Supplementary memorandum submitted by
the Department for International Development
THAILAND: CASSAVA
AND THE
COMMON AGRICULTURAL
POLICY (CAP)
Cassava is a root crop, native to South America
that is now grown throughout the tropics as a food and industrial
crop. It is tolerant of drought and low fertility. It produces
large tubers (swollen roots) high in starch. The tubers are lifted,
washed and processed to produce food or dried to give cassava
chips or pellets. It is a cheap source of starch and starch products.
In the early 1960s, the CAP insulated the internal
prices of feed grains in Europe from world market prices through
artificially set floor and ceiling prices. Cassava starch was
treated differently in the external tariff structure, which made
it highly competitive to animal feed makers and commercial starch
producers.
Since the 1940s the Thais had developed a highly
efficient production, processing and marketing structure for cassava
production. The area under production rose from 700,000 hectares
in 1975-76 to about 1,680,000 ha in 1988-89, falling to about
1,100,000 ha in 1998-99. Most of the increased production was
located in the fragile soils of north and north-east Thailand
and often on sloping land prone to erosion. The expansion of area
was at the expense of natural forest. It resulted in considerable
soil erosion. Water from processing plants frequently contaminated
waterways through high levels of organic matter and naturally
occurring cyanides released during processing operations.
Between the late 1960s and 1982 cassava imports
to western Europe, from Thailand rose from 0.4m MT to over 7.8m
MT.
At this stage the EU sought to reduce the importation
of cassava. Because of the political and legal difficulties it
sought to do this through voluntary means. Thailand agreed because
of links to other trade agreements (especially textiles) and promised
development assistance to help diversify agriculture in the poor
north-east. The 1997 quota (for a preferential tariff of 6 per
cent) was set at 5.25m MT. The negative impact of this reduction
has been reduced by growing demand for cassava chips from other
countries, namely Japan, Korea and Taiwan. There is also a growing
world market for the higher value cassava pellets and processed
starch products.
LESSONS
Agricultural and tariff policies set in Europe
can have a significant impact on market opportunities and responses
in developing countries.
The Thais exploited the market for cheap starch
for livestock feeds as it created jobs and income. The increased
areas under cassava were at the expense of natural forest and
caused soil erosion.
Department for International Development
February 2002
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