Vietnam Will Overtake India In Cashew Market Soon

Kochi: Vietnam, which is currently the second largest producer and exporter of cashew in the world, would overtake India in few years time if concerted efforts were not taken by the authorities to increase the production of raw cashew nuts indigenously.

Speaking to Business Line, P. Bharathan Pillai, Chairman, Cashew Export Promotion Council of India (CEPCI), said in the past “we used to import large quantities of raw cashew nuts from Vietnam and ever since they started processing supply was stopped”.

Now, most of the imports are from West and East African countries. In fact, almost half of “our total raw nut requirements of around 12 lakh tonnes is met by imports”.

The possible threat we perceive is that these African countries resorting to cashew processing and exporting, and a consequent stoppage of raw nut supply in the near future.

In such an event, the cashew processing industry in India would have no other alternative but to close down, he said. Given this scenario, indigenous raw nut production has to be increased on a war footing, he added.

Maharashtra overtakes

Maharashtra with the help of Nabard has brought more areas under the crop and has become a major producer. Kerala, which used to be the top producer of raw cashew nuts, has lost its position.

Though the Kerala had decided to grant plantation status to cashew and amended the Land Reforms Rules, it has not yet become an Act and “we don’t know what are reasons for it”, he said.

This and high prices for natural rubber have motivated the farmers to shift to rubber, he said.

In fact, “our dependence on imported raw nuts has to be arrested so as to be competitive in the world market”, he pointed out.

According to the CEPCI Chairman, the labour cost is higher in Kerala, while the productivity is lower.

Besides, the electricity charge is higher than the other States. Thus, the cost of production is on the higher side here.

This has compelled the industry to set up the new processing units in Tamil Nadu’s Kanyakumari district, Rajahmandry and Godavari region of Andhra Pradesh and Karnataka.

Production costs

In fact, as against the processing cost of Rs 650 per 80-kg bag in the units outside Kerala, it was Rs 1,200 in the State. As a result, 60 per cent of the raw nuts processed for exports are currently done outside Kerala, he said.

And yet, competing with Vietnam in terms of price would be difficult, he said. Raw nut availability at competitive price, high labour productivity and affordable power charges could only enable the industry to reduce the production cost.

In Vietnam, the industry is supported by the Government.

Besides, the labour cost is comparatively low. Above all, they often resort to undercutting, he stated.

Cashew is India’s third biggest agricultural export item and it generates employment in rural areas to the tune of 400 man-days per tonne of cashew kernels exported, making it highly-labour intensive of India’s export products. Our exports during 2006-07 were 1,18,540 tonnes valued at $543 million (Rs 2,455 crore). At the same time, our forex outflow for raw nuts import is around Rs 1,900 crore a year now.

Appreciation of the rupee against dollar has put the industry in serious crisis. Most of the cashew exports from India are dollar-denominated and is subject to substantial influence by exchange rate changes.

While the Indian Rupee appreciated against the dollar by around 11 per cent over the last six months, the Vietnam currency has depreciated by 3 per cent and that has, in fact, made our cashew kernels less competitive in the international market, Pillai said.

The Centre, so as to support the industry had included cashew in the Duty Entitlement Passbook (DEPB) Scheme, and raised the rate to 3 per cent in July with retrospective effect from April 1. But, by a public notice last month this rate was slashed by half to 1.5 per cent from October 9.

Where as, other products like tea, coffee, fish, walnut, etc. continue to enjoy higher DEPB while cashew in bulk was left with 1.5 per cent and that in consumer packs of 1kg or less with 2 per cent DEPB. Therefore, the Centre should raise this rate to 3 per cent, he pointed out.

Besides cashew kernels, its allied products and cashew shell nut liquid products should be included in the Vishesh Krishi aur Gram Udhyog Yojana scheme so as to help the cashew growers and the industry, he said.

About the decision to shift the CEPCI headquarters to Kollam, Pillai said that out of 140 cashew exporters in the country 100 were based in Kollam. Besides, of the 15 board members 12 are from there. Therefore, having the CEPCI headquarters in Kollam would be beneficial to the industry.

On the proposed creation of Cashew Development Board, he said that CEPCI should be allowed to function as it is today and there should not be any interference adversely affecting the processing and exporting of cashew, he said.