Thai protectionism is leading to oversupply of Cambodian cassava, forcing farmers to push for exports to China
CAMBODIA is looking to the Chinese market for its cassava product, as Thai subsidies have undercut Cambodian exporters in Thailand, a foreign trade official said Monday.
The Commerce Ministry will soon send a group of trade officials to China to study prospects for breaking into the potentially lucrative Chinese market.
"We don't worry about rice exports, but our cassava product is a problem," admitted Thon Virak, deputy director general at the Foreign Trade Department.
He said Cambodia produced over 2 million tonnes of cassava in 2008 and was expected to produce the same in 2009.
When Thailand started subsidising cassava farms in January, demand for Cambodian cassava fell dramatically.
The result could be hundreds of thousands of tonnes of unsold product, farmers said.
Cambodia has two processing factories that turn dry cassava into flour, which can be used for anything from fertilisers to skin creams.
The two factories - one outside of Phnom Penh and one in Kampong Cham - can produce a million tonnes of dry cassava a year.
The rest of the crop needs to be exported.
Cambodian factories are incapable of processing raw cassava. Previously, farmers would sell their wet cassava to Thailand, but the price has fallen so low that only processed cassava is economically viable.
We don't worry about rice exports, but our cassava product is a problem.
Since January, the news has not been all bad for Cambodian cassava farmers. Thon Virak said the price of dry cassava increased from US$75 per tonne in January to $125 per tonne in late March.
At the same time, Cambodia is hoping to use Chinese technology to set up a new, higher-capacity processing factory, hopefully increasing domestic demand for the product.
Kasie Noeu, an agriculture researcher and chairman of the board of directors at the Peace and Development Institute, said cassava growers need to be patient and should not give up on growing the crop.
He said that farmers should create a cassava growers association to increase bargaining leverage and market their product as a collective.
Riding out the storm
Kasie Noeu pointed to corn and cashew crops five years ago as a lesson. In 2004 farmers abandoned their crops due to low prices, only to see prices jump in 2007.
"I see the price of cassava increasing in the next few years," he said.
"This [price decrease] is a trick the market plays."
But that's little solace for farmers struggling right now. Agriculture tycoon Te Haing, who grows 1,000 hectares of cassava in Banteay Meanchey province, said he expects 900,000 tonnes of unprocessed cassava to go unsold this year.
"We all sit around and wait for a market for our product, but we can't sell it because of the low price of wet cassava in Thailand," said Te Haing
Te Haing called for the government to take quick action to help farmers. Otherwise, some of them would abandon their cassava crops, he said, adding that a drying factory for wet cassava needed to be built in Banteay Meanchey province.
This, he said, would keep the cassava sector in Cambodia afloat.
"If we can sell wet cassava for just $50 a tonne, we will survive," he said.
"Farmers are suffering without the Thai market," he added: "We need help."