December 28, 2011
Thai Feed Weekly: Government freezes THB40 million worth cassava for subsidy scheme (week ended Dec 26)
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Price Summary
The price of cassava, a popular feed ingredient in Thailand, slid further this week as the government appears to have backtracked on a planned subsidy scheme.
When its price hit less than THB2/kg in August, the Thai Commerce Ministry promised to launch a THB40 million subsidy programme to lift prices and help cassava farmers. But after the October-November flooding, when thousands of hectares of cassava plantations were destroyed, prices began to pick up, reaching THB2.60-3.00/kg.
Market analysis
However, since after the flooding, prices started to weaken again. In the last three weeks, they have gradually fallen to THB2.20-2.30/kg, a level that Thai cassava farmers say is not sustainable.
When the planned subsidy scheme was announced in August, the government pledged to raise cassava prices to Bt2.60-Bt2.90/kg. However, the Commerce Ministry disclosed this week the government no longer intended to launch the subsidy programme, saying it needed the money earmarked for it for the country's post-flooding rehabilitation.
Early this week, the Thai Chamber of Commerce (TCC) urged the government to stop subsidizing agricultural production as it distorts the market system. Agricultural subsidies, they say, lead to heavy financial burden on the part of government, excessive stockpiles for subsidised products, and corruption.
Instead, the government should rather invest more on developing the quality of commodities and farmers' knowledge to help them increase their incomes and to promote sustainable development for the agricultural sector, the chamber said in position paper personally handed to Deputy Prime Minister Kittiratt Na-Ranong.
The price of cassava hit rock bottom in September shortly after the government had downgraded its ethanol programme.
Twenty-five of Thailand's 36 ethanol facilities utilise cassava as feedstock. But local demand for cassava plunged in August after the government stopped collecting levies for the Oil Fund, a subsidy scheme designed to stabilise gas-pump prices when international crude prices are volatile.
The move allowed petrol stations to bring down gas prices by as much as 15-20%, causing sales of the cheaper ethanol-mixed fuel to drop by 15%.
In freezing the planned subsidy programme, the deputy prime minister said that anyway cassava prices were expected to rise next year on strong demand from the ethanol sector. The government plans to stop sale of certain benzene gasoline from second half of next year to boost use of ethanol-mixed gas products by motorists.
More than half of Thailand's annual cassava output of around 21 million tonnes is used as feedstock in ethanol production while about 30% is made into feeds. The rest are exported. Thailand is the world's number one cassava exporter.
|
|
PRICE as of Dec 19 |
PRICE as of Dec 26 |
Changes |
|
Corn (Delivered to feed factory) |
9.90-10.00 |
9.90-10.00 |
-- |
|
Cassava |
2.25-2.35 |
2.20-2.30 |
-0.05 |
|
White Broken Rice A.1 Super (US$/tonne) |
556.00 |
556.00 |
-- |
|
White rice bran |
8.10-8.30 |
8.10-8.30 |
-- |
|
Rice bran residue |
7.40-7.60 |
7.40-7.60 |
|
|
Soy |
11.60-14.45 |
11.60-14.45 |
|
|
Soymeal (imported) |
14.20 |
14.20-14.30 |
0.10 |
|
Soymeal (local) |
14.00-14.20 |
14.00-14.20 |
-- |
|
Fishmeal (shrimp grade) |
25.00-37.98 |
25.00-37.98 |
-- |
|
US$1=THB 31.47 (Dec 28, 2011) | |||
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