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Changing Demand Patterns and Maize Value Chains in Asia Bekele Shiferaw, Jonathan Hellin, Vijesh Krishna, Olaf Erenstein and Sika Gbegbelegbe CIMMYT [email protected] 11th Asian Maize Conference November 7-11, 2011 Nanning, China
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Maize demand and value chains inAsia.pdf

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Krishna Veni

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Page 1: Maize demand and value chains inAsia.pdf

Changing Demand Patterns and Maize Value Chains in Asia

Bekele Shiferaw, Jonathan Hellin, Vijesh Krishna, Olaf Erenstein and Sika Gbegbelegbe

CIMMYT

[email protected]

11th Asian Maize Conference November 7-11, 2011

Nanning, China

Page 2: Maize demand and value chains inAsia.pdf

Outline • Changing demand (and supply)

patterns

• Maize value chains for

– food

– feed

– high value maize (vegetable maize)

• Projected future demand for maize

• Implications for research, production and value chain development

• Conclusions

Page 3: Maize demand and value chains inAsia.pdf

Value chains • Kaplinsky (2000) defines the value chain as ‘the full range of

activities which are required to bring a product or service from conception, through the intermediary phases of production, delivery to final consumers, and final disposal after use’.

• Kaplinsky and Morris (2001) distinguish value-chain analysis from supply chains by emphasizing the:

– linkages both between and within actors in the chain

– Coordination and collaboration; joint investments; sharing of information for mutual economic benefit

• Value chain analysis includes mapping of key actors, relations, price flows, value added, marketing costs, profits, risk and benefit distribution and governance

3

Page 4: Maize demand and value chains inAsia.pdf

Seed

Distributi

on &

Sales

Farm Level

Maize

Production

Commerc

ial

Seed

Producti

on

Foundation

Seed

Production

Plant

Breeding Crop

Marketing

Value Chains

Food, Feed

and other

Product

development

Food, Feed

and other

Product

Marketing

Consumer:

Consumption

Input Value Chain

Output Value Chain

Farmer

Consumption Farm

Income

Impact

Page 5: Maize demand and value chains inAsia.pdf

Why Worry About Value Chains?

• Impact = f(technology, markets, policy and institutions)

• Information: awareness to make adoption decisions

• Seed access: translate desired demand to effective demand

• Capital and finance: credit and insurance services

• Markets access: market linkages, marketing costs, price volatility,

processing, storage, handling and distribution

– access to domestic and regional markets

– quality and standards in export trade

– food safety

– competitiveness, competition and fair prices

• Policies : subsidies, extension, regulatory rules, discretionary intervention, capacity building, and sustainability

Page 6: Maize demand and value chains inAsia.pdf

Maize value chains and drivers of change

• Food maize

• Feed maize

– Poultry feed

– Swine feed

– Stover for ruminants

• Vegetable maize

– Sweet corn

– Baby corn

• Population growth

• Income growth

• Urbanization

• Globalization and trade

Page 7: Maize demand and value chains inAsia.pdf

Key issues • Understanding changing demand patterns

• Research and policy implications for: – Adoption, production and supply (input value chains

for seed, fertilizer, equipment, etc)

– End user preferences, quality and standards

– Markets and trade (prices, trade policy, etc)

– Value chain development (integration, coordination, storage, processing, distribution)

– Farmer participation to capture new and expanding markets

– Equity and income growth for the poor

Page 8: Maize demand and value chains inAsia.pdf

Maize globally and in Asia Region Annual average

area (million ha) Annual average

production (million tons)

Area (%) Production (%)

Eastern and Southern Africa 18.04 34.38 12.0 4.6

Western and Central Africa 11.12 17.4 7.4 2.3

West Asia and North Africa 2.17 13.63 1.4 1.8

South Asia 10.53 25.11 7.0 3.3

Southeast Asia and Pacific 8.26 25.92 5.5 3.4

East Asia 31.4 165.51 20.9 22.0

Asia 52.36 230.17 34.9 30.6

Mexico and CAC 9.26 26.84 6.2 3.6

Other Latin America 19.13 83.24 12.8 11.1

Eastern Europe 6.5 29.13 4.3 3.9

North America 33.57 330.89 22.4 44.0

Developing Countries 109.9 392.01 73.3 52.1

World 149.97 752.04 100.0 100.0

Page 9: Maize demand and value chains inAsia.pdf

Maize net imports in Asia (1000 tons)

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000Ir

an

Iraq

Jord

an

Leb

ano

n

Sau

di A

rab

ia

Syri

a

Turk

ey

Yem

en

Ind

ia

Mya

nm

ar

Ne

pal

Pak

ista

n

Cam

bo

dia

Ind

on

esia

Lao

s

Mal

aysi

a

Ph

ilip

pin

es

Thai

lan

d

Vie

t N

am

Jap

an

Ch

ina

No

rth

Ko

rea

Sou

th K

ore

a

Page 10: Maize demand and value chains inAsia.pdf

Trends in area under maize in Asia (million ha)

0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Others

Pakistan

Viet Nam

Thailand

Philippines

Indonesia

India

China

Page 11: Maize demand and value chains inAsia.pdf

Trends in maize production in Asia (million tons)

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Others

Pakistan

Viet Nam

Thailand

Philippines

Indonesia

India

China

Page 12: Maize demand and value chains inAsia.pdf

Trends of maize yields in Asia (ton/ha)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

China India Indonesia Philippines Thailand Viet Nam Pakistan Others

China

India

Viet Nam

Source: USDA, 2010

Thailand

Pakistan

Page 13: Maize demand and value chains inAsia.pdf

Annual average growth rate of maize area (%)

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

China India Indonesia Philippines Thailand Viet Nam Pakistan Others

2002-2004 2005-2007 2008-2010

Source: USDA, 2010

Page 14: Maize demand and value chains inAsia.pdf

Annual average growth rate of maize production (%)

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

China India Indonesia Philippines Thailand Viet Nam Pakistan Others

2002-2004 2005-2007 2008-2010

Source: USDA, 2010

Page 15: Maize demand and value chains inAsia.pdf

Annual average growth rate of maize yield (%)

-5.0

0.0

5.0

10.0

15.0

20.0

China India Indonesia Philippines Thailand Viet Nam Pakistan Others

2002-2004 2005-2007 2008-2010

Source: USDA, 2010

Page 16: Maize demand and value chains inAsia.pdf

Demand for alternative uses

Page 17: Maize demand and value chains inAsia.pdf

Average annual maize demand for food as percent of total maize demand in Asia (2005-2007)

0

10

20

30

40

50

60

70

80

90

Ye

me

n

Sau

di A

rab

ia

Turk

ey

Syri

a

Iran

Jord

an

Ban

glad

esh

Ne

pal

Pak

ista

n

Ind

ia

Sri L

anka

Mya

nm

ar

Cam

bo

dia

Tim

or-

Lest

e

Ind

on

esi

a

Lao

s

Vie

t N

am

Thai

lan

d

Ph

ilip

pin

es

Mal

aysi

a

Ko

rea,

DP

R

Ko

rea,

Re

p

Ch

ina

West Asia South Asia Southeast Asia and Pacific East Asia

Source: FAOSTAT, 2010

Page 18: Maize demand and value chains inAsia.pdf

Average annual maize demand for feed as percent of total maize demand in Asia (2005-2007)

0

10

20

30

40

50

60

70

80

90

100

Leb

ano

n

Jord

an

Iran

Syri

a

Sau

di A

rab

ia

Turk

ey

Ye

me

n

Mya

nm

ar

Sri L

anka

Ind

ia

Pak

ista

n

Ne

pal

Ban

glad

esh

Van

uat

u

Mal

aysi

a

Thai

lan

d

Vie

t N

am

Ph

ilip

pin

es

Ind

on

esi

a

Lao

s

Cam

bo

dia

Tim

or-

Lest

e

Ch

ina

Ko

rea,

Re

p

Ko

rea,

DR

P

West Asia South Asia Southeast Asia and Pacific East Asia

Source: FAOSTAT, 2010

Page 19: Maize demand and value chains inAsia.pdf

Average annual other demand of maize as percent of total demand in Asia (2005-2007)

0

10

20

30

40

50

60

70

80

90

100Tu

rke

y

Jord

an

Iran

Ye

me

n

Leb

ano

n

Syri

a

Sau

di A

rab

ia

Ind

ia

Pak

ista

n

Ne

pal

Mya

nm

ar

Ban

glad

esh

Sri L

anka

Lao

s

Ind

on

esi

a

Ph

ilip

pin

es

Tim

or-

Lest

e

Mal

aysi

a

Vie

t N

am

Thai

lan

d

Mo

ngo

lia

Ch

ina

Ko

rea,

DP

R

Ko

rea,

Re

p

West Asia South Asia Southeast Asia and Pacific East Asia

Source: FAOSTAT, 2010

Page 20: Maize demand and value chains inAsia.pdf

Growth rates for food and feed demand in Asia

4.9

-7.5

4.4

14.7

5.8

9.4

1.9

6.4

0.9

7.4

5.3 6.7

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Asia (total) Central Asia East Asia South Asia South-EastAsia

West Asia

Annual growth rates for maize feed demand (%)

Annual average (1990-1999) Annual average (2000-2007)

1.1

8.6

3.2

-1.9

1.8

4.1

2.0

16.2

-0.1

5.2

1.4

6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Asia (total) Central Asia East Asia South Asia South-EastAsia

West Asia

Annual growth rates for maize food demand (%)

Annual average (1990-1999) Annual average (2000-2007)

Page 21: Maize demand and value chains inAsia.pdf

International prices for major cereals (US$/ton)

21

0

200

400

600

800

1000

1200

Jan

Ap

r

Jul

Oct

Jan

Ap

r

Jul

Oct

Jan

Ap

r

Jul

Oct

Jan

Ap

r

Jul

Oct

Jan

Ap

r

Jul

Oct

2007 2008 2009 2010 2011

Maize Rice Wheat

Page 22: Maize demand and value chains inAsia.pdf

Cost of production in India

22

624

818

693

0

200

400

600

800

1000

1200

1400

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Pad

dy

Wh

eat

Mai

ze

Bihar Chhattisgarh Gujarat HimachalPradesh

Jharkhand MadhyaPradesh

Uttar Pradesh Uttarakhand Average

Cost of production (Rs/qn)

Page 23: Maize demand and value chains inAsia.pdf

Average cost of production, prices and farm profits (Rs/qn)

23

-200

0

200

400

600

800

1000

1200

Cost ofproduction

(Rs/qn)

Harvest price(Rs/qn)

MinimumSupport Price

(Rs/qn)

Harvest priceprofit (Rs/qn)

MS price profit(Rs/qn)

Cost of production and farm profits (Rs/qn) in eight states of India

Paddy Wheat Maize

Page 24: Maize demand and value chains inAsia.pdf

Value chains for high value maize

Page 25: Maize demand and value chains inAsia.pdf

Sweet corn

• Production and exports dominated by the United States and Europe

• However, the US is losing its market share of Asia’s importers to Thailand and China

• Advantage in year-round fresh production, lower labor costs, proximity to buying destination

• Improved quality of sweet corn products has led to an increase in Thailand’s exports.

• Thailand also has an advantage over US maize in Asian markets because it does not grow GM maize.

• Significant shift in the international trade of sweet corn for Asia

• Import of sweet corn has reduced by 12% while export is increased by 162% (2000 -2009)

• China and Japan are the major importers and China with Thailand and Malaysia major expeorter

Page 26: Maize demand and value chains inAsia.pdf

World exports of sweet corn (1000 tons)

Source: FAOSTAT, 2011

0

200

400

600

800

1000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

World Africa Americas Asia Europe Oceania

Page 27: Maize demand and value chains inAsia.pdf

Sweet corn exports from Asia (1000 tons)

0

20

40

60

80

100

120

140

160

180

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Thailand China Israel

China, Hong Kong SAR Singapore Malaysia

Indonesia Others

Page 28: Maize demand and value chains inAsia.pdf

World imports of sweet corn (1000 tons)

-150

50

250

450

650

850

1050

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

World Africa Americas Asia Europe Oceania

Page 29: Maize demand and value chains inAsia.pdf

Sweet corn imports into Asia (1000 tons)

0

20

40

60

80

100

120

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Japan China Republic of Korea China, Hong Kong SAR

Philippines Singapore Saudi Arabia Kazakhstan

Lebanon Others

Japan

China

South Korea

Page 30: Maize demand and value chains inAsia.pdf

Asia's share (%) of sweet corn global trade

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Import Export

Page 31: Maize demand and value chains inAsia.pdf

Baby corn

• Short cycle crop with a duration of about 60 days as compared to the 110-120 days for food grain crop.

• Labor-intensive high value crop with significant export demand

• Asia has emerged as the major producer and exporter (e.g. Thailand, India, Malaysia, China)

• Competitiveness in export markets depends on quality and production costs

• Income diversification and intensification for small-scale maize farmers - harvest multiple crops and

Page 32: Maize demand and value chains inAsia.pdf

Baby corn • Contract farming with major seed companies

or processors to access inputs and for timely marketing

• Small-scale farmers need to meet quality standards to benefit from value chains

• High domestic demand in China and other SE Asia countries .Growing high end domestic demand in South Asia

• Thailand is the largest exporter in the world with over 61 thousand tons exported/yr

• Export markets: USA, Japan, Malaysia, UK (canned baby corn) and

• Asian countries (Hong Kong, Singapore, Japan and Malaysia) for fresh baby corn

Page 33: Maize demand and value chains inAsia.pdf

Challenges • Access to inputs (new seeds, fertilizer, etc)

• High risk (drought, floods, etc) and lack of insurance

• Price volatility/seasonality

• High marketing and transport costs

• Inadequate farmer organization to achieve economies of scale

• Limited contract farming by food and feed processors for grain maize

• Storage and handling

• Timely marketing - especially for high value maize (perishable)

Page 34: Maize demand and value chains inAsia.pdf

Future demand for maize in Asia (IMPACT Model Projections)

34

Page 35: Maize demand and value chains inAsia.pdf

Projected maize demand in Asia

0

100

200

300

400

500

600

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

Southeast Asia

South Asia

East Asia

West Asia

North Asia

Asia

Page 36: Maize demand and value chains inAsia.pdf

Projected demand for alternative uses

36

0

100

200

300

400

500

600

2000 2010 2020 2030 2040 2050

Total

Food

Feed

Biofuel

Other

Page 37: Maize demand and value chains inAsia.pdf

Maize demand in East Asia

0

50

100

150

200

250

300

350

400

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

China

Mongolia

North Korea

South Korea

Japan

East Asia

Page 38: Maize demand and value chains inAsia.pdf

Projected maize demand in South Asia

0

10

20

30

40

50

60

70

80

90

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

Afghanistan

Bangladesh

Bhutan

India

Nepal

Pakistan

Sri Lanka

South Asia

Page 39: Maize demand and value chains inAsia.pdf

Projected demand SE-Asia

0

10

20

30

40

50

60

70

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns)

Kmer and Laos

Indonesia

Malaysia

Myanmar

Philippines

Simgapore

Thailand

Vietnam

Southeast Asia

Page 40: Maize demand and value chains inAsia.pdf

Net trade: Huge imports to meet the rising the demand..

40

-120

-100

-80

-60

-40

-20

0

20

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

SoutheastAsiaSouth Asia

East Asia

West Asia

North Asia

Asia

Page 41: Maize demand and value chains inAsia.pdf

Projected maize net-trade in SE Asia

41

-70

-60

-50

-40

-30

-20

-10

0

10

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

China

Mongolia

North Korea

South Korea

Japan

East Asia

Page 42: Maize demand and value chains inAsia.pdf

Projected Maize Net-Trade for South Asia

42

-30

-25

-20

-15

-10

-5

0

5

2000 2010 2020 2030 2040 2050

Mill

ion

to

ns

Afghanistan

Bangladesh

Bhutan

India

Nepal

Pakistan

Sri Lanka

South Asia

Page 43: Maize demand and value chains inAsia.pdf

Conclusions

• The rapidly changing demand for maize in Asia has opened new and untapped opportunities for agricultural transformation and income growth for poverty reduction in the region.

• This however requires an integrated approach (technology, markets and policy) that stimulates expansion in production to meet the growing demand while also diversifying market opportunities for resource-poor farmers to access and benefit from emerging markets.

Page 44: Maize demand and value chains inAsia.pdf

Conclusions • Improving access to new seeds, complementary inputs and services to

expand production to meet the growing demand

• Diversifying market opportunities for maize farmers in less favored areas to access emerging markets

• Building market linkages between small-scale maize producers and other value chain actors

• Improving access to market information and other business services to rural producers

• Supporting organizational capacity of small-scale maize producers to achieve economies of scale

• Enhance skills in maize vegetable production and post-harvest processing that add value to products

• Policy support for small maize producer to understand and better satisfy product quality and delivery standards