COIMBATORE: A sharp rise in tapioca prices, driven by poor yields and dwindling arrivals, has significantly increased the production cost of sago and starch across Tamil Nadu, forcing many mills to curtail operations and triggering concerns over supply in the months ahead.
The price of tapioca, the primary raw material for sago and starch, has more than doubled from Rs 4,500 to Rs 6,500 per tonne a few months ago, depending on quality, to around Rs 12,000 per tonne. Industry stakeholders say prices may rise further as supplies remain scarce.
"Prices have more than doubled due to a steep fall in yield caused by inadequate rainfall and other factors. We have not witnessed such a drastic decline in tapioca output in recent years. There is little possibility of prices easing in the near future," said SRP Selvam, a member of SAGOSERVE and owner of a sago manufacturing unit.
The peak production season for sago generally coincides with strong market demand between November and March. Tapioca cultivation also peaks during this period. After supplies from the plains taper off, mills depend on limited arrivals from hill regions such as Kolli Hills, Pachamalai and Karumandurai.
"In the past few years, arrivals remained healthy even during the off-season. This year, however, supplies from the hill regions have also been poor. Only about 10 per cent of larger mills, which normally operate throughout the year, can procure tapioca. The shortage has pushed up prices and reduced production of both sago and starch by nearly 20 per cent," Selvam said.
The industry is also grappling with rising operational costs. Manufacturers said global conflicts and higher fuel prices have increased transportation expenses, fuelwood costs, machinery maintenance charges and other operational expenditures.
While demand for sago has been gradually declining, the market for tapioca starch has expanded considerably due to its growing use in sectors such as textiles, paper and packaging, as well as in food processing units that manufacture products including ‘appalam’, ‘vadagam’, ‘murukku’ and mixture.
"The price of a 90-kg bag of tapioca starch has increased from about Rs 3,900 to Rs 5,400 in the last six months. Demand for starch has grown substantially over the years, leading to a nearly 60 per cent increase in production. Prices remained low for the last three years and have risen only now because of the spike in tapioca costs. Similarly, the price of sago has increased to around Rs 5,000 from Rs 3,700 a few months ago," said V Sundaram, a sago manufacturer in Attur in Salem.
Manufacturers said uninterrupted supplies and bumper harvests in recent years had enabled year-round production. However, the current shortage has disrupted the sector.
"Only this year has there been a break in production because tapioca arrivals have fallen sharply. Many units have stopped manufacturing sago over the last month, and only a handful of mills are operating. In Attur taluk alone, only 70 to 80 of the 136 registered sago units remain operational. Of these, only a few are currently running,” said another manufacturer.
Manufacturers have urged the government to revive the supply of sago through the Public Distribution System and introduce sago-based food items in school noon meal programmes to boost consumption.
They have also sought the creation of a price stabilisation mechanism. "The government could procure sago and starch when prices are low and release stocks when demand rises. Such a measure would protect farmers from price crashes while ensuring stable supplies. Individual manufacturers do not have the infrastructure required for large-scale storage," industry representatives said.