State aid for cassava farmers
The government is set to introduce measures to curb the adverse impact of falling tapioca prices in light of lower imports from China and price-cutting competition.
Wiboonlasana Ruamraksa, director-general of the Internal Trade Department, said the measures include schemes to cut farmers' existing loan interest, increase productivity and upgrade production and processing standards.
The cabinet late last month approved soft loan packages worth 5.36 billion baht to help alleviate hardships for cassava farmers, who have been feeling the pinch from falling tapioca prices.
Cassava root prices with 25% moisture are now quoted at 1.70-2.00 baht a kilogramme, down sharply from 2.30 baht a kg in the same period last year.
Of the total budget, some 372 million baht will go to subsidise a 3% loan interest rate for the state-owned Bank for Agriculture and Agricultural Cooperatives, with 2.3 billion to increase productivity through a special interest rate of 4% a year.
Another 1.5 billion baht is for cooperatives to process tapioca with a 1% loan interest rate.
The remaining 1 billion is for small farmers and cooperatives to upgrade their production and processing standards, with the government subsidising a 3% interest rate.
Ms Wiboonlasana said the department plans to discuss with banks and financial institutions ways to ease the liquidity constraints for tapioca starch factories and cassava ground entrepreneurs who buy cassava roots from farmers.
The department has tried its best to diversify tapioca export markets, reaching out to India, South Korea, Japan and Europe to cut Thailand's dependence on China, she said.
At home, the department also plans to promote tapioca processing, not only into food products but also for alternative energy such as ethanol production.
Thailand is estimated to produce 32 million tonnes in the 2016/17 harvest season, higher than the previous harvest of 30.91 million. The harvest season starts in November, with the bulk of production, some 20 million tonnes, normally churned out between January and April.
Thailand consumes around 42 million tonnes of cassava annually, of which 30-32 million tonnes are home-grown and the remainder is from Laos and Cambodia.
Last year Thailand shipped 11 million tonnes of tapioca products, an increase of 15.3%.
But this year, Suree Yodprachong, president of the Thai Tapioca Traders Association, said shipments are likely to fall to only 10 million tonnes as importers have shifted to buying more alternative crops such as wheat and maize.
Exports are expected to drop in value 20-30% this year from US$350.8 million.