Article

Cassava starch processing

Cassava is a vital pillar of Laos' economy, thriving due to its adaptability and minimal input requirements. In 2020, Laos produced 1,270,529 tonnes of cassava in the northern region (34.48%), 716,105 tonnes in the central region (19.43%), and 1,698,110 tonnes in the southern region (46.08%), providing essential income for impoverished farmers.

Laos exports cassava in the form of dried chips and starch. Cassava chips serve as a significant export product, used in animal feed, alcohol, and citric acid production. The country has numerous large cassava chip factories and over 20 small-scale facilities. Additionally, there are more than 10 operational industrial starch processing factories, with three under construction in the south. Cassava starch production primarily yields native starch, suitable for household use or further processing into high-value modified starch for diverse industries.

The cassava value chain in Laos involves production, intermediation, processing, and exports. Smallholder farmers sell cassava roots to traders, intermediaries, or companies, with prices influenced by factors like selling periods and product quality. These roots are then processed in chip or starch factories before being exported, primarily to Asian countries such as Thailand, Vietnam, China, Taiwan, and the Philippines.

Domestic Consumption and Export

In Laos, approximately 80% of cassava production is directed towards cassava factories, with the remainder mainly sold as dry chips. The cassava export landscape in Laos encompasses collecting companies, chip factories, and starch factories, which export various cassava products to both neighboring countries and international markets.

These collecting companies, often foreign-owned, export both fresh cassava roots and dried chips. Chip factories primarily export chips to nearby countries, while starch factories focus on exporting cassava starch to international markets like China, Vietnam, Taiwan, and the Philippines.

However, several challenges impede the growth of cassava production and consumption in Laos. These include:

• Price Fluctuations: The cassava price and marketing system's reliance on factory-defined prices create price instability.
• Logistic Costs: High transportation costs pose a significant challenge to the cassava industry in Laos.
• Natural Disasters: Floods and droughts disrupt agricultural production, affecting cassava cultivation.
• Disease Spread: The practice of using stem cuttings from previous crops can facilitate the transmission of pathogens between plant generations.

Government Initiatives

The Lao government has been actively encouraging cassava cultivation, especially on private and concessional land, since 2011. Support and expansion efforts in southern provinces like Champasak, Salavan, Xekong, Attapue, and Savanhnakhet indicate strong government support for the cassava industry. The government has also formulated a master plan to bolster the cassava industry from 2021 to 2025, focusing on domestic consumption and export, tax exemptions, access to low-interest loans from banks, and international standard compliance.

Innovation/Modern technology

Laos relies on imported cassava technology and machinery from countries like China, Vietnam, and Thailand. Several factories have adopted innovative technology to enhance quality and production, leading to a move toward sustainable practices, such as using waste for renewable energy generation, like biogas. Additionally, modern technology is utilized for monitoring transportation and payment systems within the industry.

Policy Support for Cassava Starch Processing Technology

Laos actively participates in international trade agreements like the WTO to access foreign markets and attract investments and technology. Bilateral transportation pacts with neighboring nations, including Thailand, Vietnam, and China, simplify cross-border transportation, facilitating trade. These agreements grant Laotian trucks the right to enter neighboring countries with reloading privileges, promoting trade.

SWOT Analysis

Laos' cassava starch processing assessment reveals internal strengths, such as an abundant labor force, tax exemptions for agro-industry, and ample land for cassava cultivation. However, significant weaknesses include a lack of innovation and technology, low farmer knowledge, and the shift to cassava causing land use losses. External opportunities arise from potential investments driven by initiatives like the Lao-China railway, reducing import needs and enhancing farmer productivity through training.

Despite these strengths and opportunities, the cassava industry faces threats from factory-defined pricing, high logistics costs, and natural disasters like floods and droughts. Using stem cuttings from previous crops also spreads disease.

In summary, cassava is vital for Laos' agriculture and economy, with government support, technology adoption, and international trade agreements backing the sector. Addressing challenges and leveraging opportunities will strengthen Laos' cassava industry, fostering long-term economic growth and poverty reduction.