Page 45 - Food Outlook

12 million tonnes and nearly matching the volume of 2016. Demand by China for cassava chips is expected to remain robust, on account of cassava’s revived competitiveness
as a feedstock in its ethanol distilleries and as a feed ingredient in its livestock sector. While Thailand is set to be the dominant chip exporter, Viet Nam and Cambodia – the other important suppliers in the region – are also forecast to sustain their export shares of last year.
Prospects for an international cassava market expanding beyond Asia remain largely elusive, with no sign of re- emerging demand for substantial cassava volumes in Europe (which once imported pellets in large quantities
for its feed sectors), or of significant exports from the major producing regions of Africa or Latin America and the Caribbean. This is in spite of Ghana and Nigeria having been granted a duty free quota to export 4 million tonnes of cassava chips to China on an annual basis.
OUTLOOK
Uncertainties prevail in non-food markets
Growth prospects for world cassava sectors appear delimited along the lines of geography that characterize the role of cassava in the agricultural economy. For instance,
as cassava is principally a food crop in Africa, the sector is providing a strong stimulus for rural development, poverty alleviation, economic growth and, ultimately, food security. There is also wider recognition of cassava as a choice crop in the context of climate change adaptation strategies, particularly in eastern and southern African countries
that have recently endured sustained periods of drought. These considerations are providing cassava sectors in the continent with a more assured long-term footing and are, by and large, behind an annual average production growth rate, which except for 2017, has outpaced population growth for the past decade and beyond. The current year anomaly is on account of a new policy in Nigeria that has incentivized the cultivation of other crops at the expense of
cassava, resulting in cassava’s scarcity and very high prices. Notwithstanding the prospect of higher root prices going into the next season, given the importance of cassava to Nigeria’s economy, official intervention could see production growth back on track next year.
By contrast, cassava sectors in Asia are strongly susceptible to developments in China, the principal destination for cassava products. In fact, almost all cassava sectors in Southeast Asia have been geared to meet China’s high import demand, expanding in tandem with trade growth. However, with highly competitive industrial and feed procurement, the immediate future for cassava had appeared bleak on account of China’s policy change to promote domestically stockpiled maize to meet internal demand. But because of supply problems of maize in the country – poor crop prospects and logistical disruptions
in distribution – respite to regional cassava sectors was provided by way of unfilled demand in China.
The downgrading of China’s 2017/18 maize supply prospects may only provide a temporary stimulus to cassava in the region. A bumper maize crop in the following season or overcoming supply hurdles would pose a significant threat to the cassava sector. So would a more active policy of de-stocking maize. Given the thinness of international cassava trade, even a minor recovery in China’s maize supply would bring about serious ramifications to the international market for cassava, as witnessed in the latter half of last year.
The potential for cassava to compete in markets beyond China is also uncertain, given that international maize prices are currently hovering at relatively very low levels. While cassava root prices in Southeast Asia have firmed
in recent months, the outlook for next year and beyond will much depend on whether producers would be willing to accept the risks of a possible strong decline in cassava demand in China. Already some indication is provided by way of a recent official survey in Thailand, which points to 9 percent drop in cassava area in 2018.
FOOD OUTLOOK NOVEMBER 2017
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CASSAVA