CASSAVA

SLIGHT INCREASE IN 1995 PRODUCTION AND CONSUMPTION

World cassava production in 1995 is forecast to grow by less than one percent to 159 million tons of fresh roots, mainly reflecting increases in Africa and Latin America. Production in Africa is expected to reach 81 million tons, or two percent above last year, primarily as a result of favourable weather, higher yields and increased plantings. Larger harvests are estimated for Angola, Cameroon, Cote d'Ivoire, Mozambique, Nigeria and Uganda. In Nigeria, cassava output may reach a record of about 32 million tons, some 3 percent above last year, following the progressive replacement of existing improved varieties with new polyploid varieties which are more resistant to pests and diseases, higher-yielding and more adapted to a variety of culinary applications. In Mozambique, output is expected to be 26 percent above the drought-reduced harvest of last year. The growth is explained by larger areas planted throughout the country and better yields. Also in Uganda, while in 1994 cassava plantings declined in favour of sweet potatoes, this year, both area and output are expected to increase by 9 and 21 percent, respectively. By contrast, very poor crops are estimated for Tanzania, mainly reflecting recurrent problems of mealy-bug and mosaic diseases outbreaks that affected productivity, but also in Benin, Burundi and Rwanda. In the latter country, the impact of civil strife on agricultural activities, but also adverse weather conditions and shortages of farm inputs are mainly responsible for the decline. Little change of the crop size is anticipated in other countries of the region.

In Asia, the 1995 production is forecast to fall by about two percent from last year's level to reach 45 million tons, mainly due to smaller crops in Indonesia, Thailand and Vietnam. In Indonesia, the 1995 output is estimated at 15.4 million tons, two percent below the harvest in 1994 as yields were negatively affected by drought. Similarly in Thailand, the 1995 production is officially forecast to fall by 10 percent, to 16 million tons due to cutbacks in the cultivated area from 9 to 8.3 million rai ( 1.4 to 1.3 million hectares), the effect of drought, harvesting of immature roots with low starch content and shortage of farm labour.

In Latin America and the Caribbean, cassava production is forecast to grow in a number of countries, particularly Brazil, Bolivia and Colombia. In Brazil, output is expected to increase by over 7 percent to reach about 26 million tons; the expansion in the centre-south, and northern regions has been supported by higher producer prices and favourable growing conditions. In Bolivia the expansion resulted from larger plantings. In Colombia various measures have been implemented by the Government to expand cultivation. In fact, the 1995-98 Plan for the strengthening of the cassava agro-industry on the Atlantic Coast, has the objectives of developing processing industries for chips and pellets and promoting new technology applications in order to meet the growing demand of cassava and cassava products for food consumption. Also in Venezuela and in the Dominican Republic output is anticipated to increase somewhat compared with the previous year.

Utilization of cassava follows closely domestic production in most countries as international trade is restricted to a few exporters and stock changes are difficult to assess. Cassava provides a relatively cheap source of dietary energy and thus continues to play a key role in food security of several countries in the tropics.

In Africa, lager crops are expected to lead to some increase in food consumption of cassava, especially in Angola, Mozambique and Nigeria. The devaluation of the CFA-franc at the beginning of 1994, has increased demand for cassava in producing countries such as Benin, Cameroon, the Central African Republic, Congo and Côte d'Ivoire. Import costs for wheat and rice increased considerably bringing a consequent rise of cereal prices on domestic markets. Therefore, a larger number of people were unable to buy all their cereal requirements and had to look for alternative food sources, such as cassava, potatoes and yams, to cover their consumption needs. As a result, demand for roots and tubers in those countries rose well above available supplies pushing up prices of domestically produced substitutes for cereals, including cassava. In other countries, where output rose in 1995, cassava contributed significantly to sustain food availability. In Nigeria, for instance, per caput consumption is expected to continue its upward trend as the new varieties prove to be superior to the traditional ones for a number of food preparations. Moreover, since March 1995, consumption of cassava has been further supported by the Government's imposition of a 100 percent customs duty on rice imports.

In most countries of Latin America and the Caribbean, production increases are likely to result in greater usage of cassava both for food and feed in 1995, particularly in Brazil. In a few countries, especially in the Far East, including China, India and Indonesia, domestic production was supplemented by imports of tapioca starch and flour to meet the growing demand for snack foods and industrial uses.

In the developed countries, although utilization of cassava for animal feed is expected to fall, particularly in the EC but also in other countries, cassava remained competitive vis-a vis other feed ingredients during the first nine months of 1995.

LOWER CASSAVA TRADE IN 1995

In 1995, world trade in dry cassava products is expected to continue its downward trend established over the last few years. It is currently forecast to fall to 5.8 million tons ( 14.5 million tons in fresh root equivalent ), or 16 percent below the previous year's volume. This marked decline reflects reduced shipments to the EC and affects largely chips and pellets for feed, in which the bulk of the international trade takes place. Starch and flour for food and industrial uses, accounting for an estimated 17 percent of world trade, is expected to reach one million tons in 1995, up by 8 percent from last year.

Contributing factors for the anticipated sharp fall in world trade in 1995, include: a) the effects of the reform of the EC's Common Agriculture Policy (CAP), which inter alia intends to bring the Community's domestic grain prices closer to world market levels; b) the high freight rates which raised prices on the EC markets by U.S.$ 17-18 per ton; c) tight domestic supplies in major exporting countries and d) high domestic tapioca prices in exporting countries.

Imports into the EC in 1995 are forecast to fall by 37 percent to 3.4 million tons, versus 5.4 million tons in 1994. This mainly reflects reduced shipments from Thailand due to a poor crop, a tight quota year under the four year trade import agreement with the Community and a sharp rise in domestic demand for tapioca starch and flour. As from 1st July 1995, the EC is committed to replace import variable levies by fixed rates as set in the Common Custom Tariff. Under the Uruguay Round Agreement, the earlier voluntary restraint arrangements provided for in the Cooperation Agreement between the EC and Thailand on imports of cassava and products, are replaced by a fixed annual quota 1/.

By contrast, imports by Japan are anticipated to increase, while New Zealand, the United States and Australia are expected to buy small quantities. More attractive price incentives granted to Thai exporters, which are also the main suppliers to non-EC markets, are expected to lead to a partial recovery of imports by this portion of the world market. Total 1995 purchases by non-EC countries are currently forecast at 2.4 million tons, or 60 percent above last year. A major increase in imports especially in the form of starch and flour, is expected to take place particularly in China, Indonesia and the Republic of Korea, but also in other countries such as Malaysia and the Philippines.

As in the past, Thailand and Indonesia continue to be the main suppliers to the world market, covering about 74 percent and 17 percent of global exports, respectively. However, total shipments from Thailand in 1995 are currently forecast at 4.3 million tons only, the smallest volume since 1979, and 23 percent less than last year. By contrast, foreign sales by Indonesia are expected to recover. Total exports in 1995, are currently forecast to reach one million tons, up 40 percent from last year. However, as a result of strong domestic demand and the quota allocation mechanism 2/, Indonesia is not expected to fulfil its quota of 866 000 tons per annum to the EC.

PRICES UP SHARPLY IN 1995

Cassava combined with protein-rich meals is a substitute of grains in animal feeding 3/. As a result, cassava prices are closely linked with domestic grain prices of cassava-importing countries. In July 1993, with the implementation of the first stage of the reform of the EC's Common Agriculture Policy (CAP), import prices for cassava pellets fell steeply (see graph). In January 1994, the average price, at U.S.$ 122 per ton, was almost U.S.$ 40 per ton or one-quarter lower than a year earlier. However, starting from the second half of 1994, cassava import prices in the Community recovered. Despite the increase to U.S.$ 164 per ton in January 1995, cassava regained its attractiveness as feed ingredient in the Community. Factors responsible for this development included: steadily rising domestic grain prices in the EC since the beginning of 1995 to well above intervention levels due to tight domestic and world supplies; lower soyabean meal import prices during the first six months of 1995, compared with the same period in the previous year; tight cassava supplies and high domestic prices among several exporters, including Thailand; and the weakening of the US dollar relative to currencies of the main cassava importers in the Community (see table). As a result, cassava quotations remained at high levels through July 1995 when the monthly average price for pellets reached U.S.$ 183 per ton f.o.b. Rotterdam, although they eased somewhat in the following two months. The July average was almost U.S.$ 36 per ton or one quarter higher than a year earlier. Nevertheless, prices of cassava/soyabean mixtures in the EC remained substantially lower than quotations for barley during the first 9 months of 1995.

 

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1/ Under the 1995-98 agreement, a total of 21 million tons of cassava pellets could be shipped from Thailand to the Community over a period of 4 years with customs duty at 6 percent ad valorem with an annual maximum quantity of 5.5 million tons in any one year. In addition, the import duty on tapioca flour will be reduced from 148 ECU to 95 ECU per ton and that on starch will also fall from 260 ECU to 166 ECU per ton by the year 2000.

2/ Under the "bonus quota mechanism" Indonesian exporters were eligible, in 1995, to ship up to 2.6 tons to the EC for each ton exported to non-EC countries.

3/ To substitute for grains in animal feed rations cassava pellets need to be supplemented with protein meals (e.g. a mixture made of 80 percent cassava pellets and 20 percent soyabean meal).

PRODUCTION AND TRADE OUTLOOK FOR 1996 UNCERTAIN

Preliminary indications for global cassava production next year point to some recovery in Asia. Early expectations suggest that traditional plant material in the main exporting countries will be gradually replaced by new, higher-yielding varieties with a high starch content suitable for processing to meet the rising demand for tapioca products domestically and abroad. In Thailand for instance, farmers are encouraged to switch from traditional roots to the higher-yielding strain KU 50 under the Eighth National Economic and Social Plan. Expectations of higher export returns from value-added sales of starch, flour and other products, may even prompt a larger shift to higher-yielding varieties than currently expected. The tapioca flour industry is well poised to play an important role in the future because of the renewed favourable outlook for expanded exports. In Africa, plantings and output could increase particularly in some countries where producers are expected to react to higher domestic cassava prices and cereal import prices. Moreover, the ongoing diffusion of recently introduced high-yielding and pest-resistant varieties may likewise contribute to bring production in several countries back, at least to 1993 levels. An increase might also occur in Latin America and the Caribbean in line with traditional production growth rates.

The size of world cassava trade in 1996 will depend on various factors, primarily the price developments for grains and soyabeans in the EC but also the effects of the enlargement of the Community and the availability of supplies in major exporting countries. However, the reduction of the set-aside area for cereals in the Community to 10 percent for the 1996/97 crop year, is expected to stimulate production and could result in a fall of domestic grain prices. This in turn would exert downward pressure on quotations for alternative feedstuffs, including cassava chips and pellets.


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