Seeking way out for cashew industry

SGGP
The domestic cashew industry has been coping with many disadvantages and difficulties as it lacks both capital and raw materials.

The cashew processing industry in Binh Phuoc Province lacks both capital and raw materials. (Photo: SGGP)

The cashew processing industry in Binh Phuoc Province lacks both capital and raw materials. (Photo: SGGP)

Most of the raw materials must be imported so the profit is not high. Completing the planning of the centralized raw material areas and establishing the value chain has become more urgent.

Binh Phuoc Province, the capital of cashew of the country, has 134,000 hectares of cashew trees with a yield of 1.5 tons per hectare and more than 1,400 processing facilities, exporting cashew nuts to many countries, including the US, Australia, and China. The raw material areas are unstable as processing enterprises need 600,000-800,000 tons of fresh cashew but the provincial production merely meets 200,000 tons. Therefore, the provincial cashew processing industry must import raw cashew from African countries, Indonesia, and Cambodia. For instance, last year, the provincial cashew industry had to import 495,000 tons worth US$814 million last year. Last year, cashew nut exports hit $770 million with a production of 98,000 tons and export prices varying from $7,800 to $8,300 per ton. In the first two months of this year, cashew nut exports merely reached $61.7 million with an export volume of 9,500 tons and the export price continuing to decline to $6,500 per ton, a decrease of 23.1 percent.

According to Mr. Vu Manh Tung, the owner of a cashew processing facility in Phu Rieng District, the industry faces a shortage of raw materials as processing facilities have not focused on investing and developing raw material areas; the connection between enterprises and farmers remains loose.

Moreover, many enterprises also lack capital for production. Loan sales of the cashew industry hit VND26 trillion last year with 33,921 customers with debts and bad debts were more than 271 billion, accounting for 2.37 percent of total debts. A typical example is Phuc An Manufacturing and Trading Company, one of the leading companies in processing cashew nuts for many consecutive years. It had customers from the US, Canada, Europe, Australia, China, and the Middle East. It had a modern production line, producing products that met the strictest requirements of the US and Europe. The company processed an average of 30,000 tons of raw cashew, collecting tens of millions of US dollars every year. However, the business became more and more difficult so it was forced to go bankrupt.

According to the Department of Industry and Trade of Binh Phuoc Province, most of the cashew for the provincial production is imported. Since the end of last year, enterprises had signed import contracts with some raw cashew exporting countries at a price of $1,500-$1,600 per ton which now has dropped to around $1,200-$1,300 per ton. Enterprises signed export contracts of cashew nuts at around $8,300 per ton, but now the price has plunged steeply to $6,500 per ton so importers pressurized enterprises to reduce the prices or they will back out of the deals, causing difficulties for enterprises in the province.

The province has more than 1,400 cashew processing facilities but only 30 enterprises are capable of importing raw cashew for processing. The rest including 110 small enterprises and more than 1,200 super-small ones so after the harvest, there is always a shortage of raw cashew for processing. Due to high expenses, after processing imported raw cashew, they get low or even no profits. Many enterprises encountered this situation and have had to temporarily suspended operations.

The province is in the process to review and complete the planning of the centralized raw material areas of cashew, thereby establishing the value chain from farmers to processing and exporting enterprises. Especially, it will focus on investing in equipment and technology, increasing the application of high-technology to production administration, traceability, building geographical indication for cashew products, and applying advanced quality control systems in the world, such as HACCP, ISO22000, and BRC.

According to Mr. Pham Van Cong, Chairman of the Vietnam Cashew Association, the export target of $4 billion of cashew nuts this year will be unable to achieve due to the impacts of the Covid-19 pandemic. The cashew industry will definitely reduce its export target for this year.

By Hoang Bac – Translated by Gia Bao

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