Factors Determining the Competing Use of Thailand's Cassava for Food and Fuel

Abstract

Abstract Cassava is one of the most important crops in Thailand as it is one of the most feasible feedstock for ethanol production to help meet the target set by the Renewable Energy Development Planning (REDP) of 9 million liters per day by the year 2022. That target is very ambitious and will need a considerable amount of feed stock to supply ethanol production. So this paper aims to study factors determining demand, supply, and price of cassava in Thailand for both food and fuel and to observe it's effect on ethanol production targets. The analysis utilized time-series data for the period 1989-2009 in order to estimate the model parameters by means of the Two-Stage Least Squares method. The results of this analysis found that in recent years the share of ethanol production has increased continuously as has cassava production. Factors affecting supply of fresh cassava are the yield and the land area cultivated. The cultivated land utilized is also affected by the land area cultivated in the previous year and the price of cassava roots in the previous year. On the demand side, cassava products such as chips, pellets, and starch are affected by their wholesale price, competitor's price, and policy implementation. Factors affecting cassava root price are the wholesale price which itself is affected by the supply whereas factors affecting cassava product price are it's export price, cassava root price, and policy implementation. However, no significant effect on ethanol production in Thailand can be observed as a result of cassava price variations. In order to meet targets set by REDP, the demand of ethanol production should be seriously considered. The demand and supply models of cassava are useful to predict cassava prices when cassava demand goes beyond ethanol production. This model should highlight the important implications for Government in decision-making on agricultural and energy policies.