This project aims to examine policies that have influenced cassava and sweet potato starch production in the Philippines and formulate policy recommendations for action/advocacy or further research. Root crop starch could have a huge potential economic and social contribution considering its various uses. It could be a basic ingredient, binder, filler, adhesive, stiffener, thickener in food processing, pharmaceutical and industrial manufacturing sectors.
The development of cassava and sweet potato sector particularly anchors on the High-Value Commercial Crop (HVCC) Program of the government. Moreover, a number of policies that address agricultural development are already in place which cassava and sweet potato stakeholders could hinge upon to uplift the industry. The major policies examined which bear implications on the starch processing sector are trade, credit, infrastructure, research and development.
There are twelve cassava starch mills listed with the Cassava Planters and Millers Association. But currently only five cassava starch mills in Lanao del Sur, Bukidnon, Bohol and Negros Occidental are operational. Two sweet potato starch mills were put up in Pangasinan and one in Leyte but they all closed down. One reason for the closure of some mills was inefficiency in operations due to inadequate supply of fresh roots for processing. The shortage of mills' raw material requirements is due to low farm yield, farmers' unwillingness to sell to the mill due to its low buying price compared to the price in the fresh root market, and conversion of root crop farms to other cash crops. Problem of procuring from other areas is the distance involved as the root crops are quickly spoiled. In other cases, the transport cost on the part of the farmers discourages them to sell to starch processors.
The problem of low farm yield relates to technology adoption and other support such as credit. Research and development efforts in the country have generated cassava and sweet potato varieties appropriate for starch processing. However, promotion and distribution of such planting materials is reportedly weak. Credit assistance was also extended to growers, e.g., through contract growing scheme, cooperatives, for their production requirements. But there were problems encountered in handling of loans and farmer's repayment performance. There were instances when farmers shift from root crops to other higher income crops such as corn and sugar cane. This happens particularly when the environment becomes favorable, e.g., irrigation facilities, improved roads, available farm inputs. These circumstances boil down to the lack of incentives to farmers to produce cassava and sweet potato, thus affecting the needs of starch processors.
Trade policies, particularly the ASEAN Free Trade Area (AFTA) to which the Philippines has acceded allegedly brought about problems to the cassava starch processors. The drastic reduction of import duty on cassava starch from ASEAN member countries like Thailand has encouraged importation. Worse, technical smuggling has taken place due to inadequate surveillance at ports of entry. Consequently, local starch is losing its price competitiveness to imported starch discouraging some local starch millers to continue operations. The volume of imported starch has now surpassed that of local starch in the market. With other mills operating below capacity, the less they are able to offer better buying prices to cassava suppliers. The starch millers have actually articulated their laments to concerned authorities and it now depends on what prerogative the government will give to the sector. Importation may be favorable to the starch traders and users but the benefits may be offset by the continuing devaluation of the Philippine peso.
Meanwhile, AFTA has not as much adversely affected the sweet potato starch sector as the country is not currently importing it. On the other hand, the country has started to venture on sweet potato starch production and exportation although it was not able to exploit its full potential. The establishment of sweet potato starch mills would have assured the country an export market, e.g., South Korea, had strategic location of the mill been carefully studied.
Stimulating production and processing of fresh root crops into starch indeed depends on incentives provided to the sector. The government has a pivotal role in this effort by specifically targeting these sectors in its policy actions. Foremost, it has to conduct a wider-based consultation with various stakeholders for a better-guided decision making. If it recognizes the economic potential and ensuing benefits of root crop starch given the versatility of their uses, it must devote effort and resources to invigorate the industry towards:
1) establishment of key production areas specifically for these root crops and in areas where the starch mills are situated;
2) promotion and distribution of appropriate varieties with high yield and high starch content;
3) infrastructure, e.g., roads, storage, in key production areas to reduce production and marketing cost of both farmers and processors;
4) better institutional coordination, e.g., among farmers/cooperatives, millers, lending entities, local government units; and
5) continuous research on technologies, functional properties and qualities of fresh roots and root crop starch that will reduce processing cost and improve market potential.
