Rattled by high prices fixed by Thai tapioca exporters, Indian buyers have decided to back tapioca growers in Tamil Nadu to increase their acreage from this season. Sago (sabudana) and tapioca starch prices in India increased sharply in the past one year because of low supply in the Salem (TN) spot markets. Salem is the country’s biggest tapioca trading centre.
Price of sago increased to Rs 2,800 per 90-kg bag from Rs 1, 700 in the last one year, while that of tapioca starch more than doubled to Rs 2,100 from Rs 1,000 per bag.
Prices went through the roof because of shortage of tapioca tubers compounded by increased sago demand. Tapioca starch is used as a raw material for industrial purposes. Industries like textile, paper, adhesives, confectionaries, dyes and chemicals, pharmaceuticals and corrugated boxes use tapioca starch as a raw material.
With tapioca prices surging, manufacturers have started using maize starch in place of tapioca starch, said J Manjunath of Sivadarsh Exports & Imports, a leading tapioca starch supplier in India. He said that Thailand is trying to take advantage of the sharp hike in Indian prices.
Thailand has increased prices to yield benefits on increasing demand for the product, primarily in China and India, he added.
According to Thai Tapioca Starch Association (TTSA), the apex body of tapioca starch industry in Thailand, the current tapioca starch prices for export markets increased to $330 per tonne compared to $280 per tonne in January 2009.
The international demand for tapioca products has been reflected in Thailand’s domestic market too. In Thailand’s spot markets, starch prices increased to 10 bhat per kg in November 2009 from 8.60 bhat in January. (1 Thai baht is equal to Rs 1.39).
Thailand is the world’s biggest exporter of tapioca products, controlling 75% of the global market. It exports tapioca in the forms of chips, pellets and flour.
?There is no profit even if we import tapioca starch from Thailand at current prices,? added Manjunath, who is also a senior member of Sagoserve, the country’s lone state-owned exchange for tapioca products in Salem.
In India, tapioca is cultivated only in Kerala and Tamil Nadu. Although Kerala is the largest producer of tapioca in the country, Tamil Nadu, with 82,000 hectares under cultivation, stands first in terms of processing tapioca into starch and sago. In Tamil Nadu, Salem is the biggest tapioca starch and sago market.
Due to supply crunch, volume of tapioca products traded in Sagoserve declined to 17.26 lakh bags in 2008-09 from 19.04 lakh bags in the previous financial year.
Lured with the current higher prices, farmers in TN now have started increasing Tapioca acreage. However, Manjunath said prices of tapioca products are expected to fall in India from next year.