Market and product

Increasingly high cassava prices have spelled trouble for local ethanol factories, according to an annual report from the Vietnam Bio-fuel Association.

Export of dried sliced cassava to China has remained high, keeping local prices at high levels. The association said dried sliced cassava cost US$120 a ton in 2007 but the price doubled to US$250 at the end of 2013.

China’s demand for cassava is huge while Vietnam’s output is limited. China alcohol plants have completed their depreciation. Those factors have led cassava prices to surge, making it hard for Vietnamese ethanol businesses to afford, according to the report.

Vietnam now has a number of ethanol plants with capacity ranging from 45 to 120 million liters a year such as Dong Xanh, Tung Lam, Binh Phuoc, Dung Quat, Phu Tho, Dak To and Dak Nong. Most of them use dried and fresh cassava as feedstock.

Vietnam’s total cassava acreage is around 450,000 hectares with average output of 20 tons per hectare, supplying around 9.5 million tons of fresh cassava a year. Of this, four million tons goes to flour processing plants and the remainder is sliced and dried with a total volume of 2.5 million tons per annum.

The association said factors including high material cost, investment and depreciation are posing challenges to Vietnamese producers, mostly newly established ones, and making it difficult for exporters to compete with U.S. and Brazilian firms. Meanwhile, demand for cassava on the local market is low, making domestic businesses grapple with difficulties.

As planned by the Government, petrol with 5% bio-ethanol content, or E5 petrol, will be made available in seven provinces and cities including Hanoi, Haiphong, HCMC, Can Tho, Danang, Ba Ria-Vung Tau and Quang Ngai from December 1, 2014 and E5 and E10 petrol will be launched nationwide at the end of 2017.