Price spikes for tapioca starch, risk tools required
makers in desserts and pie fillings, have soared by 40 per cent in
the past six months.
Tapioca, a nutritious starch, originates from the roots of the cassava plant, and is typically grown in tropical and sub-tropical climates.
But Thailand, a leading global supplier of tapioca, has suffered in recent months from prolonged droughts that have crushed crop output.
And over the last six months the prices in Brazil, a further key supplier, were still very high with difficulties in sourcing good food grade quality supplies.
Confronted by price spikes, Dutch co-operative Avebe, that offers a range of tapioca starches for the food industry, says it works with producers who are "able and willing to make contracts on volume and prices".
"By having more suppliers from different regions we try to temper fluctuations in prices," a spokesperson for the firm tells FoodNavigator.com.
In other words, a classic risk management tool that involves spreading the risk of fluctuating supplies between various sources of the raw material, as well as locking in contracts to fairly stable prices.
Also influencing price spikes, Thai tapioca products have been snapped by China as the country attempts to feed demand for its exploding food market. According to a report from Rabobank International, since 2000 China has become the second largest importer of Thai tapioca products.
The report claims that of all the Thai tapioca products, modified starch has seen the highest growth in recent years, averaging 10 to 15 per cent growth.
But rapid growth in the market needs to be matched by supply security.
Rabobank International says the Thai tapioca industry is "seeking solutions to eliminate the bottlenecks in supply of tapioca roots in order to increase production."
However, the current high double-digit price rises for modified starch suggests much more work is required to stabilise supplies.
There are about 20 modified starch companies in Thailand, more than half of them are joint venture companies.
Leading international companies with a presence in Thailand include Avebe, ICI's National Starch, London's Tate & Lyle and US firm, Corn Products International.
In 2002 Thailand exported 6.2 million tonnes of tapioca products (chips, hard pellets, native starch and modified starch), recording exports of €603 million.