FAO/GIEWS - Food Outlook No.3 - June 2001 p. 9

Cassava

Global cassava production rises by one percent

World cassava production is estimated to have risen by about 3 million tonnes, or 2 percent, in 2000, reaching 175.5 million tonnes, slightly more than originally forecast in November. The year-to-year increase was concentrated in Latin America and the Caribbean, while output stagnated in Africa and Asia.

World Cassava Production 1/

In Asia, cassava production slightly fell from 50.9 million tonnes in 1999 to 50.5 million tonnes in 2000, reflecting a small contraction in Indonesia and Thailand. In the latter country, weak international demand for cassava products depressed prices to a record low, encouraging farmers to divert land from cassava to maize and sugar cane. However, large intervention purchases of cassava pellets and flour by the Government helped contain the contraction in plantings to 1.3 percent, while a greater usage of improved varieties boosted yields by 0.8 percent. The net effect was a fall in output of half a percentage point only. In Indonesia, the contraction was more pronounced at 4 percent, as bumper crops and falling prices of rice, which competes directly with cassava in human consumption, depressed domestic demand for cassava products and plantings. By contrast, output was up by 13 percent in Vietnam, while India recorded a 2 percent increase, sustained by growth in Tamil Nadu and Andhra Pradesh. Little change was observed in the rest of the region.

Latin America and the Caribbean provided much of the momentum to global cassava production in 2000. With output estimated at 32.1 million tonnes, the region recorded a 10 percent annual growth compared with 1999, even faster than the 7 percent witnessed in the previous year. Most of the increase reflected a 12 percent expansion in Brazil, which accounts for about 70 percent of the region's output. Higher cassava market prices since 1998 in the country have encouraged producers to modernize the sector and cassava area under irrigation is reportedly increasing, especially in the State of Sao Paolo. A 10 percent expansion in production was recorded in Colombia, supported by private sector initiatives to expand the domestic usage of cassava as feed. Growth in the Dominican Republic was even stronger at 34 percent, reflecting rising producer prices. Production expanded in several other countries in the region, including El Salvador, Nicaragua and Peru. By contrast, a very steep contraction was reported in Costa Rica.

Little change in global cassava utilization

Global cassava utilization is estimated to have risen by about 2 percent in 2000, very much in line with production, given the fact that cassava food reserves are mostly kept under the ground in the form of roots until they are needed and harvested. Proper cassava stocks are held only in relatively modest quantities and in dried form.

Cassava global utilization as food is put at 102 million tonnes in 2000, 2 million tonne more than in 1999, the bulk of which is consumed in Africa in the form of fresh roots and processed products such as gari, foufou, attiéké, etc.. Global cassava utilization as feed is estimated to have remained of the order of 34 million tonnes, most of which concentrated in Latin America and the Caribbean and in the EC.

In Africa, food cassava consumption is estimated to have remained at about 63 million tonnes in 2000. Large production gains supported increases in cassava food availabilities in Uganda. On the other hand, those countries that experienced a contraction in production following climatic or civil strife problems recorded a marked fall in cassava food consumption, especially Mozambique, Tanzania and the Democratic Republic of Congo. The rural population, who relies to a larger extent on the crop for subsistence, was the most affected. However, in Nigeria, Ghana and Rwanda, urban dwellers were also reported to have faced substantial increases in the prices of processed cassava products. In Asia, cassava utilization as food is estimated to have risen marginally to some 28 million tonnes. Strong increases took place in Cambodia, following substantial gains in production, but also in India. By contrast, in Indonesia, large supplies and low prices of alternative foods, in particular rice, are deemed to have resulted in a contraction in cassava utilization as food and its diversion to feed and other forms of utilization. Increased imports of cassava starch and pellets were indicative of a growing industrial utilization of cassava by the Republic of Korea and Turkey. In Latin America and the Caribbean, the expansion in production is estimated to have boosted cassava utilization for both food and feed, especially in Brazil and Colombia. By contrast, utilization by the developed countries declined by about 11 percent, reflecting mainly developments in the EC. The drop in consumption by member countries was mainly caused by falling domestic grain prices, following a 7.5 percent reduction in intervention prices, and the weakening of the Euro relative to the U.S. dollar, which encouraged a substitution of locally produced grains for alternative imported feedstuffs, including cassava, in compound feed production.

World cassava trade larger in 2000

International trade in dry cassava (also called tapioca) products is estimated to have risen by 4 percent to 7.1 million tonnes (in cassava pellet equivalent) in 2000. The increase reflects a 37 percent expansion in the volume traded in the form of flour and starch, to 2.6 million tonnes (1.3 million tonnes in product weight) while trade in chips and pellets fell by 9 percent to 4.5 million tonnes.

The EC remains the major world cassava market, importing in prevalence cassava pellets for its feed industry under a preferential quota system subject to low import duties. In 2000, demand for cassava products fell among member countries, especially the Netherlands, reflecting the disruption to the livestock sector caused by animal disease problems, but also the loss of competitiveness of cassava feed products vis-à-vis domestically produced grains. The decline was more than compensated by larger purchases by countries in the Far East, mainly of cassava starch and flour, that were stimulated by an 8 percent dip in world prices. In the region, China maintained its imports at around one million tonnes, but Indonesia raised them more than five fold to half a million tonnes. Increased purchases were also made by Japan, the Republic of Korea, Malaysia and Singapore.

World Trade in Cassava 1/

Although the major cassava producers are located in Africa and Latin America and the Caribbean, countries in those regions have failed to gain a significant share of the world international cassava market, mainly because of their high production costs and the difficulty they face in maintaining a regular flow of quality supplies. Thailand continues to have a dominant position, with a share of over 90 percent of world exports. The other traditional cassava suppliers are Indonesia and China, though they have also become sizeable cassava importers in recent years. Falling quotations of pellets in the EC since the 1992 CAP reform have encouraged exporters to diversify their cassava markets, especially into the Far East. In 2000, exports from Thailand rose to 6.5 million tonnes, about 300 000 tonnes more than in 1999, sustained by larger shipments of cassava flour and starch to Asian countries. Similarly sales from Indonesia, which are mostly destinated to China and the Republic of Korea, are estimated to have risen by about 7 percent. By contrast, shipments from China, Viet Nam and the other minor exporters in Africa and Latin America and the Caribbean, were put at 200 000 tonnes, overall, unchanged from 1999.

Prices of Cassava, Soybean meal and Barley in the EC

International prices down during most of 2000

Average annual world prices for cassava pellets have been falling uninterruptedly since 1996. There was no reversal of that trend in 2000, and prices continued to drop, reflecting mainly the weakness of EC import demand and the downward pressure exercised by competitive grain pricing. A 25 percent strengthening in the prices of soybean meal, which is combined with dried cassava to reach nutritional properties similar to that of grains, also contributed to depress cassava quotations. Prices of cassava pellets exported into the EC averaged US $ 84 per tonne, 18 percent lower than in 1999 and the first year ever that pellet prices had fallen below the US$ 100 per tonne benchmark. Similarly, prices of cassava starch and flour, which are mainly traded within Asia, fell by 8 percent to US$ 158 per tonne in 2000.

Outlook for 2001

Preliminary forecasts for global cassava production in 2001 remain subdued, as world production is anticipated to slide to around 174 million tonnes. In Africa, output is forecast to fall, mainly reflecting a contraction of 2.5 million tonnes in the Democratic Republic of Congo and of 600 000 tonnes in Tanzania. In the two countries outbreaks of Mosaic Virus Disease are jeopardizing the crop. Moreover, the disease is reportedly spreading to Burundi and Rwanda. In this country, the outbreaks are aggravating problems arising from planting material shortages and drought. A smaller output is also anticipated in Mozambique due to recurring flood problems. By contrast, output could expand in Nigeria, where good growing conditions have been reported, while in Kenya the sector is anticipated to recover from the effects of last year's drought. Output is also forecast to increase in Angola, the Central African Republic, Ghana, Liberia and Madagascar, albeit only modestly. Cassava production in Asia is expected to decline as low domestic and export prices may encourage a diversion out of the crop, especially in Thailand and Indonesia. By contrast, the expansion in Latin America and the Caribbean is likely to linger into 2001, sustained by further gains in Brazil.

Cassava and Cassava Products Prices in Thailand

Preliminary prospects for cassava trade in 2001 point to an 8 percent contraction to 6.5 million tonnes, based on the expectation of a further drop in import demand in the EC. From January to mid-May 2001, the EC Commission had only released import certificates for an amount of 1.3 million tonnes of cassava chips and pellets, about one million tonnes less than in the corresponding period in 2000. Since this slow start was mainly the result of uncertainties and disruptions in livestock markets caused by the occurrence of BSE and foot-and-mouth diseases, EC import demand might pick up later during the year, as the situation stabilizes. Nonetheless, on an annual basis, purchases by the EC are forecast to fall in 2000, consistent with the expected contraction in meat production and the second 7.5 percent planned reduction in grain intervention prices as of July. By contrast, imports of cassava by Asian countries could be boosted by low international prices for both flour and pellets. The brunt of the trade contraction will mainly be borne by Thailand, whose exports are forecast to fall to 6 million tonnes. The country is anticipated to diversify its cassava markets further during the course of the year, especially as the Government has intensified its efforts to secure an outlet for stocks kept by the Public Warehouse organization, following large intervention purchases made since October last year. Such efforts were already evidenced by the sale of about 500 000 tonnes of pellets to China early in 2001.

International prices of cassava pellets exported to EC recovered somewhat during the first few months of 2001 compared with the levels prevailing in the last quarter of 2000. Such tendency reflected mainly the purchases made in Thailand by the public intervention agencies to sustain the markets, but declining prices of soybean meal in February and March also contributed to the firming of cassava pellet prices. However, prices could resume their downward trend in the forthcoming months, especially if grain prices remain under pressure. Large exportable availability in Thailand is also likely to keep cassava prices from recovering in the other world markets.