The potential economic impact of CMD on livelihoods and value chains in Southeast Asia Phnom Penh, 18th September 2018 Regional CMD j.newby@cgiar.org

Introduction As we work through the different scales, consider what a major disease outbreak mean for various stakeholders in the cassava value chain. The global market and trade Local processors and national exports Rural Livelihoods Cassava farmers and processors in Asia are involved in a constant battle to be competitive VS

On the demand side – the market outlook for cassava in Asia needs to be considered in the context of substitutes in different applications Cassava for direct consumption or sale into short value chains as fresh roots for food. Competition with other food such as rice based on price and consumer preferences. Global markets where cassava chips compete with other forms of carbohydrate for processing animal feed or ethanol such as maize, sorghum, wheat, molasses – oil, gas. Markets where cassava starch competes largely on price with substitutes such as maize and potato starch, sugarcane. Markets where the functional properties of the starch are desired. Consumer preferences, clean label segment, gluten free etc.

Changes in costs of production Long term climate trends And on the supply side – the relative competitiveness against other land use in the context of different trends and shocks Own price and relative prices to other commodities that can be produced in agroecological zones Changes in costs of production Changing labour costs and ease of mechanization Long term climate trends Changes in land suitability and land degradation Floods and droughts IMPACT OF PEST AND DISEASE

Thai starch price 2006 - 2018 Reduction in planted area Flooding in Thailand Maize price in China DISEASE ? Cassava Mealybug Maize policy reform

Value of cassava trade and relative importance of cassava starch in global trade Global trade largely is Southeast Asia exporting to East Asia and Southeast Asia Source: Comtrade

The regional value chain for cassava products involves large amounts of cross border trade

Cumulative monthly exports from Thailand (Value) Dried chips 0.5% value 27% volume Starch 25% value 15% volume

Cumulative monthly exports from Vietnam (Value) Dried chips 31% value 47% volume Starch 13% value 24% volume

Cumulative monthly value of imports from Cambodia (fresh or dried) Thailand 2017 = 281.7 million USD Vietnam 2017 = 282.2 million USD 30% value 37% volume 50% value

Comparison between Thai and Indonesian prices Starch Fresh roots

Cumulative monthly exports from Thailand and Vietnam to Indonesia (million USD)

Difference in Thai cassava and US maize starch 2012 2018 Cassava starch has again become a relatively more expensive native starch for modification and deep processing Eg. Manufacture of sweeteners Short term options for Indonesian deep processors to remain competitive Use alternative feed stock (maize) Import processed products (glucose etc.).

Biofuel prices and root equivalent price

Smallholder livelihood outcomes impacted by these global market trends and shocks

Grown by upland farmers to support livelihood security (Eastern Cambodia) Gross total income % share of total income % share of cash income

Grown by upland farmers to support livelihood security (Lao PDR) Gross total income % share of total income % share of cash income 20m Kip = $2350 USD

Grown by upland farmers to support livelihood security (DakLak Province - Vietnam) Gross total income % share of cash income 40m Kip = $1745 USD Sugarcane Marginal land & Limited resources

Large price uncertainly - Fresh root prices at collection points & factory 30% SC 30% SC Farm gate = $28 25% SC CIAT

Adding another level of production risk from emerging pest and disease will significant impacts rural livelihoods, industry and national economies

Participatory budgeting and scenario analysis in Lao PDR Price (THB/kg) Yield (t/ha) 0.9 1.6 2 15 - 15,650 - 5,150 850 20 - 11,150 2,850 10,850 25 - 6,650 20,850 35 2,350 26,850 40,850 ~$650USD/ha returns to household owned resources Price (THB/kg) Yield (t/ha) 0.9 1.6 2 15 78.3 195.0 261.7 20 128.3 283.9 372.8 25 178.3 483.9 35 278.3 550.6 706.1 Shadow wage rate = 220

Cassava witches broom disease

Cassava witches broom in variety evaluations KU50 Rayong11

Cassava witches broom disease impact on starch yield

Cassava witches broom in fertiliser demonstrations

Cassava witches broom disease impact on MRR to fertiliser 500%

2016-17 PVS trials became infected in Cambodia 2 sites in same village; RCB with 3 replications Farmers own variety is assumed to have been infected prior to establishment with surrounding fields also infected. DNA finger printing showed variety was KM419 officially released in Vietnam in 2013 Visual inspection of every plant occurred (May 2017) Samples collected and sent for PCR analysis Second round of visual inspection carried out (Nov 2017)

Percentage of plants without visible symptoms   Variety Infection rate (%) Asymptom rate (% of infected) Location 1 Location 2 Huay Bong 60 6.7 0.0 100 KM98-1 5.6 KU50 Farmer's Local Variety 76.7 88.9 26.1 20.0 Rayong 72 43.3 61.1 84.6 81.8 SC8 16.7 27.8 80.0 60.0 SC9 66.7 40.0 58.3 Asymptomatic plants SC8/SC9 showed high levels symptoms by November 2017 Rayong 72 was still not showing high levels of symptoms by the second inspection despite high levels indicated with PCR * DNA fingerprinting suggest SC8 and SC9 in the trial were the same variety.

50m apart KU50 Rayong 11 SC8 HuayBong60 KM98-1 Rayong 72

Conclusion For many applications cassava needs to compete in a global carbohydrate market Field level productivity is important to ensure this can happen further down the value chain The cassava producing countries in mainland Southeast Asia are strongly linked in both the value chain for outputs (roots, chips, starch) and inputs (planting material, fertiliser, labour) Market and production risk contribute to the vulnerability of smallholder cassava farmers in Asia – debt, distressed land sales, migration by necessity, and other undesirable livelihood choices

Conclusion The addition of disease pressure will impact the competitiveness of smallholder cassava farmers in the global carbohydrate market The poorest households in communities are the most reliant on cassava for their livelihoods and the less able to quickly adapt their livelihood portfolio in the face of new constraints. Shocks in smallholder livelihoods are deep and long lasting.

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