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Thailand Cassava Guide

Country Specific
Aug 4, 2022
Edited by
Bojan Mijatovic
HS Code: 071410 - Vegetable roots and tubers; manioc (cassava), with high starch or inulin content, fresh, chilled, frozen or dried, whether or not sliced or in the form of pellets
|
FAO Code: 0125 - Cassava
Share in Export
2021
≈ 2.89%Rank 5
Share in Import
2021
≈ 1.37%Rank 8
Share in Production
2020
-
Export Volume
2021
10.42MUSD
1Y ≈ -98.49%
Import Volume
2021
4.95MUSD
1Y ≈ -98.83%

Value Chain Overview

How is the sourcing distance for exporters?

Exporter/processing companies consider the distance of farmers to the factories when buying fresh supplies. Farms with distance of at most 50 km from the factories are highly preferred. Farther than this they will have to source their cassava not from farmers but from middlemen (collectors) who can secure more volume to make the transportation cost worth it.



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Cassava

What are the common processed products of cassava?

  • Cassava starch (Tapioca)

Tapioca is a starch extracted from the cassava root through a process of washing and pulping. The most common use of starch is to add to puddings or mix with fruit.

  • Cassava flour

Cassava flour comes from ground cassava root. It's fine and powdery which is mainly used as a swap for all-purpose flour in gluten-free baking.

  • Cassava chips

This is the most common form in which dried cassava roots are marketed and most exporting countries produce them. The chips are dried irregular slices of roots that vary in size but should not exceed 5 cm in length so that they can be stored in silos. They are produced extensively in Thailand, Malaysia, Indonesia, and some parts of Africa.

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Cassava

Market Penetration Strategy

What are some issues to be considered for exporting?

-Government Floor Prices: The Thai government tends to impose export floor pricing on cassava starch and chips as a way to increase the income of small scale farmers. Recent figures are $480/ ton (from $475) and domestic wholesale from 13.5 to 13.6 baht.

-Logistics Issue: Container shortage has increased the logistic cost up to 300%. At the moment sea shipments are kept to a minimum.

-Very saturated market: Players in the industry have increased exponentially. Competition is increasing and competitive pricing once an advantage has levelled the playing field. This can be an opportunity as well.

-Climate Change: Cassava plant is a hardy croup that can withstand low moisture and nutrient poor soil but this strength is now becoming a weakness face with climate change, as Thailand experience record floods and rains, The roots becomes waterlogged and rot, which greatly reduce harvest volume. As many of the farmers are small scale, without any government subsidy, they do not have much incentive to pay more to save rotting crops.


Thailand
Cassava

What are current buyer-engagement issues?

- Pre-harvest spot contract: Most of the transactions with China, except for tenders, are spot purchases. Most contracts last at most three months.

-Substitute Products: Maize has the same applications in almost all the industries that use Cassava feedstock, such as biofuel, food manufacturer, feeds, etc., and China produces this locally. When prices of maize in China drop, the import volume for cassava starch also drops significantly.

-Competitions: Vietnam, although less preferred by Chinese importers, have a pricing and proximity advantage over Thailand, which is a major threat right now as shipping container shortages continue to delay transactions (Chinese buyers use Thai pricing as standard and impose 10~20% lower prices for Vietnamese suppliers)

-Bargaining Power: Because of the structure of the Thai cassava starch market, especially its value chain (high reliance on export), Thai suppliers lack bargaining power and are highly exposed to risks coming from any policy changes with the destination countries.

-According to the General Administration of Customs of the People's Republic of China: GACC issued Notification No. 248, dated April 12, 2021, regarding the registration and management of imported food producers from abroad to the People's Republic of China. This requires that entrepreneurs wishing to export all kinds of food products to China register with the GACC, effective from January 1, 2022.

Thailand
Cassava

Crop Calendar

What are the major varieties of cassava?

There are two major varieties of cassava.

  • Sweet variety

-Contains low quantities of hydrogen cyanide and does not require much processing. -The roots of this variety will rot quickly if left in the soil after maturity.

-Rarely mass cultivated, due to limited demand

-Minute cyanide content

-Little application in food processing or bio-fuel industry

-Mainly consumed directly or as a cooking ingredient

  • Bitter variety

-Contains a high hydrogen cyanide content

- requires the roots to be detoxified before consumption to avoid poisoning

-Unlike the sweet variety, the roots of this variety can be left unharvested in the soil for a long period and will not spoil even after ripening

-Not suitable for human consumption but highly valuable for industrial processing into cassava starch, chips, pellets which have various industrial applications.

The top three varieties of cassava in Thailand are Kasetsart 50, followed by Rayong 5, and Rayong 72.



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Cassava

What is the grade classification of cassava root?

There are three grade classifications of cassava root that are mainly used in the market:

  • Extra grade

A superior quality. The cassava included in this grade must be uniform in shape, quality, and size. It also must be free of defects, with the exception of very slight superficial defects.

  • Grade 1

Cassava included in this grade must be of good quality. Slight defects are allowed in the case these do not affect the general appearance, the quality, the keeping quality, and the presentation of the cassava root.

- Slight defects in shape;

- Bruising, not exceeding 10% of the surface area; and

- Scraped areas, not exceeding 20% of the surface area.

  • Grade 2

This grade includes cassava which does not qualify for inclusion in the higher grades, however, satisfies the minimum requirements stated above.

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Cassava

How is the seasonality of Thai cassava?

Cassava is available all year round, with the peak season of harvest from April to December.

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Cassava

Others

Which countries are the main competitors?

Competition in the Chinese market is growing, particularly in Vietnam. The preference for Thai cassava starch is high. Still, Vietnam has a competitive price and proximity advantage, especially when sea logistics and cargo container shortages are significant issues (Vietnam mainly does cross-border). Other competitors include Cambodia, Indonesia, and Lao.

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Cassava

What is the export trend of Thai cassava?

-At least 80% of Thailand’s cassava export are in the form of Cassava starch.

-China imports comprises around 60~70% of all Thai cassava export volume.


Timeline: 

-2016: Continuous high production, low price of maize in China. The alcohol industries reduced their imports of cassava chips significantly. Same year, Chinese importers also imposed lower pricing on other cassava products.


-2017: export values dropped by 8% as a result of decreased demand from China. Low import demand and export prices farmers suffered capital losses and many of them shifted to other crops such as sugarcane and maize. Incessant rains caused backlogging and many crops were damaged. Lack of capital and any motivation to take care of their cassava crops high volumes were left to rot.


-2017~2019:Total production and export dramatically fell.


-2020~ : the market is diversifying their export countries away from China to other Asian countries

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Cassava

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