4
CASSAVA CHIPS

Global Perspectives

The Europeans demonstrated that given the correct price regime, cassava in the form of chips or pellets is a very useful animal feed ingredient. They demonstrated that cassava, mixed with protein rich ingredients and given the EU price regime, was an economical replacement for imported grains, primarily maize. This same situation may exist for cassava producing countries. As illustrated in the following table, there has been an increase in per capita maize imports from 1961 to 1995 (Table 35).

The greatest increase in maize imports has occurred for Latin America. Asia has also shown a marked increase in maize imports, although the average level of imports is about one-third that of Latin America. On a regional basis, the African countries have the lowest per capita import of maize. A partial explanation for these differences may be accounted for by the continental trends in urban growth and expanding livestock numbers.

The case for the growth in maize imports being related to the increase in livestock numbers is supported by an examination of the index of livestock numbers, particularly those for chickens (Table 36). One might argue that the growth in the Latin American livestock index does not justify the large maize imports. But examination of the individual country data shows that a large portion of the growth has occurred in Brazil, a country that has developed one of the most intensive poultry industries in the world. Hence, increased imports to Brazil reflect growth in livestock numbers and an intensification of feeding practices.

Applying simple time trends to these FAO data, suggest that the use of cassava as an animal feed looks promising. One cannot, however, put as much faith in these trends as one could for the human food market. In particular, the European trend is not expected^[8] to continue (Figure 9). Note that these figures are in fresh root equivalence not tonnes of cassava chips or pellets. The optimistic estimate is that the European market will stay at its present level, which is less than half the trend projection.

One anticipates that the upward trends for Africa and Asia could be realised. The rather flat Latin American trend is unexpected. As shown above, livestock numbers are growing in Latin America, leading one to anticipate a somewhat similar pattern in the growth in the use of cassava as an animal feed. Brazil's highly developed and large poultry industry has existed for some time. Perhaps this explains why there is limited additional growth in the animal feed sector in Latin America.

Placing an upper limit on the EU imports of cassava, but accepting the other growth trends, the market for cassava as an animal feed might grow by 6 million tonnes reaching 50 million tonnes fresh root equivalence by 2005. This is a greater figure than FAO's estimate that 40 million tonnes of cassava will be used as an animal feed^[9] (FAO 1997). Both the FAO report and this report agree that:

Although the potential for further expansion as a substitute for grains is considerable, it remains largely unexploited and much would depend on the relationship between the prices of cassava vis-à-vis protein meals and feed grains. Furthermore, there would need to be an expansion of processing facilities in countries where supplies of cassava roots are abundant to meet any potential growth in domestic and export markets. (FAO 1997).

While there is some doubt about the future size of the global market for cassava as an animal feed, there is little doubt that this is a market that should be developed.

On the other hand, global reductions in agricultural protectionism suggest that world prices will increase, thereby improving the competitive position of cassava domestically. In addition, many cassava-producing countries are expected to experience a growth in intensive livestock rearing.

Intensive livestock production will undoubtedly place greater reliance on the use of compound animal feeds, which can include cassava as an ingredient. As an estimate of the import substitution opportunities for the use of cassava in animal feeds, it is assumed cassava chips or pellets can replace 10 percent of maize imports at a ratio 2.5:1.

It can be seen from Table 37 that the market expansion opportunities for cassava as a substitute for maize is less than the import substitution opportunities for wheat flour imports. The average price of maize imports shows slightly less variability than the import price of wheat flour. This is probably because wheat and wheat flour imports cover a range of quality levels. Maize imports are probably of a more consistent quality. (Unfortunately data to confirm or refute this possibility are not readily available). The maize import price sets a target price for cassava chips and pellets. Given the assumption of a 2.5:1 ratio of cassava roots to maize, the target price for cassava roots plus processing ranges from US$58.00 to US$75.00 per tonne: Thus the target price for cassava whether used to replace wheat, wheat flour or maize is roughly the same. It is probable that the quality standards and processing cost are higher for cassava that substitutes for wheat and wheat flour than for cassava that substitute for maize.

At the national level, at least 13 countries appear to have the opportunity to expand the demand for cassava by more than 20 percent if they realise the potential for using cassava as an animal feed ingredient, Table 38. Demand potential for cassava exists in Latin America but both Malaysia and China would appear to have an opportunity to create large cassava-based animal feed industry.

The FAO study identifies Brazil, China and Nigeria as potentially the largest users of cassava as an animal feed by the year 2005 (FAO 1997). Interestingly Nigeria does not appear to be one of the large potential markets for using cassava as an animal feed in this study. This is because the analysis is based on import substitution opportunities and not directly on the growth potential of national livestock industries. Nigeria has basically banned the import of maize and wheat into the country; therefore a different type of analysis is needed to provide a more reliable analysis of the opportunities in Nigeria. This may also be true for other countries in the analysis

It would seem that the animal feed markets in cassava producing countries are a promising growth market. The discouraging feature is that the market has only been growing by 1.3 percent a year (FAO,1997). As indicated in Figure 9, the fastest growth appears to be occurring in Southeast Asia (also refer to the Thai Case Study, Chapter 7). However, given the previously noted growth in livestock numbers (pigs 4.5% annually and chickens 7% annually) and importation of maize (greater than 15 percent a year), one would have expected a faster growth rate in the domestic use of cassava for animal feed.

The above analysis suggests that the domestic use of cassava as an animal feed should be a growth opportunity. This growth is partially dependent on a number of factors. One, availability of a more intensive livestock industry that uses prepared animal feeds. Two, a feed compounding industry that is willing to use cassava. Three, a constant supply of competitively priced cassava coupled with a constant supply of protein rich feed ingredients and four, an infrastructure that links cassava producers to animal feed compounders.

Exploring the use of cassava in the feed sector in Zimbabwe

Currently cassava is not widely grown in Zimbabwe. However, a feasibility study in Zimbabwe carried out by the Natural Resources Institute in collaboration with the Commonwealth Science Council (CSC) during 1993 indicated considerable potential for cassava (Kleih 1994). Farmers expressed interest in cassava as a food security and possible commercial crop, on the basis that it is drought tolerant and could be grown on marginal lands with low levels of inputs. The study in Zimbabwe indicated that the marketing of dry cassava to the animal feed sector was the most attractive option in the short to medium term.

In 1993 three major feed millers expressed strong interest in cassava as a substitute for maize if cassava chips could be produced for less than the cost of maize at US$151 per tonne. These millers provided estimates of likely demand for dry chips (Table 39). Economic predictions indicated that farmers could grow cassava and prepare dry chips for sale at US$80 per tonne profitably if certain conditions could be met. Estimates were made on the basis of farmers achieving a yield of 15 tonnes of roots per hectare. If this figure was achieved, farmers could produce cassava chips on farm (using simple equipment) for sale at US$80 per tonne. At this price the net income per farmer from 1 hectare of cassava would be US$181 or US$1.53 per labour day.

In 1993 the potential for chip production looked positive and recommendations were made for a project to promote cassava production and processing with the intention of involving 1 000 farmers in the production of 500 hectares of cassava within 4 years. Given a yield of 15 tonnes of roots per hectare, 500 hectares would provide 7 500 tonnes of fresh roots or 2 777 tonnes of dry chips (conversion factor = 2.7).

However, in 1997 Triangle Ltd. indicated that the demand for cassava had fallen owing to macroeconomic problems affecting the livestock feed industry. Triangle revised their original estimate of 2 000 tonnes of dry chips per annum down to between 20 and 200 tonnes of dry chips per annum (Kleih 1998). The reduction in demand for cassava appeared to be related to changes in agricultural policy involving land redistribution, high inflation and generally poor economic performance. In spite of the less positive environment for cassava, cassava was still considered to have a potential for development because of large differences in price for cassava and maize.

The evaluation of processing options for cassava chips included both field-based and centralized processing. Recommendations were made to promote a simple field-based technique on the basis of cost versus return-on-investment for the pilot project.

The analysis did suggest that centralized processing might become an option in the future if a cassava-based economy was established in Zimbabwe. The field-based option consists of chipping washed cassava roots with a manual chipper and then drying chips on cement drying floors.

One of the feed millers in Zimbabwe provided a specification for cassava chips for use in livestock feed (Table 40). It is interesting to note that no mention of cyanide or general chip quality is made; this indicates that feed millers in Zimbabwe are generally unfamiliar with cassava as a feed ingredient.

This opportunity has been influenced by the existence of marginal land areas within 100 km of major feed millers with reasonable road access that are currently under-utilised. Farmers are keen to adopt a crop that is drought tolerant and can improve the economic returns from these lands.

The recommendations of the evaluation project were that field-based processing of' cassava would be more suitable in marginal areas of Zimbabwe, and that the chips should be sold directly to livestock feed millers or used in feed formulations by farmers' co-operative groups.

Constraints

The likely physical bottlenecks that could hinder exploitation of this opportunity are as follows (Kleih, 1994; Kleih, 1998):

Biennial cropping system. Due to the long dry season in the marginal areas, cassava is likely to be a biennial crop in Zimbabwe with harvest taking place 18 months after planting. This will affect cash flow during the early stages of the project, and it also requires farmers to use staggered planting techniques to ensure a reliable supply of cassava.

Encroachment by wild and domestic animals. During the dry season, unwanted grazing by wild and domestic animals is likely to be a serious problem thus introducing the need for goat proof fencing that increases costs and requires additional maintenance.

Access to draught power. In marginal areas many farmers do not own draught animals for land preparation and would be forced to rely on hired animals, which introduces an additional cost element.

Access to sufficient planting material. The current project proposes 500 hectares of cassava within 4 years, but currently available stocks of planting material in Zimbabwe are only sufficient for 50 hectares. To produce enough planting material in a short space of time, 200 hectares of land would be required and 2 million cassava cuttings at an approximate cost of US$30 000.

Yields. The predictions made by the project rely on a projected yield of 15 tonnes of fresh roots per hectare of cassava. This is a moderate yield for a research station and can be achieved by farmers using the correct levels of inputs and good agricultural practice. However, yields in many African countries are much lower, ranging from 4-5 tonnes per hectare to 10-12 tonnes per hectare. Low yields could adversely affect the economic viability of production.

Transport. Most of the areas selected by the project for promotion as cassava growing areas have reasonable road links to feed millers; access to transport in the field is poor with many farmers relying on head loading.

Extension support. To realise this opportunity farmers who are unfamiliar with cassava will need a high level of support from the extension services. However, in Zimbabwe the extension services are likely to have little experience of cassava, which could present a problem.

The principle economic determinant affecting this opportunity is the raw material price. Maize is a relatively expensive commodity at US$152 per tonne. Cassava, which is drought tolerant, offers the potential for a cheaper locally produced alternative to maize. If the predictions of 15 tonnes/ha can be realised, cassava chips would sell for US$80 per tonne, thus saving the feed miller 48% when compared to the cost of maize.

To establish a cassava-based economy in Zimbabwe, Kleih proposed a 4-year pilot project at a total cost of US$475 000 (Kleih 1998). In addition to this, individual farmers' groups (7 farmers per group) would require loans of approximately US$500 to cover the cost of investment in a manual chipper, concrete drying floor and various minor tools. This cost could be reduced if farmers used simple drying racks and plastic sheets in place of concrete floors.

The likely economic bottlenecks affecting successful exploitation of this opportunity are as follows:

Yield and sale price of cassava chips. It is estimated that farmers could make a profit from cassava chip production if yields are around 15 tonnes of roots per hectare and the chip price is at least US$80 per tonne (ibid). A sensitivity analysis indicates that cassava chip processing would become non-viable if yields went below 12 tonnes of roots per hectare or the chip price went below US$74 per tonne (ibid). The price of chips in Zimbabwe is difficult to predict but it does seem likely that yields could fall below 12 tonnes per hectare for many reasons.

Access to credit and negative cash flow. According to the project proposal, farmers will experience a highly negative cash flow in the first year of operation that would continue into the second year. This cash flow problem results from the biennial nature of the cassava crop in Zimbabwe and the requirement for a relatively high level of initial capital investment (ibid). To overcome this difficulty, farmers will require access to credit that does not need to be repaid in the first three years of operation; this could prove difficult, as potential financiers are likely to be reticent about investing in an untried commodity.

Demand for cassava in livestock feed. Macroeconomic problems in Zimbabwe have adversely affected demand for livestock feed and have reduced the potential for development of a cassava-based economy in the country.

To develop this opportunity, the extension services and NGOs would have to play a vital role in raising public awareness of the potential of cassava. They would also play a role in providing training and technical support for farmers on production and processing of cassava. International institutes with regional centres such as IITA could play a vital role in providing and building up stocks of high quality planting material. Financial institutions would have to be identified that could provide the necessary level of credit to enable farmers to exploit this opportunity. The feed millers through the market system would have an important role in providing access for the farmers to the feed market. As with other examples in other countries, it would probably be the miller that would need to establish a system for getting the chips to the factory and maintaining quality standards.

To realise this opportunity a number of critical factors must be dealt with, these are:

Training: Training must be provided to extension personnel in aspects of cassava production, processing and utilisation in livestock feed. Such training would enable them to support farmers and feed millers wishing to exploit this opportunity.

Supply: A sufficient supply of high quality planting material is required to enable cassava to be established in Zimbabwe.

A market: A stable market for cassava must exist in Zimbabwe so as to provide an outlet for the farmer's product. Current downward trends in the demand for livestock feed could make investment risky.

Farm credit: A system of rural credit is required to enable farmers to invest in cassava production and processing and to cover the initial period of one to two years when cash flow is likely to be negative. It would be useful if initial planting material could be provided without cost to farmers to encourage planting of cassava on marginal lands. Cassava's potential contribution to food security could provide a justification for this approach.

Access and price: Areas for promotion of cassava must be selected with care to ensure that farmers have easy access to potential markets, and that these markets will use cassava, if available, at a price that is favourable to both the producer and user.

Cassava should be an attractive raw material for livestock feed because of its drought tolerance,and its ability to grow in marginal soils whilst giving relatively high yields for low levels of inputs. Secondly, it is a fact that with cassava, only a minimal level of processing is required to produce a value-added product. Another important factor is that the use of cassava would free up domestic maize, typically white maize, for the domestic food market where it is a more valued commodity. Cassava, as an animal feed ingredient, has a competitive advantage over imported maize, which is more expensive than domestic maize.

To be successful in Zimbabwe, where there is no history of growing cassava, a high level of external support is required over a period of 5-10 years to ensure that cassava has a chance to become established within the country.

Although focussed on Zimbabwe the issues raised are applicable to other countries in other agro-ecologies.

Exploring the opportunities of a cassava chip industry in Northeast Brazil

The Ceará project

This case study discusses the implications in the establishment of a cassava chip industry in Northeast Brazil. The case study is based on the recently completed adoption and impact assess-ment of the cassava chipping and drying project in the state of Ceará (Ospina et al. 1998). The Ceará project was an outgrowth of CIAT's (International Centre of Tropical Agriculture) Integrated Cassava Research and Development (ICRD) project. The CIAT approach has been used in several Latin American countries to develop new market opportunities for cassava farmers. It is based primarily on the assumption that farmers are motivated to explore new marketing channels but require new and improved production technologies. The implementation of this strategy required cassava farmers' associations and co-operatives to establish and operate small-scale agro-industries to process dried cassava chips. These chips would then be used in the animal feed industry as a partial cereal substitute.

The Ceará integrated research and development project demonstrated that the introduction of cassava chip drying technology could expand cassava markets and become a viable strategy to increase farmers' income and employment; thus improving their overall well being.

The production of cassava in Ceará State is enough to guarantee the successful operation of a dry cassava agro-industry (Table 4.7). As shown in the Table, nearly 65% of the cassava harvest is devoted to flour production ("farinha"). This could be attributed to the fact that cassava flour is a very important staple in the diet of northeast Brazilian people "Nordestinos". Farinha is an integral part of traditional culture and its consumption is constant or perhaps even increasing. The introduction of a dry cassava chip market would have to respect this established use of cassava and not attempt to compete with the cassava flour market. Instead the introduction of the dry cassava chip market would have to complement the current cassava flour market by providing farmers an additional market outlet. Therefore, the dry chip market may be based initially only on the remaining 5% of cassava production that is not traditionally processed into cassava flour.

According to the figures in Table 41, about 200 000 tonnes of cassava roots in the State of Ceará could be used for dry cassava chips. However there are two considerations about these numbers^[10]. First, they are based on an estimated productivity of 8.5 tonnes per hectare in the North. But field observations in Ceará State over several years indicate that the actual productivity of small-scale cassava farmers in the region is lower, and stand at about 5.5 tonnes/ha. Ceará State farmers do not use any fertilizer and do not plant 10 000 plants per ha. They also use poor quality planting material and practice limited weed control. Second, a high percentage of cassava producers in Ceará State are sharecroppers or renters. But it is known that landowners, and not sharecroppers, control the final destination of crop production. In many cases, the sharecroppers or renters are required by the landowners to process their cassava crop into farinha at the landowners processing plant. This is a very serious constraint to the introduction of a dry cassava industry in Ceará State.

Table 41: Annual production and estimated uses of cassava in some regions of Brazil

Source: CONAB, 1997. Indicadores da Agropecuaria. Companhia Nacional de Abastecimento. Ano VII No. 4, 1998.
* Average yield: Ceará 8.5t/ha; Northeast l 0t/ha; North 13 t/ha.
** Hco. Human consumption.

Another potential problem associated with the introduction of a dry cassava chip market in Ceará is the land tenure system. It is assumed that 50% of current cassava production could potentially be used for the chip industry. At a 2.5 conversion coefficient, the annual production of dried cassava chips could be 476 000 tonnes in Ceará, 200 000 tonnes in the Northeast and 104 000 tonnes in the north.

According to Islabao, (1990) the basic raw materials for feed formulation in Brazil are corn and soybean meal with levels of 60 to 90% for corn and 10 to 40% for soybean meal. Corn and soybean meal are primarily produced in the south and centre-west states of Brazil, which results in high transportation costs for feed users in the north and northeast. Therefore lower priced cassava chips at US$130 per tonne may be an attractive alternative in these regions as a partial substitute for other feed components, such as corn.

Constraints and the "Bank of the land" programme

The factors that constrain the development of a cassava chip industry in Ceará are a lack of working capital, low cassava production surpluses and land tenure problem. The most difficult problem to resolve is the land tenure problem. Without ownership of the land, cassava farmers have to make agreements with the owners just to produce enough flour for their own consumption. As a result, there is no surplus production to sell to drying plants. In addition, lack of working capital does not permit the purchase of cassava from farmers that are not members of the agro-industries.

One programme currently being implemented to address the land tenure constraint in Ceará is called "Bank of the Land" and operates with the World Bank and state funding. The programme encourages farmers' groups to organize themselves and identify pieces of land that are for sale. The group can then apply for a loan with soft interest rates and long-term payments period to purchase the land. In some cases some communities that have already started a cassava chip industry have used the programme to apply for loans to purchase land and have already began planting cassava.

According to the Ceará project, many farmers testified that the sale of dry cassava chips was difficult in the beginning; that markets were scattered and that farmers did not have the skills to operate the agro-industry efficiently. In addition, transportation was difficult owing to a lack of access to good roads and vehicles.

Another problem is that the typical dry cassava consumer is a small-scale cattte producer. During years of good rainfall, with abundant pastures, this consumer is less keen to buy cassava chips. Thus development of the dry cassava chip industry would benefit a growing number of large animal feeding units requiring large quantities of cassava chips.

The experience gained through several years of dry plant operations is critical in the creation of promotion programmes for the dry-cassava agro-industry. Plans and strategies have to be designed with the direct participation of cassava farmers' organizations. The promotion programmes require that farmers have access to enough land so that production for the operation of drying plants would be adequate. Furthermore, local and government agencies have to actively encourage farmers to develop new markets in close collaboration with private sector consumers.

Consumer demand for meat, milk, poultry, eggs, and chicken is expected to continue to increase. This increasing demand will place tremendous pressure on the availability of various raw materials, among them cereals. Since the production of corn is not feasible in many parts of the Northeast and because of high transportation costs, cassava production and drying is expected to be a viable alternative to many traditional raw materials. A major constraint remains if average yields of cassava are five tonnes per hectare. Hence a significant effort must to be made to reach the feasible goal of 20 t/ha given appropriate and available technology. If these conditions are met, cassava chips could be supplied at competitive prices and demand would surely increase creating a competitive cassava chip industry.

Currently many forces play a negative role in the development of a cassava chip industry in Northeast Brazil. Several strategies have been designed and implemented in an attempt to address these constraints but to date none have been successfully applied. There is great potential for cassava chip production but to date the programmes and conditions remain ineffective in the promotion of cassava production. In conclusion, the only way to create a competitive cassava chips industry will be to improve land tenure conditions and increase cassava yields by using appropriate technology for cassava production. This will create a production surplus that can be used for cassava chip production.

Cassava as an animal feed ingredient in Thailand

As a partial replacement of the shrinking export market for cassava chips and pellets, the Thai industry is exploring the possibility of increasing domestic utilization of chips and pellets in animal feeds.

Economic feasibility of using cassava chips in the feed ration

In terms of technical feasibility, studies have shown that adding high-protein content raw materials and mineral supplement into the ration can solve technical problems of using cassava chips products in feed rations. For feed compounders all the technical problems are, more or less, solved. However, at the farm level, especially the small holders, technical problems persist - regarding the availability of certain ingredients and the appropriate mixing of feed rations. The latter problem can be overcome by using the existing extension system, as well as the activities of the Thai Tapioca Development Institute, to provide farmer training on how to mix the correct ration for farm level feeding. Research has led to the identification of several successful cassava-high protein mixes that can be used as substitutes for maize, broken rice or sorghum. These mixes are: cassava chips or pellets mixed with soybean meal at 85 kg and 15 kg respectively; or chips and pellets mixed with fish meal at 89 kg and 11 kg respectively. The percentages of using chips or pellets in the ration are as shown in Table 42 (TTTA 1997).

Table 42: Percentage of cassava products in the feed ration

The economic feasibility of using cassava chips in the feed ration was tested by comparing the computed value of mixture between cassava and high-protein feed ingredient i.e. soybean meal and fish meal at an appropriate ratio with the price of corn or maize at Bangkok wholesale level. The monthly average Bangkok wholesale price of chips, soybean meal and fish meal were used to compute the value per tonne of cassava-soymeal (soybean meal) mixture at a ratio of 80:20 and 84:16, and the value of cassava-fishmeal mixture at a ratio of 89:11. Then the computed value was compared with the monthly average Bangkok wholesale price of corn per tonne (Figure 10).

Figure 10. Average monthly Bangkok wholesale price of corn and computed value per tonne of 80:20 mix of cassava chips and soybean meal.

The computed cost of a cassava-soymeal mixture at a ratio of 80: 20 was lower than the price of corn for only 69 months out of the total 180 months during the period 1983 to 1997. In other words, there were only 69 months that it was economically feasible or profitable to use cassava-soybean meal to substitute corn in the feed ration. When the ratio of mixture increased to 84:16, the period of economic profitability to use cassava-soybean meal mixture rose to 101 months. In both cases, the average price of chips in those months that the mixture was profitable was between 2,089 and 2,080 baht/tonne (approximately US$83/tonne)^[11] or between 38-52 percent of the corn price (4,066 -3,853 baht/tonne, approximately US$158/tonne). On the other hand, the price of soybean meal was between 8,973 to 8,979 baht/tonne, approximately US$359/tonne.

All these figures suggest that since 1994, it would have been economically feasible to use cassava chips in the feed ration (Figures 11 and 12).

Figure 11. Average monthly Bangkok wholesale price of corn and computed value per tonne of 84:16 mix of cassava chips and soybean meal.

Figure 12. Average monthly Bangkok wholesale price of corn and computed value per tonne of 80:20 mix of cassava chips and soybean meal.

The above-mentioned comparison between the computed value per tonne of cassava-fish meal at a ratio of 89:11 and corn price shows that in the period 1983-1997, there were only 41 months during which it was economically feasible to use the mixture to replace corn. During those months, the average price of chips was 2,436 baht/tonne, approximately US$97/tonne, or 23 percent of the average price of fish meal (15,416 baht/tonne, approximately US$616/tonne), while the average price of corn was 4,558 baht/tonne, approximately US$182/tonne. It is interesting to note that those economically feasible months began in 1994. The three scenarios show a pattern that started in 1994 where the value per tonne of cassava-soymeal and cassava-fishmeal mixtures were lower than the price of corn.

This was due partly to the price of corn, which increased from 2,892 baht/tonne in April 1994 to 4,510 baht/tonne in December 1997. It can be concluded, however, that based on the simple analysis of economic feasibility, at times it is economically profitable to use cassava mixture to replace corn in the domestic animal feed ration (Figure 10).

It is noteworthy that the cassava-soybean meal or fishmeal mixes have exhibited less price variability than the corn price. Feed compounders should find the above point a useful feature when using cassava and high-protein rich feed mixes in their rations.

Growth trends in the livestock sector

Growth trends in the livestock sector have been favourable. Statistics obtained from the Thai Animal Feed Producers' Association showed that during 1995-97, boiler, layer, aquaculture and dairy cows had the highest annual growth rates of 7.5,7.2,7.2 and 7.0 percent, respectively, while the growth rates for pigs was about 3 percent and for ducks, 5 percent.

The production of shrimps, which are the brackish water tiger prawn, decreased from 250 000 tonnes in 1995 to 180 000 tonnes in 1997. This was mainly owing to environmental problems created by the aquaculture of shrimp. In fact, shrimp growing will be limited eventually to restricted areas. The major concern is soil contamination owing to increased salination, especially in those areas where rice fields are being converted into ponds for growing shrimp.

In terms of economic factors, there has been a strong domestic demand for animal feed, which is a derived demand from the livestock industry. The major driving force behind the livestock industry expansion is the increasing export of boilers and shrimp. During 1980-1995, Thai exports of frozen chicken increased from 27 000 to 137 000 tonnes with an annual growth rate of 15 percent. More than 75 percent of the total was exported to Japan, while the rest were exported to Germany, the Netherlands, Singapore and Honk Kong Special Administrative Region, China. The success of the boiler industry and frozen chicken export is matched by the export of frozen shrimp. Frozen shrimp exports increased from 18 000 tonnes in 1980 to 161 000 tonnes in 1997 (an annual growth rate of 19 percent). The major markets are Japan, United State of America, EU, Singapore and Honk Kong Special Administrative Region, China.

As for the domestic market, there has been increasing demand for meat and seafood which, in turn, increased the demand for animal feed. This is owing to the increased income of Thai people and increased number of tourists in Thailand. In addition, the domestic agro-industry was able to expand in response to the increasing domestic and export demands. For example there are many processed meat and fishery product that are available in the domestic markets. These products were produced partly for export and partly to cater to domestic consumers' needs.

Constraints in the animal feed industry

The major problem faced by the animal feed industry is the shortage of high-protein feed ingredients. Imports of soybean meal increased from 191 000 tonnes in 1983 to 790 000 tonnes in 1996 (an annual growth rate of 13.7 percent). Another problem, which has a negative impact on growth, is the high sanitary and hygiene standards and regulations imposed on processed seafood, meat and meat product by the importing countries. Some of these regulations can be regarded as barriers to trade.

Currently, there are 51 animal-feed compounders with a total of more than 57 factories. All are registered as members of the Thai Animal Feed Producers Association. Although the total annual capacity of these factories is not available, annual production of animal feed is estimated at more than 10 million tonnes. Some of the big feed compounders utilize cassava chips and pellets as feed ingredients. However, the official data on cassava consumption is not known. The annual consumption of chips and pellets in compound feed production was estimated to be between 300 000-500 000 tonnes. Nevertheless, there are reasons to believe that annual consumption of chips and pellets is much higher than the estimated figure.

Chip and pellet exporters have been actively promoting the use of chips and pellets in the domestic animal feed ration through supporting research and seminars. A recent seminar revealed that one of the reasons that farmers do not use chips in the animal ration was a lack of knowledge. Currently, exporters have not yet fully integrated into the animal feed compounding industry. However, there is a possibility for exporters to produce some form of cassava-based animal feed to serve the local market.

The institutions involved in promoting the use of cassava product, as animal feed in the domestic market are very similar to those mentioned in the case study of modified starch. The Thai Animal Feed Producers Association and the various government agencies involved in animal feed and livestock promotion are more or less, working to find solutions to the major feed gain and high-protein feed ingredient problems. The Thai Tapioca Development Institute has also helped to promote and sponsor demonstrations on the use of cassava as a domestic animal feed.

The potential domestic utilisation of chips and pellets for selected animal feed were estimated using the average percentage of chips or pellets that can be mixed in the compound feed and the estimated annual feed production obtained from the Thai Animal Feed Producers Association. The total potential demand for chips in pig finisher feed was estimated at 1.1 million tonnes in 1997. The potential demand for other types of animal feed over the same period was: boiler feed (0.6 million tonnes), laying bird (0.3 million tonnes), pig breeding stock (0.2 million tonnes), and for dairy cows (0.18 million tonnes). The total potential demand for chips in the feed ration of these animals increased from 2.2 million tonnes in 1995 to 2.4 million tonnes in 1997 and it was projected to be at 3.2 million tonnes in 2002. It is worth pointing out that the estimated total potential demand for chips for animal feed in 1997 (2.4 millions tonnes), which represent about 24 percent of total compound feed production may be regarded as the maximum potential quantity demanded for the time being. However, the current total domestic demand for corn for feed is almost more than the total corn production (4.3 million tonnes; which means the price of corn will tend to remain at the high level. This would encourage feed compounders to use chips for substituting corn in the future (Table 43).

In general, cassava products are used in aquaculture feed. Cassava chips are mixed with other feed ingredients in the feed ration for the aquaculture of fish. The alpha star or pre-gelatinized starch, which is a physically modified native starch, is used as a binder in the feed ration of eels and shrimps. The estimated potential utilisation of cassava chips in fish feed ration increased from 30 000 tonnes in 1995 to 345 000 tonnes in 1997, and the projected potential demand in 2002 was 484 tonnes. As for the feed ration of shrimp, the estimated utilisation of alpha starch was 36 000 tonnes, which is expected to be the same in the year 2002. As a matter of fact, 36 000 tonnes of alpha starch is equivalent to 180 000 tonnes of fresh roots or 67 000 tonnes of chips. Therefore, the total potential demand for aquaculture feed in 2002 will be around 115 000 tonnes of chips (Table 43).

Table 43: Estimated potential utilization of cassava chips in feed rations of selected animals (1 000 metric tonnes)

Note: The estimated cassava product used in shrimp feed is in terms of alpha or pre-gelatinized starch that is modified from native starch at a conversion ratio of 1:1.

The lessons learned from the Thai experience demonstrate one, the importance of the export demand as a driving force behind the growth of the chips and pellets industry. This in turn raised domestic prices and prevented domestic utilisation. Two, that a unique marketing approach was required to encourage the domestic use of cassava products as an animal feed. Three, that cassava and non-cassava related industries require linkages across the industry if mutual benefits are to be realised.

Future directions

As noted at the beginning of this Chapter, the domestic animal feed market can be a growth market for cassava. But even in a country such as Thailand, cassava must be competitively priced against competing commodities. On the other hand, the use of cassava in animal feeds can free up the use of maize and competing crops for other markets where they have a comparative advantage. In Zimbabwe the use of cassava chips could create a market that does not currently exist. In the case of Thailand, the domestic use of cassava could free up maize for other domestic or export purposes.

Thai animal feed industry experience also illustrates the importance of the size of market. Thailand is currently using about 500 000 tonnes of chips and pellets in domestic animal feed. The analysis indicates that by 2002, Thailand could use as much as 3.3 million tonnes of chips and pellets and starch for animal feed. This is approximately equivalent to 8.3 million tonnes of roots. Given that Thai cassava farmers tend to be small, the domestic animal feed market could be a market for over 250 000 farmers.

The Ceará project also demonstrates that the animal feed market in Northeast Brazil could utilize a substantial amount of cassava and provide a growing market opportunity for a large number of cassava producers.

The Zimbabwe case study illustrates that the animal feed market for cassava may be attractive even in a relatively small market situation. The Zimbabwean example also suggests that a cassava chip and pellet industry could be developed in conjunction with the development of a more intensive animal feed industry.

An interesting feature of the three case studies is that the actual or target price of cassava roots and processing ranged from US$30 per tonne for Thailand and Zimbabwe to US$52 per tonne for Ceará. This compares favourably with the maize import substitution target price of US$58 per tonne to US$75 per tonne, calculated at the begining of the chapter.