An economic study of foreign demand for Thai cassava products

Abstract

Cassava products have become one of the most important exports of Thailand since 1960. About 95 per cent of total production of cassava is exported. Most of the cassava products are exported in the form of chips, meal and pellets as a raw material for animal feed production. Thai cassava products for animal feed are mostly exported to the European Economic Community (EEC) countries, especially the Federal Republic of Germany, the Netherlands and Belgium. Since 1962, the quantity of Thai cassava products exported to these three countries has been increasing considerably. This was due to the introduction of the Common Agricultural Policy in the EEC which raised the prices of grains. In turn, this increased the feed compounder demand for grain substitutes such as cassava in order to lower the cost of feed production. At the same time, these three countries also have been expanding their livestock industries which induced the increasing use of cassava in feeding livestock. Estimation of foreign demand for Thai cassava has been attempted. The results indicated that changes in substitute prices had different effects on cassava imports in each country and so did the change in livestock numbers. However, on the aggregate demand equation, livestock numbers were the most important factor explaining the changes in demand for Thai cassava. The projection of foreign demand for Thai cassava has indicated that in 1980 the projected level of cassava imported by these three countries together will be 1,945 thousand tons on the assumption of constant price and 2,552 thousand tons on the assumption of continuation of price trend. Nevertheless, it can be concluded that Thai cassava trade is not quite as successful as it should be. Recommendations are given for improving the existing standard (quality) of the products.