Kerala: Private cashew processors stare at huge losses


With around 400 cashew factories in Kollam district remaining closed due to a variety of reasons including high operational costs leading to accumulating losses, small scale private cashew processors are at the receiving end. Many cashew processors are now facing revenue recovery procedures from the banks due to default in mortgage payments. Recently, a cashew processor who incurred a huge loss from his factory was on the verge of suicide and was saved at the nick of time.


A cashew processing unit owner hailing from Chandanathoppe in Kollam attempted suicide as he face revenue recovery threats for his debt to the tune of Rs 7.5 crore from the Karnataka Bank. Five factories under his company Alfana cashews remain shut for more than a year now, which was a source of livelihood to some 800 employees. Another processor from Randam Kutty in Kollam having a default of Rs 4.5 crore has been served with revenue recovery notice asking to repay the money within a month’s time from the Corporation Bank.


“Several cashew factories are on the verge of revenue recovery proceedings owing to the financial crisis they are in. The industry is not at all profitable in Kerala when compared to neighbouring states. For processing a bag of 80 kg cashew here, it will cost nearly `2,000 more than other states like Tamil Nadu, Karnataka, and Andhra Pradesh. The government should immediately intervene by announcing financial packages modelled on other industries,” said I. Nisamudeen, secretary of federation of cashew processors and exporters.


The private owners are also denied sufficient time to repay dues as the debt is listed as a non-performing asset (NPA) soon after the completion of 90 days of non-payment. At present, the banks charge an interest rate of 9%-12% from the processors which could be included as a financial package with the intervention of the government. Proper repayment schedule in long term and availability of new working capital from banks could save the sinking industry.

Vietnam’s path to become world cashew king

A worker examines cashew nut after preliminary processing (Photo: SGGP)

Vietnam has overcome India, the world’s largest and long standing cashew nut processing and export nation for 12 years, and now continues leaving the country far behind to become the new capital of the world’s cashew processing industry.

Nearly a decade ago, the cashew processing industry took shape in India and its city Kollam became the world’s cashew capital. By the end of the 1990s, India including Kollam entered the most golden phase, exporting 97,000 tons of cashew a year accounting for 80 percent of the world’s total processing output.

After 1975, Vietnam started exporting raw cashew nut. The country’s cashew processing industry started to toddle in early 1980s when the Government encouraged businesses to export peeled instead of raw cashew nuts.

Since the Government encouragement the industry had begun to become one of the most earners and recruited most unskilled workers, contributing to create jobs for rural laborers.

However after industrial zones were set up in many provinces and cities especially in the southeast region, which was considered as the capital of Vietnam’s cashew industry, garment and textile field started developing and became the most attractive industry to laborers.

Workers gradually left cashew peeling plants for garment and textile companies. The situation put the cashew industry in front of a decisive turning point to invest in machines and equipment to replace the scarce laborers.

A group of engineers from HCMC Export Farm Produce Company led by Mr. Nguyen Van Lang, who is considered to be the father of the Vietnam’s cashew processing industry afterwards, started studying a technology to cut cashew nut shells and grained initial successes in 1984.

The technology’s price accounts for only 10 percent of import items. However, Mr. Lang and the group was just able to transfer the technology to businesses in Song Be province (Binh Duong and Binh Phuoc provinces now), and Long An province until the end of the 1980s under the huge pressure from laborer scarcity.

Ten years later, up to 60 plants used the technology which was continued being popularized later on. The technology has taken Vietnam from a raw cashew nuts exporter to become one of leading nations in exporting peeled product.

Spectacular change

Workers at a cashew nut processing plant (Photo: SGGP)

Statistics from Vietnam Cashew Association (Vinacas) show that Vietnam started exporting cashew nut to China in 1992 and the US in 1994. Two years later, the country began importing raw cashew nuts from Africa to process and terminated export of raw cashew nuts to India.

From 2002 to 2003, the Vietnam’s cashew industry posted development leaps to become the world’s second largest cashew production, processing and export nation. In 2006, the country outstripped India to become the world’s top exporter.

Year of 2007 witnessed a strong change in technical investment structure and cashew processing technology especially in the phase of automatic shelling which Vinacas continued improving in 2009 and 2010. Vietnam obtained the export turnover of $1 billion for the first time in 2010.

From only a group of Mr. Lang studying cashew processing technology initially, there were as many as 13 domestic mechanical engineering companies attended an equipment showcasing event organized by Vinacas in Binh Duong province in 2012. They comprise Khuong Viet, Anco Viet, Son Viet, My Anh An , Phuc Thang, Gia Loi, Tien Loc Phat, Viet Le Nguyen and Thanh Son.

Over 80 percent of equipment at cashew processing plants have been made by domestic firms. That is the result of national program KC07 implemented in 2006-2010 to study applications and develop technologies for industrialization and modernization.

The entire of 13 phases in cashew processing have been fully or partly mechanized, reducing nearly 80 percent workers.

Nearly 500 international businesses attended the cashew conferences in Vietnam to learn about business opportunities in the end of 2017,

Early December 2017, The Wall Street Journal published the article “How Cashews Explain Globalization,” saying that today Vietnam is the cashew king thanks to an ingenious push to automate the business. Kollam is reeling, a victim of misguided government protectionism and its own unwillingness to adapt to the realities of the freewheeling global economy.