This document summarizes a presentation on opportunities for economic growth in sustainable cassava value chains for smallholder farmers in Southeast Asia. It finds that in the short term, low returns, debt, and declining farming areas pose challenges, but adopting existing technologies can boost yields and income. In the medium term, underlying demand for cassava products provides opportunities if production keeps pace with substitutes across scales. In the long term, new technologies and markets present opportunities for economic growth. The document reviews cassava markets, production challenges, and 2017 workplans to address opportunities through demonstration trials, household surveys, and policy engagement.

1. Sustainable cassava value chain for
smallholder farmers in the ASEAN region:
Is there opportunities for economic
growth?
Jonathan Newby
j.newby@cigar.org
Cassava Retreat
8-10 February 2017
Hanoi, Vietnam

2. 1. Update of cassava global and regional
markets.
2. Local value-chain assessments in
2016
3. What does it mean for the program
Outline
The term value chain refers to the full
range of activities that are required to
bring a product from conception, through
the different phases of production to
delivery to final consumers and disposal
after use (Kaplinsky 1999; Kaplinsky and
Morris 2001).

3. Why does CIAT work on cassava in Asia?

4. Strategic Objectives
• Make affordable, high-quality food readily available to the rural and urban poor
by boosting agricultural productivity and enhancing the nutritional quality of
staple crops
• Promote rural income growth by making smallholder agriculture more
competitive and market oriented through improvements in agricultural value
chains
• Provide the means to make a more intensive and competitive agriculture both
environmentally sustainable and climate smart
Mission

5. Let’s get straight to the point
Is there opportunities for economic growth?
In the short-term:
No. Expect low returns, debt, decline in areas
In the medium-term:
Maybe. Underlying demand for final products remains.
Adoption of existing technologies can boost/maintain yields and income
Need to keep pace with substitutes across scales (farm – deep processing)
In the long-term:
Yes, New technologies and markets
THIS SEASON
EXISITING TEC.
NEW TEC

6. Cassava global market: ASEAN, East Asia and the World

7. 0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Billions
Cassava starch
Cassava (fresh and dried)
Increase in production and trade (the good)
Source: Comtrade (1989-2015)
The demand for
carbohydrates continues
to expand as incomes in
Asia grow.
Changing food preferences
and changing diets
New starch applications
being developed
Some decline in traditional
areas (such as paper)
Younger generation in
changing preferences in
traditional cassava eating
locations

8. Not an “economic inferior” good
• Livestock feed
• Paper industry and glues
• Textiles
• Sweeteners
• Processed food sector
• Pharmaceuticals
• Alcohol
• Bioplastics
• Biofuel
Desirable functional traits:
Meat products, sauces, frozen foods, dairy products,
noodles
• High viscosity, firm and elastic texture
• Freeze thaw stability.
• Provide short texture and reduce water
separation
• Smooth texture and paste clarity
• Prevent cracking, good freeze thaw
• Smooth and improve mouth feel
Cost competitive compared to substitutes?
• Maize, sorghum, sugarcane, potatoes, etc
• Oil

9. Sweeteners
44%
Monosodium
Gultamate
(MSG)
18%
Whole Salers
13%
Modified Starch
10%
Paper
7%
Tapioca Pearls
4%
Textile
1%
Other
3%
Starch
Sweeteners
46%
Sugar-hol
5%
Modified Starch
7%
Polyol
2%
Citric Acid
7%
Lactic acid
1%
glutanate
18%
Lysine
5%
Other amino
acids
1% Food
8%
Utilisation of starch in Thailand and China
Thai Domestic use of cassava starch Chinese use of all starch
Source: TTTA
Source: Jin Shu-ren

10. Why Chinese market outlook matters …. (the nervous)
Data source: Comtrade 2015
*Reported by exporters
Cassava (fresh, dried) Cassava starch Total
World To China World To China World To China
All
exporters 2,059 M 1,910 M 2,175 M 1,360 M 4,234 M 3,269 M
100.0% 92.8% 100.0% 62.5% 100.0% 77.2%
Thailand 1,539 M 1,536 M 1,191 M 539 M 2,729 M 2,075 M
74.7% 74.6% 54.8% 24.8% 64.5% 49.0%
Vietnam 399 M 360 M 914 M 808 M 1,312 M 1,168 M
19.4% 17.5% 42.0% 37.2% 31.0% 27.6%
Thailand +
Vietnam 94.1% 92.1% 96.8% 62.0% 95.5% 76.6%

11. Importer Rank Country
Import trade
value (US$) % of imports Cumulative %
1China 781 M 50% 50%
2Indonesia 256 M 16% 66%
3Other Asia, nes 138 M 9% 75%
4Malaysia 75 M 5% 80%
5USA 70 M 4% 84%
6Japan 58 M 4% 88%
7Philippines 35 M 2% 90%
8Singapore 27 M 2% 92%
9Rep. of Korea 11 M 1% 93%
10Netherlands 10 M 1% 93%
11Germany 8 M 1% 94%
Cassava starch: Currently largely an Asian market
*Reported by importersData source: Comtrade 2015

12. Change in Chinese maize price support (the bad)
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
Jun-08
Oct-09
Feb-11
Jul-12
Nov-13
Apr-15
Aug-16
CASSAVASTARCH(USD/T)
MAIZEPRICE(USD/T)
US Maize (FOB Gulf) US Maize +Freight+ VAT
Chinese Maize (DCE Nearby Futures) Cassava Starch (FOB Bangkok)
-200
-100
0
100
200
300
400
500
600
700
Oct-09
Mar-10
Aug-10
Jan-11
Jun-11
Nov-11
Apr-12
Sep-12
Feb-13
Jul-13
Dec-13
May-14
Oct-14
Mar-15
Aug-15
Jan-16
Jun-16
Nov-16
USD/MT
Difference
Tapioca starch (Super High-Grade) FOB Bangkok
Corn starch, Midwest
Rabobank estimates 232 million tons of Chinese maize
stock in 2015/16, forecast to increase to 264 million
tons.

13. That’s a lot of maize in storage!
Rabobank estimates 232 million tons of
Chinese maize stock in 2015/16, forecast
to increase to 264 million tons.
1 cubic metre of maize = 0.76tons
Wembley stadium has a capacity of 4
million cubic metres
= 76 Wembley stadiums of maize in
storage

14. 150
170
190
210
230
250
270
290
310
300
350
400
450
500
550
600
650
Jan-10
Oct-10
Jul-11
Apr-12
Jan-13
Oct-13
Jul-14
Apr-15
Jan-16
Oct-16
CassavaChips-FOBBangkok(USD/t)
Starch-FOBBangkok(USD/t)
Tapioca Starch Cassava Chips
Intermediate product prices fall (starch and chips)

15. Fall in chip exports from Thailand and Vietnam
-
100
200
300
400
500
600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Valueofchipexports(millionUSD)
2010 2011 2012 2013 2014 2015 2016
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Thaichipexportvalue(MillionUSD)
2010 2011 2012 2013 2014 2015 2016
Thailand Vietnam

16. Less dramatic fall in starch exports from Thailand
and Vietnam
Thailand Vietnam
0
200
400
600
800
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
ThaiStarchexportvalue(MillionUSD)
2010 2011 2012 2013 2014 2015 2016
-
100
200
300
400
500
600
700
800
900
1,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Valueofstarchexpots(MillionUSD)
2010 2011 2012 2013 2014 2015 2016

17. Logistics are important!
$30MT
$15-20/t +
$10-20 truck and clearance
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
Bulkfreightrate(USD/t)
US Gulf to China

18. Local value chain assessments

19. Activities in 2016: From global to local value chains
Flores
North Sumatra
Daklak
SonlaXayabouli
Kratie
Ayeyarwady
Region ***
Bolikhamxai
Assessment of cassava value chains in
different production and value chain
settings
• Food security zone (Flores)
• Frontier and cross border trade
(Cambodia, Laos)
• Upland sloping systems (Sonla)
• Lead firms (North Sumatra, DakLak)
• Myanmar still awaiting sign-off
• Missing cases
• Intensive processing zones
(Thailand, Tay Ninh and Lampung)
• Feed market (San Miguel
Philippines)
Tay Ninh
Lampung
Bukidnon
Isabela
Thailand

21. Cassava root price
(The ugly)
Location Price USD/t (factory/collect
point)
Starch content
Thailand $49 USD/T 25%
Tay Ninh (Vietnam) $74 – 77 USD/T 30%
Central Highlands
(Vietnam)
$64-65 USD/T 30%
Sonla (Vietnam) $58 – 60 USD/T 30%
Lampung (Indonesia) $38 USD/T (Dec) Before refraction
North Sumatra
(Indonesia)
$47 USD/T 10 month min.
Bolikhamxai (Laos) $37 USD/T
Champasak (Laos) $37 USD/T
Xayabouli (Laos) $36 – 49 USD/T
Tboung Khmun
(Cambodia)
49-52 USD/T
Battambang (Cambodia) $42 – 45 USD/T Below and above
25%
Ayeyarwady Region
(Myanmar)
$72 USD/T
Thai root price (25%)
Farm gate = $28
0
20
40
60
80
100
120
140
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Lampung Roots (USD/T) Thai Roots (USD/T)

22. Increasing labor costs in a crop
difficult to mechanize to date
Location Daily wage rate
(local currency)
Daily wage rates
(USD/day)
Thailand 300 THB/day $8.50 USD/DAY
Vietnam
(Daklak and Sonla)
150,000 VND/day $6.60 USD/DAY
Indonesia
North Sumatra
70,000IR/day $5.30 USD/DAY
Lao PDR
Bolikhamxai and
Xayabouli)
50,000LAK/day $6.10 USD/DAY
Cambodia
(Southeast Provinces)
20,000KHR/day $5.00 USD/DAY
Myanmar
(Ayeyarwady Region)
3,000MMK/day $2.20 USD/DAY

23. What does this mean for smallholder?
Central Highlands
Vietnam (Ea Sar)
Xayabouli
Lao PDR
(No fertilizer)
Higher prices scenario
Price $66 USD/T $58 USD/T
Yield 15t/ha 30t/ha 11t/ha 30t/ha
Net returns -$ 15
USD/ha
$976
USD/ha
-411
USD/ha
$694
USD/ha
Lower price scenario
Price $53 USD/T $23 USD/T
Net returns - $215
USD/ha
$580
USD/ha
-795
USD/ha
-353
USD/ha
Increasing
productivity (or at
least maintaining it)
will be key to cassava
continuing to be
‘pathway out of
poverty’ for upland
farmers
Is increasing the area
of cultivation to
meet demand a
priority?

24. Assessments with farmers, traders, processors
• Understanding of the value chain and production
systems is setting the priorities for:
• What we do: establishing demonstration trails
based on demand from farmers, traders,
processors.
• Where we do it: locating activities where possible
on factory or trader land or where other
stakeholders (next users) can utilize it for scaling.
• How we evaluate: what is the value proposition or
business case of this next-user scaling it to final
users (farmers)

25. Why is a nuanced impact pathway needed?

26. Relationship building with private sector
Develop models for
industry funding on
research and evaluation of
technologies.
Can not be on an
individual factory basis.
Unleash the power of big
data, spatial analysis
Need to develop packages
and membership
payments

27. Fertility management
Large areas of cassava
production occurring
with NO fertilizer used
Declining yields
Contributing to poor
reputation of the crop
and limited
government support

28. 9
10
11
12
13
14
15
0.0 0.5 1.0 1.5 2.0
Netbenefit
Million(kip)
Fertiliser treatment cost
Million (kip)
3.50
0.69
4.50
1.50
2.00
0.88
0.88
Low balanced
Medium balanced
Low balanced + OF
High balanced
Attractive rate of return from improved fertility
management
Example from Lao PDR
(3 locations 2014)
The application of a low
balanced fertilizer regime gave a
200 – 450% rate of return
In some locations still attractive
returns on pushing this into
higher application rates

29. Generally, these results are stable even with falling prices
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0.0 0.5 1.0 1.5 2.0
Netbenefit
Million(kip)
Fertiliser treatment cost
Million (kip)
1.50
-0.06
2.06
0.39
0.67
0.04 0.04
Low balanced
Medium balanced
Low balanced + OF
High balanced
Example from Lao PDR
Even at current prices, these
results would give a 67 – 206%
MRR on investment
Industry and government
support
• Understand local
environment (site specific)
• Get information to farmers
• Make the correct fertilizer
available in local stores

30. Back to the future? Does livestock feed warrant another look?
0
0.5
1
1.5
2
2.5
3
3.5
4
2011 2012 2013 2014 2015
Importvalue(BillionUSD)
Animal prep nes
DDGS
Other fodder
Lucern and alfaalfa
Soybean meal
Soybean other
Soybean seed
Soybean
Fish and meat meal
Maize
Vietnam import of animal feed
0
5
10
15
20
25
30
35
40
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Kg/capita/year
Bovine Meat Pigmeat Poultry Meat

31. 2017 Workplan
• Household surveys: understand the current
farming systems and livelihoods of cassava
farmers throughout our 5 country project sites
across typology of value-chains.
• Conduct demonstration trials with value chain
actors: Use our understanding of the value chain
to conduct demonstration trials to determine the
incentives of value chain actors to adopt or
promote technologies
• Develop models for scaling across the typology:
Across the matrix of technologies, value chains
and production systems develop nuanced impact
pathways
• Policy dialogues and learning alliances: evidence
based policy analysis

32. Join the conversation.