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IV.1 Supply

World cassava production is projected to maintain a two percent annual growth between 1994* and 2005, rising to 208 million tonnes in root equivalent (Annex Table 1). The rate of expansion is anticipated to be of the order of 3 percent in Africa, while it is likely to be more modest in Latin America and the Caribbean and in Asia, at 1 percent. Compared with the previous decade, growth in yields is anticipated to rebound, reflecting the wider uses of improved varieties by farmers (Annex Table 2).

In Africa, output is expected to reach 114 million tonnes in 2005, up from 83 million tonnes in 1994*, with the bulk of the increase accruing in the major producing countries, in particular Ghana and Nigeria. The expansion should rely almost equally on increased plantings and on yield improvements. In Latin America and the Caribbean, total output is projected to expand at an annual growth rate of 1.3 percent to 36 million tonnes in 2005, with higher rates expected in Argentina, Brazil, Colombia and Paraguay. Like in Africa, the sector should benefit both from an increase in area and yields. Production in Asia is projected to rise by 1.3 per year to 58 million tonnes, supported mainly by productivity gains following the adoption of high-yielding and disease resistant varieties, integrated pest management and soil and conservation techniques. In Thailand, the adoption of improved cassava strains is expected to boost productivity in the medium term. Similarly, in Vietnam, the shift from traditional to high-yielding varieties should help reverse the contraction in yields observed in the past decade.

IV.2 Utilization

Cassava utilization in the year 2005 is anticipated to follow closely production patterns. Indeed, international trade in cassava products is projected to remain small relative to output and to engage only few countries. In addition, stocks in dry cassava should continue to be rather small given practice of keeping the root stored in the ground. Total utilization is projected to grow at 2.2 percent annually, from 162 million tonnes to 208 million tonnes (see Annex Table 3), with food consumption representing about 59 percent of the total. The shares of feed and other uses, including waste, are projected at 22 percent and 19 percent of total availability respectively, i.e. slightly less than in the previous decades.

I. Food

Cassava food consumption is projected to rise from 96 million tonnes En the base period to 122 million tonnes by the year 2005 (Annex Table 3), sustained mainly by growth in the developing countries, especially Africa. On a per caput basis, cassava consumption is projected to rise from 17.2 kg in 1994* to 19.0 kg in 2005. Africa's expansion in aggregate consumption should respond mainly to the rise in population, since growth in per caput levels is anticipated to be modest. Nonetheless, per caput food availability is anticipated to rise by 4 kg over the period, underpinned by a positive income effect that more than offsets the negative influence of urbanization. In Latin America and the Caribbean, cassava food utilization is expected to follow closely the change in population as per caput consumption is anticipated to change little. In Asia, food utilization is projected to rise by 1 percent a year. However, on a per caput basis, consumption Is projected stabilize around 6.6 kg, which would imply a reversal from the falling trend recorded in the previous decade (Annex, Table 6). This new tendency should be associated with the increased availability on the market of processed cassava products, such as dehydrated chips, flakes, flours, meals, snack foods, cake mixes, bread cookies, ice creams or beer.

ii. Feed

Overall, growth in cassava utilization as feed is expected to rebound to an annual rate of 1.6 percent, to 46 million tonnes, up from 0.9 percent in the preceding period (Annex Table 4). Among the developed countries, EC's feed utilization is likely to stabilize around the levels recorded in 1994*, which would be substantially below 1984*. Cassava usage by the other developed countries is anticipated to remain very limited. In the developing countries, feed demand is projected to grow at a slower rate than in the 1980's. Feed utilization is projected to be concentrated in Nigeria, Brazil and China. In the case of China, major efforts are currently being made to support the feed Industry and to improve the utilization of local feed resources, including cassava and potatoes. In the other producing countries, a fast expansion of the domestic livestock sector is anticipated to boost the demand for cassava as feed, although the quantities absorbed by the animal sector are likely to remain small. Although cassava has a large and untapped potential as an energy feedstuff, cassava feed demand in the future will depend mostly on the relationship between the prices of cassava combined with protein meals and feed grains.

iii. Post-harvest losses and other uses

Cassava utilization other than for food or feed includes post-harvest losses, which in the base period accounted globally for 19 percent of production, and industrial uses. The share of cassava waste was much smaller for Latin America and the Caribbean and for Asia, at 10 percent and 8 percent respectively, while it was of the order of 29 percent in Africa. Success in controlling diseases, together with improved marketing practices in the latter region, should help reduce the share of waste in Africa to 16 percent. In Latin America and the Caribbean and in Asia, little change is anticipated as the percentage of post-harvest losses in production for cassava is already low and only slightly above that for cereals. Thus, waste at the world level is projected at 26 million tonnes in 2005, or 13 percent of production.

Cassava utilization for other uses, including utilization in the manufacturing of paper, cardboard, glues, textile, resins, composite woods, Pharmaceuticals, alcohol, dextrin, etc., is estimated to grow from 5.9 million tonnes in 1994* to 12.9 million tonnes in 2005 in root equivalent, or 13 percent per year. Such an expansion would be driven by a dynamic growth in demand, especially in Asia, which is expected to account for more than 60 percent of total cassava industrial utilization. A more modest expansion is anticipated in Latin America and the Caribbean, supported by ongoing Government programmes to promote cassava market diversification. Industrial utilization in Africa is expected to record a strong expansion, albeit from very low levels. Thus, although it may arise as a major growth market in the medium term, the industrial use of cassava is likely to remain of secondary importance, after feed use. Industrial demand for cassava in the region may nonetheless play an important role in enhancing producer and processor cash earnings and in generating foreign exchange savings as cassava starch substitutes for alternative imported products.

IV.3 International Trade

World net trade18 in cassava products is projected to increase by 1.6 percent between 1994* and 2005 to 5.7 million tonnes, in dry weight equivalent, as the reduction in imports tariff following the 1994 URA Agreement is expected to enhance cassava trade only modestly. Although chips and pellets for feed are likely to remain the leading cassava traded product, international flows in cassava flour, starch and other high value-added cassava products are likely to intensify the most.

18 International trade In cassava products to the year 2005 was derived as the difference between projected production and utilization. It therefore provides an estimate of net Imports in root equivalent. The net trade approach Implies that the size of the transactions is underestimated.

On the demand side, net imports by the developed countries are anticipated to record only a marginal increase, from 3.9 million tonnes to 4.0 million tonnes. The EC should remain the most important cassava market. However, shipments there are likely to stay well below the quantities allowed for import under preferential conditions as the tendency for domestic grain prices to fall is envisaged to persist following the launching of the Agenda 2000 reform. Among the other developed countries, Japan should remain an important market for cassava products, especially for flours and starch. Imports by the developing countries are projected to provide the main momentum to trade by 2005. India, Malaysia, Pakistan, Colombia, Cuba, Paraguay, Peru and Venezuela are all anticipated to step up their purchases of cassava chips and flours, which they are likely to source from neighbouring countries.

Thailand is anticipated to remain the leading exporter of cassava products, followed well behind by Indonesia and by other small suppliers, including Ghana, Nigeria, Brazil, Colombia and Venezuela.

Trade projections have taken into consideration the likely decline of intervention prices for grains in the EC. In the 1998/99 season, intervention prices were set at 119.19 ECU/tonne, or US$ 132/tonnes19, compared with a domestic market prices of US$ 145 for barley. Under the Agenda 2000 CAP reform, the EC grain intervention prices are scheduled to be cut by 15 percent by 2001/02 to some Euro 100 per tonne20. Assuming market grain prices fall close to that level by 2005, or US$ 111 per tonne using the 1998/99 average exchange rate, cassava pellets prices would need to fall from the current US$ 102 to US$ 75 /tonne21 in order to remain competitive. Given reported marketing margins in Thailand, prices at the farm would fall to some US$ 37 per tonne for dry cassava pellets, or less than US$ 15 per tonne in root equivalent (or Baht 600 per tonne22, at an exchange rate of Baht 40 per US$ prevailing in September 1999, (see explanatory note).

19At the exchange rate prevailing in December 1997.

20In two equal installments of 7.5 percent In 2000/01 and 2001/02.

21To reach this level, it was assumed that one tonne made of 80 percent cassava pellets and 20 percent soybean meal is used as a substitute for one tonne of barley. Soybean meal prices were also assumed to remain constant at the 1996–98 average.

22 Average root prices in Thailand in 1998 and 1999 were respectively 1,785 and 1,027 baht per tonne, equivalent to US 46.5 and US$ 26.2 per tonne substantially above the prospected prices under the CAP reform scenario.

Production costs of cassava roots in Thailand have been reported to vary from Baht 550–650 per tonne for old strains (US$ 14 to 16 per tonne23) and from Baht 350–450 per tonne (US$ 9 to 11 per tonne) for new strains. Thus, only the lowest-cost producers will find it profitable to produce cassava for export to the EU. The prospects for CAP reform could therefore seriously impair the future competitiveness of cassava as a feed ingredient in the EC and force cassava producers to look for alternative markets. In this connection, the development of niche markets for special cassava products is expected to instil additional dynamism to the sector, although this will depend to a large extent on a removal of the restrictions that hinder international trade, especially for starch products, in the form of high tariff and non-tariff barriers.

23using the exchange rate of baht 40 per US $ prevailing during most of 1999.

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