers will grow these higher quality varieties and grow them in the proper way. Registeration and monitoring of farmers is one way to make sure that the proper varieties are being grown in the proper way.
The KU50 and Rayong 5 varieties of cassava are the most prevalent in Thailand (according to a Kasetsart University report) and with proper soil and planting duration, yields as high as 5.38 and 4.98 tonnes per rai have been achieved in experimental trials.
Another problem area is premature harvesting (digging young roots). The roots of the Cassava have to be left to grow for at least 10 months to provide high starch content. Monitoring is also essential here too. Plans were made last month by the cabinet to boost cassava productivity from one to 4.7 tonnes per rai over the next five years while keeping the land used for cassava to 7.4 million rai. A budget of 10 billion baht over 12 years has been allocated to increase yields of cassava, sugarcane, and palm.
Read a previous article
about the Isan
windfall in biofuel crops. Recently, the internet has been
abuzz with talk of a possible
bubble in commodities markets. Read a Wall
Street journal articles on research into a possible bubble
in the commodities markets.
(Source: Bangkok Post, business, 14-05-08, WALAILAK KEERATIPIPATPONG,
temp-link)
Vocabulary:
tapioca
- a flavorless starchy ingredient used in cooking, produced from dried
cassava root, used to make a milky pudding eaten for dessert (See wikipedia)
มันสำปะหลัง
starch - a thick substance, thicker than a liquid
แป้ง
pellets - a small round ball, like dog food [Thai:
met] ก้อนกลมเล็กๆ
chips - a small piece of something ชิ้นส่วนเล็กๆ
profit margins - the profit being made on sales (can
be seen as a percentage of each sale) กำไร
maize - corn ข้าวโพด
whopping - very large พุ่งสูงขึ้น
biofuel crop - a crop mixed with gasoline to reduce
oil usage พืชที่ใช้สำหรับผลิตน้ำมันไบโอดีเซล
excessive - too much มากเกินไป
established - has existed for a long time (generally
approved, officially recognised) ก่อตั้ง จัดตั้ง
urged - try hard to persuade someone to do something
วิงวอน
the breakeven point - the point at which you start
making a profit, no longer losing money ระยะคืนทุน
a benchmark - a standard that everyone can measure
themselves by (and compare themselves to others with) มาตรฐาน
guarantee - a promise that something will happen
(See glossary)
รับรอง
registration - recording in an official list
การจดทะเบียน ขึ้นทะเบียน
monitoring - regularly checking something จับตามอง
most prevalent - used most often, found most often
ที่พบบ่อยที่สุด
experimental trials - tests by agricultural
researchers (probably at universities) การทดลอง การวิจัยทางการเกษตร
premature - before the right time to do it
ก่อนเวลาอันควร
allocated - a share or part of something given to
someone, or assigned to be used for something จัดสรร