700 out of 824 factories closed in Kollam

Cashew export council seeks revival package

Kerala’s cashew industry, the sole livelihood of around three lakh rural women, is pinning its hopes on a revival package supported by Central and State governments and banks, to weather the crisis it faces.

Out of the 824 factories, almost 700 are closed down and around 60 businesses already became NPAs. The sector was on a sound footing till 2010-11 but subsequently profitability eroded due to various reasons.

RK Bhoodes, Chairman, Cashew Export Promotion Council of India, cited competition from Vietnam on import of raw cashew nuts, increase in wages by the Kerala government, cut in export incentives, import duty, and surge in import prices of cashew kernels contributed to the slide.

Soaring input costs

According to him, working capital erosion was sparked by an abnormal increase in raw nut price. After 2014-15, processing in Kerala has become unviable and few processors have done partial mechanisation without term loans.


Raw cashewnut price during 2012-13 was 59.75/kg and in 2017-18, it stood at 134.39. In the case of kernels, in 2012-13 the price was at 404.20/kg and in 2017-18, it went up to 696.97.


Considering the increase in processing charges, the production cost has gone up steeply. against the price hike in cashew kernels. The processing charge in Kerala is hovering at 3,200-3,500 for an 80-kg bag, while in other States it is ranging from 2,200-2,400. In Vietnam, it is less than 700-750.


Available bank facilities have not increased inspite of the increased working capital requirements. The situation was more severe during 2017-18, when the raw nut price shot up by 27 per cent against just 8.45 per cent hike in kernel prices during the first three quarters. This has resulted in a sudden financial crunch that led the already ailing industry to an almost full closure, he said.


Since the raw nut procuring capacity is directly proportional to the cash availability, he said the price increase and limited bank facility posed a constraint to small processors for procuring and storing the raw nuts for off season.

African imports

CEPCI suggested that the crisis has to be addressed by framing short-, medium- and long-term solutions. The Indian processing is heavily dependent on imports of raw cashew nuts from African countries. As the African nations encourage domestic processing of cashew nuts and envisage 50 per cent of raw cashew they produce to be processed domestically by 2025, our domestic production has to be augmented to reach 20 lakh tonnes by then. For this, CEPCI has already submitted a roadmap to the government which aims to attain the target in three phases through pre-harvest management, area expansion, re-plantation.

Merely 40% of cashew stock sold in IVC

Less than 40% of cashew stocks sold in Côte d'Ivoire, according to producers

© Other press by DR
Korhogo Inauguration of the headquarters of FENAPACI 
korhogo Inauguration of the headquarters of FENAPACI.Photo: PCA BAMBA ADAMA

Barely 40% of cashew stocks are sold in the 2018 season compared to previous seasons, when 80% to 90% of stocks were already sold, Yamoussoukro said on Saturday. a General Assembly of actors of the sector, the president of the federation of cashew farmers of Ivory Coast, Bamba Adama.

"In terms of loss, it is a lot of money lost," said the chairman of the Administrative Council of the Union of Agricultural Cooperatives of Côte d'Ivoire, Bamba Adama, hoping that the stocks available to producers will be sold.

He explained that Côte d'Ivoire is facing the slump in cashew nuts due to a drop in the price of 500 francs CFA. In Burkina Faso, the price is fixed at 900 CFA francs per kilogram and 1000 CFA francs in Guinea-Bissau, it was learned.

This situation, according to Bamba Adama, encourages product leakage outside the country's borders to Ghana, and represents a shortfall for the State of Côte d'Ivoire, but also for the Ivorian economy. According to statistics, more than 200,000 tons have already left for Ghana.

"It worries us, that's why we actors in the sector, we decided to put together and set up the interprofessional to find the solution," said the farmer.

The General Assembly of cashew industry associations brings together the four families of the cashew sector, namely the producers of the 19 producing regions, the buyers, the exporters and the processors.

"We met and we agreed that only an interprofessional organization is able to be the interlocutor with the authorities so that we can make ourselves heard and explain our problems," said Bamba Adama.

The interprofessional, according to Bamba Adama, will be a tool to help train our producers to the quality of the products, to monitor everything that is done in the field, to prevent products from leaving the country and to reach the country. objective of cashew processing as desired by the State of Côte d'Ivoire.

Côte d'Ivoire is the largest cashew producer with 700 000 tonnes and has about 450 000 producers.

Revival package for Indian cashew industry

Center, state-level revival package proposed for cashew sector-India

In a bid to revive the ailing cashew sector, the Cashew Export Promotion Council of India (CEPCI) has come out with a revival package which proposes short, medium and long-term strategies. The revival package which is based on the two broad plans of reducing the cost of production and increasing the domestic production of raw cashew nuts (RCN) also proposes the package will have to be implemented by both the state and Central governments.

“The abnormal raw nut price increase and limited bank facility have become a constraint for small-scale cashew processors to procure RCN,” said R K Bhoodes, chairman, CEPCI, at a press meet here on Tuesday. “With limited finance decreasing the production, the interest burden of small and medium-level processors has increased substantially and they might finally end up in bankruptcy. If the crisis is unaddressed, it will lead to the total collapse of the industry.”

One of the important demands, pitched by CEPCI in its revival package, was to declare the cashew industry as sick by the state government. While forwarding the suggestion to the state government to conceptualise a new credit guarantee organisation in line with the CGTSME at the Center, CEPCI also demanded the need to send a representation by the state to the Centre asking it to fully withdraw import duty. According to Bhoodes, considering the crisis in the cashew sector, the Central government might have to consider the possibility of announcing a special economic package for the cashew sector. He added the Centre should also weigh the possibility of banning or restricting the import of low-quality cashew kernels. “We will consider the aspect of the handover of the revival package to the Prime Minister, Union Finance and Commerce Ministers and to the Chief Minister in a time-bound manner,” said Bhoodes.

At the same time, in data presented along with the revival package, CEPCI claimed out of the 824 registered factories, 700 had to down its shutters, which further left 2.50 lakh workers jobless. While saying almost 60 entrepreneurs were notified as non-performing assets and the loans of around 100 processors are marked as stressed loans by banks, CEPCI added the workers were also being denied ESI facilities due to lack of working days due to non-operation of factories. The cashew industry is looking towards a meeting on April 27 in which the representatives of various banking institutions, trade union representatives and industrialists will attend.

Vietnam: Season is less fun

Vietnam: Season is less fun

Bu Gia Map Agricultural Cooperative (Bu Gia Map Commune, Bu Gia Map District, Binh Phuoc) was established in 2016. Currently, 132 cooperatives are involved with a total area of 400 hectares. Over the past two years, the performance of Bu Gia Map Agricultural Cooperative has been rather low due to the loss of cashew nut. In particular, the 2017/2018 is even more disappointing, because not only crop loss in productivity, but also quality losses.

According to Tran Thi Yen, director of Bu Gia Map Agriculture Cooperative, the crop of 2017, due to unseasonal rain, pests and diseases, productivity of cooperatives is quite low, reaching only 7-8 quintals per hectare. In the season 2018, the situation is more uncertain as many pests such as stem borer, leaf blight ... raging across the whole area of the cooperative. Despite the attention and support from pest and disease prevention from provinces, districts and communes, but the situation on cashew is still heavy. On the whole of Bu Gia Map commune, about 80-90% of cashew area is pestilent.

Not only that, 2017/2018 termination is quite early. Every year, at the end of April lunar year, new cashew growers prune, fertilize ... for cashew when the cashew on the tree has run out. At the end of February, beginning of March lunar month, many households have to embark on the care of cashew to prepare for the next. Therefore, it is likely that in 2017/2018, the average productivity of Bu Gia Map Agricultural Cooperative can only be about 6 quintals per hectare, only half of normal cases.

Equally worrying is the decline in quality of raw materials. In case of 2016/2017, although the yield is reduced sharply but raw quality is good, when the rate of floating seeds (when in water) is low. This year, the floating rate is too high, up to 40-50%. Therefore, despite the fresh price of 38,000-39,000 VND / kg (the high price), the cashew growers in Bu Gia Map commune sell only for about 28,000-29,000 VND / kg. The price of 38,000-39,000 VND / kg is equal to the recovery rate of 30% or more (when dried), and Bu Gia Map has a much lower recovery rate, so only sell at that price.

Not only in Bu Gia Map Commune, crop failure and sharp decrease in cashew nut quality are common in many localities. Pham Van Nguyen, a cashew expert, said that the rainy season 2017 extends to the beginning of 2018, affecting many areas of cashew growing during the first flowering.

For experienced farmers who have good cashew conditions, they can still maintain their productivity. But many of the current cashew growers are poor households, lack of conditions, and caregiving experience, resulting in heavy productivity. On the other hand, many cashew orchards have been exhausted due to serious pests in 2017, to 2017/2018, flowers, late fruits, but still ends early, also greatly affect productivity thing.

In Binh Phuoc, many cashew orchards produce only one third of their production in 2017. In Binh Phuoc, Lam Dong and Binh Thuan provinces, there are districts that have lost cash crops in the district such as Tanh Linh , Da Te, Da Huoai, Cat Tien, Bu Gia Map ...

Information from processing enterprises also showed a clear decline in both quantity and quality of cashew. According to Mr. Le Nhat Khoa, Deputy Director of Phuc An Production Trading Company Limited (Phuoc Long town, Binh Phuoc province), every year, the recovery rate of Binh Phuoc is an average of 30-32% (drying). In 2017, despite the crop failure in production, the recovery rate is still over 30%. This year, the recovery rate is only 27-28%.

A comforting thing for processing enterprises is the case in Cambodia has signs of season. In the past time, there was a small amount of crude imported from Cambodia to Vietnam. This will help businesses less pressure on raw materials when the import from Africa is still being sold at high levels.

SAMSON'S CASHEW MARKET REPORT - 17 APR 2018

Cashew kernel prices came down significantly during March with some processors selling W320 as low as 4.25 FOB for prompt and nearby shipments. Prices have moved up a few cents during April but still lower than the levels traded during Jan/Feb. Differential between the lowest and highest offer at any given time has widened considerably.

Current range of prices is W240 from US$ 4.75 to 5.00, W320 from US$ 4.40 to 4.85, W450 from US$ 4.35 to 4.60, SW from US$ 4.30 to 4.50, Splits from US$ 4.15 to 4.40 and LP from US$ 3.50 to 3.75 FOB

RCN prices also declined during March - lowest levels were 200-300 dollars lower than the highs of Jan / Feb. Now, prices seem to have bottomed out and there is a slight pick up in the last 2 weeks. Current prices are in the range of US$ 1900 to 1950 for IVC, around US$ 2000 for Ghana, around US$ 2050 for Benin and US$ 1900-2000 for other origins (Burkina, Togo, Conakry etc)

The current RCN prices are lower than the peaks of Nov 2017 - Feb 2018 but higher than the range in which majority of the 2017 crop was traded.

The current kernel prices are lower than the peaks of mid 2017 and near the bottom of the range traded during 2017.

As noted before, RCN prices have moved up about 60-70% in the last 3 years where kernel prices have moved up only 30-35%

Overall, supply of kernels in 2018 is likely to be the same as 2017. Vietnam & Cambodia will have bigger crops than they have had in last 2-3 years but the earlier expectation of huge crops in these 2 origins has been tempered down from 600-650K to about 450 or max 500K. There is some concern about crop in some areas of India. No adverse news from West Africa but kernel yields are certainly lower than normal at this stage of the crop. This is a trend we have been seen for the last few years - African crops are bigger but kernel yields are lower.

Vietnam has been slow in buying in West Africa. One reason is the higher purchases from Tanzania in the last quarter of 2017 coupled with bigger crops in Vietnam & Cambodia. Other is reluctance of processors to pay the very high prices quoted in Feb / early March in the face of slow kernel market. Large processors have been buying in the declining market. In the last couple of weeks, there are signs of more processors starting to buy.

Indian processors have bought reasonable quantities in West Africa mainly because low purchases in East Africa meant stocks were low. They will probably continue to buy if prices remain around current levels.

Kernel buyers have been comfortable with their strategy to buy small quantities for nearby shipments as prices have been coming down. As there is no concern on supply, they have not felt the need to take any large forward covers - especially when the processors are asking significant premiums for deliveries beyond couple of months.

The fact that not much kernel business has been done for second half 2018 shipments is a double edged sword. It means that processors will need to sell at regular intervals to maintain inventory & cash flow levels. It also means that buyers will have to buy at regular intervals to have enough product to deliver to roasters and roasters to retailers. The problem could be if the RCN prices do not come down further (or go up) without an increase in kernel prices 0r kernel activity. Processors would reduce RCN buying and this could result in reduction of conversion & kernel availability for some periods although RCN availability may be okay.

We have seen more than once that cashew market can do what very few expect, BUT Our feeling is that in the coming weeks, RCN prices will stabilise around current levels or move up a bit. If that happens, processors will be forced to increase kernel prices as their margins are already under pressure with current prices. And that may lead to an increase in kernel activity if buyers see the market turning.

Although we do not expect prices to move up too much, we would not be surprised if W320 are trading around the high of the current range. Unless something big happens, downside is limited.

Pankaj N. Sampat

Source: SAMSONS TRADERS