Feb 11, 2009

Cassava prices nosedive

Written by Thet Sambath and George McLeod
Phnom Penh Post - Phnom Penh,Phnom Penh,Cambodia
Wednesday, 11 February 2009

After many farmers chose last year to switch to cassava production, a price crash means crop has become unprofitable in another hit for agriculture. (A biofuels factory in Kampong Cham that processes cassava. Despite its many uses, cassava demand has dropped this year, Photo by: Michael Hayes).

Cassava crash

Acreage tripled from 10,000 hectares in 2007 to 30,000 in 2008
Yield 23 tonnes per hectare in Cambodia
Prices have dropped more than threefold from 300 riels per kilo in February 2008 to 90 riels per kilo this month.
Incomes have more than halved this year, said cassava growers.

THE end of the commodities boom has left thousands of Cambodian farmers with vast harvests of cassava on their hands and few buyers, said local authorities and growers.

The sugar-rich root used in ethanol fuel, food products and bioplastics was all the rage last year and tens of thousands of acres were converted to cassava fields.

Cambodia has an ideal climate for growing cassava, and the cash crop has become one of the few agricultural goods whose yields per hectare are on par with neighbouring Thailand and Vietnam, say World Bank figures.

By 2007, three percent of total land in Cambodia was growing cassava, and yields were a promising 23 tonnes per hectare, says a World Bank report.

But falling fuel and commodity prices took their toll on the cassava market, and farmers report prices plumetting from about 300 riels (seven US cents) per kilogram in February 2008 to less than 90 riels this week.

Cassava farmers say they have been left trying to offload an unprofitable crop. "I will make no money this year. I can barely pay for workers and cultivation," said Oy Tun, a 56-year-old cassava farmer in Kamrieng district, Battambang. He said prices have fallen so drastically that he is switching back to corn, even though cassava yields at his farm are a strong 30 tonnes per hectare.

Battambang has been a big cassava supplier for Thailand, and farmer Oy Tun said his earnings are down from more than $5,000 last year to under $2,000 after the latest harvest.

"I am very disappointed with cassava prices this year. They are so low compared to last year," said Oy Tun.

Provincial authorities aggressively promoted biofuel crops, with Kampong Cham and Battambang leading the pack. Battambang alone saw acreage grow from about 10,000 hectares in 2007 to 30,000 in 2008.

But with prices tanking, officials blame global prices and Thai protectionism.

Cheam Chan Saphon, director of the Battambang department of agriculture, said that shipments to Thailand have dropped because buyers are favouring local products.

"The price of cassava is down because the Thai government only allows its businessmen to buy from Thai farmers," said Cheam Chan Saphon.

Even with the gloomy energy market, one local green energy expert said that Cambodia's green energy potential remains strong. "Biofuels are Cambodia's hidden treasure.... With the global economic crisis, a lot of the money that was coming has not materialised. I don't think it is detrimental to the market as a whole," said David Granger, a director of Biodiesel Cambodia.

He said that a strong domestic energy policy would help the country's green energy industry: "This is a country that imports 100 percent of its petroleum, so biofuels have huge potential."

With Thailand building additional bioplastics and ethanol plants, cassava demand from across the border is expected to grow. The outlook for cassava is, therefore, not altogether negative. The crop is used as a feedstock for bioplastic, and global demand is expected to rise by more than seven percent annually, according to figures quoted on Icis, a petrochemicals newswire service.

Thailand is a major regional consumer and demand is expected to hit 300,000 tonnes per year by 2010, according to Thai petroleum giant PTT. The country produces about 25,000 tonnes per year, and even with yields expected to triple in the next three years, Thailand's supply will fall short.

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