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How is the value chain formed?

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Production Supply Chain
Aug 1, 2022
Edited By
Seujin Jang
Aug 1, 2022
Edited By
Seujin Jang
The production value chain of cassava is formed from farmers that sell cassava to retail and wholesaler collectors, as they pay in cash and with lower prices. The retail collectors would also distribute the cassava to wholesalers and factories that would process it.

99% of all farmers’ produce is fresh cassava roots; the remaining 1% is cassava chips. Farmers sell to retail and wholesale collectors because they pay upfront and in cash but at relatively lower prices. Starch factories offer higher pricing but require higher quality and do not pay upfront (it takes 2~3 weeks) because they conduct cassava starch quality tests on the fresh cassava roots.

Both public and private sectors encourage farmers to do clean cassava chips to increase the value-added to their production. The lack of places to dry cassava chips, lack of cassava chipping machines, and a long time for the processing are the leading causes for farmers not fulfilling the request.

Retail collectors will also distribute to wholesale and starch factories. Wholesale collectors will process the cassava into chips and pellets for domestic and export. Cassava chips are mostly sold to major animal feed industries (Cargill, Betagro), ethanol, alcohol, and citric acid industries. Cassava starch is mainly for export and is directed to food, sweetener, paper production, and MSG manufacturers.

Starch processing firms are the only channel that buyers can approach. 

Source: Case study 

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