However, prices on the first day of trading cannot be predicted, depending as they do on market demand. Tapioca chip has been trading between Bt3.70 and Bt4 per kilogram on the open market.

Napaporn Kurupasutachai, Afet president, said yesterday that the commencement of trading aimed to stabilise local prices for both cassava root and tapioca products.

The policy is also designed to reduce the business risks of manufacturers and exporters as well as farmers.

Tapioca chip becomes the sixth product to be traded on Afet, following 5-per-cent white rice, ribbed smoke rubber sheet No 3, standard Thai rubber, latex and premium grade tapioca starch.

Napaporn said the Afet system would boost the confidence of traders and help reduce price fluctuations. It is hoped the move will persuade traders and farmers to trade greater quantities of tapioca chip, as they will know the future price of the product.

"There will be no need for the government's pledging programme any more as traders will be involved in Afet," said Napaporn.

It is predicted that tapioca chip traded on the exchange will gradually increase thanks to an expected rise in demand on the world market.

Trading information about Afet will be released to the public to allow farmers, entrepreneurs and investors to keep abreast of market movements, six months in advance. Traders are also expected to use the market to reduce their risks.

An average of Bt200 million is traded each day on Afet. Rubber is the main product and has the highest value.

The exchange is also considering bringing in more products, including white shrimp and sugar, said Napaporn.

Private tapioca traders also expect the commencement of trading in the futures market will stabilise prices.

Ung Meng Chua, chairman of Cholcharoen Group, said the move should stabilise prices and bring an end to the government's intervention programme.

The programme has destroyed the tapioca market as it led to farmers only harvesting their products during the pledging season, he said.

Currently, cassava root is priced at Bt1.30 per kilo. This year the price has fluctuated from Bt0.90 to Bt1.50 because of changes in demand and the government's intervention policy.

Ung said an increase in demand for tapioca would increase the price without the government needing to intervene in the market.

Siripol Yodmuangcharoen, director-general of the Commerce Ministry's Internal Trade Department, said the government would study Afet tapioca-chip trading for a while before deciding whether to cancel its pledging to farmers.

"The government will decrease market intervention if trading on Afet increases gradually," he said.

Siripol also said demand from the European Union and China, both major importers of tapioca, was expected to increase gradually, as tapioca can be used for producing alternative fuel.

Petchanet Pratruangkrai

The Nation