Cassava new price cycle: [3] Ethanol drives future growth

Maintaining supply chain momentum

As part of the roadmap for biofuel development, cassava is gradually moving beyond its traditional role as a food crop and raw material for food processing to become a key link in Vietnam’s green energy strategy. At the heart of this value chain, Tay Ninh is considered the capital of the cassava industry, with the largest cassava-growing area in the country and more than 60 processing plants, accounting for around 40% of all operating cassava starch factories nationwide.

The large-scale production capacity has enabled Tay Ninh not only to lead in cassava processing but also to become a key hub for regional raw material linkages. According to Mr. Le Huu Hung, Vice Chairman of the Vietnam Cassava Association and Chairman of the Tay Ninh Cassava Starch Producers Association, at the end of 2025, the association and a delegation of Vietnamese businesses signed an agreement with Cambodian partners, witnessed by the Cambodian Ministry of Commerce, on importing cassava worth US$5 billion over five years.

Under the agreement, Vietnamese enterprises will import around 9 million tonnes of fresh cassava roots annually, valued at nearly US$1 billion, to supplement raw material supplies for cassava starch and modified starch processing plants serving both export markets and domestic demand.

As domestic cassava-growing areas have yet to fully meet processing requirements, proactively securing supplies from Cambodia is considered an important solution to maintain factory operations and ensure a stable supply chain for various industries that use cassava starch.

According to Mr. Nguyen Quoc Manh, Deputy Director General of the Department of Plant Production and Protection under the Ministry of Agriculture and Environment, Vietnam currently has around 517,000 hectares of cassava, with fresh root production reaching approximately 10.5 million tonnes. About 85% of the output is supplied to processing industries, including starch, ethanol, monosodium glutamate, and various other industrial products.

This shows that each cassava root now has multiple destinations across different value chains. Therefore, the entire cassava output cannot simply be converted into ethanol production potential. Ethanol is only one of many competing end uses within the cassava industry.

Balancing starch production and biofuel development

Vietnam currently has six ethanol production plants, with dried cassava chips as their main raw material, produced from fresh cassava roots at a ratio of approximately 2.5 tonnes of fresh cassava roots per tonne of dried cassava chips. Current cassava chip production is only sufficient to meet the demand of existing ethanol plants.

Meanwhile, a large proportion of cassava supplies continues to be prioritized for the cassava starch industry, which has grown rapidly over many years due to strong export demand, particularly from China and other Asian markets.

According to Mr. Le Huu Hung, this imbalance stems from the investment orientation adopted by many localities in the past, which focused on developing cassava starch processing plants rather than building supply chains for ethanol production. The dried cassava chip market is currently managed mainly by agricultural commodity traders on a seasonal, fragmented basis, lacking a professional system comparable to that of the starch processing sector.

This highlights the need to develop a long-term raw material strategy for ethanol production as demand for biofuels continues to rise. Building a sustainable ethanol supply chain requires coordinated efforts across raw material areas, processing enterprises, distribution systems, investment policies, and production planning.

The Government has issued Resolution No. 29/2026/NQ-CP piloting several policies to implement the roadmap for the use of E10 gasoline, effective from June 16, 2026 to June 15, 2028. Under the resolution, the Ministry of Agriculture and Environment is tasked with developing mechanisms to establish raw material areas for biofuel production and announcing greenhouse gas emission reduction indicators for biofuels.

“Alongside food and industrial demand, ethanol will become another important market outlet for cassava in the future. With an appropriate development strategy, cassava can not only increase farmers’ incomes but also contribute to energy security, promote the transition towards a low-carbon economy, and help realize Vietnam’s green development goals,” Mr. Le Huu Hung said.

The Ministry of Agriculture and Environment is orienting the cassava industry towards sustainable development by improving productivity rather than expanding cultivation areas. At the same time, it encourages investment in modern processing technologies, the utilization of by-products, and the reduction of environmental impacts.