Asia Cassava Resources Holdings, the largest importer of the starchy plant's dried roots into China, reported sales volume doubled in the nine months to December on the back of rising demand from makers of liquor, chemicals, and ethanol fuel. The Hong Kong-based and listed company had cassava sales of just over one million tonnes in the period, up from around 500,000 tonnes in the year-earlier period, chairman Chu Ming-chuan said. Around 60 per cent of annual sales are typically recorded in the second half of the financial year, which ends on March 31, he said. The company is the biggest grower and exporter of cassava in Thailand and about 20 per cent of sales are to makers of ethanol fuel, with the rest sold to makers of liquor and chemical producers in China. Chu attributed the growth in sales to new customers and increased demand from existing customers. The company's largest customer is Henan Tianguan Ethanol Fuel, which is 40 per cent-owned by the nation's largest oil producer China National Petroleum Corp. Henan Tianguan is one of four firms tasked by Beijing to build pilot plants to make ethanol fuel from plant materials as a cleaner-burning alternative to petrol. Due to concerns that overzealous investment in ethanol fuel production capacity would drive up grain prices and inflation, Beijing in 2007 stopped approving new plants that use wide-acre grain crops as raw material. Those that use plant sources such as cassava are encouraged. Ethanol fuel production is still a nascent industry whose viability is heavily dependent on state subsidies and sustained high oil prices. Demand depends on how fast Beijing pushes the expansion of ethanol fuel pilot programmes via subsidies and fuel price control policies. For example, state control on domestic petrol prices saw Shenzhen-listed Anhui BBCA Biochemical post an operating loss of 315 million yuan (HK$358 million) in the first nine months of last year amid low oil prices. But owing to 574 million yuan of subsidies, it booked a net profit of 188 million yuan on 3.68 billion yuan of sales. Ethanol prices are also state-stipulated and are slightly cheaper than petrol prices. Ethanol is mixed into ordinary petrol to produce ethanol fuel, with ethanol making up not more than 15 per cent of the content. Chu said cassava's higher starch content meant it is more competitive than corn, the main raw material for ethanol production on the mainland. This is because it takes only 2.8 tonnes of cassava to make a tonne of ethanol, compared to 3.15 tonnes for corn. The corn price, at HK$1,900 a tonne, is also around 20 per cent more expensive than cassava at HK$1,550 yuan a tonne. But in Thailand, state fuel price controls and a lack of subsidies meant the ethanol fuel industry had not yet been developed, Chu said. It is the world's third largest cassava producer with output of 29.1 million tonnes last year, according to the UN Food and Agriculture Organisation. China produced 4.5 million tonnes. Chu said cassava demand is expected to rise since Beijing has targeted to raise ethanol fuel output to 10 million tonnes by 2020 from 5.2 million tonnes this year. Asia Cassava plans to spend HK$10 million to expand its procurement and logistics facilities in the six months to March 31, and HK$8 million to retrofit its new procurement centre in Cambodia. It has five procurement and warehouse centres in Thailand and one in Cambodia. To cut logistics costs the company recently agreed to buy a US$5.95 million vessel capable of moving 43,500 tonnes of cassava from Thailand to mainland ports ten times a year. Chu expected the investment to be recouped in less than three years, based on a freight saving of US$40 per tonne for each trip, assuming the vessel returns to Thailand empty. The company plans to add one or two procurement and warehouse centres annually. 'The key to encourage farmers to grow more cassava is to set up procurement facilities near them,' Chu said. 'Our centres are open for business 365 days a year and will buy as long as their product meets our quality standards and they are willing to take the prices we set.'