Vietnam: Cashew industry faces crunch

HCM CITY (VNS) – Cashew processors and exporters are facing problems like short supply, high raw material prices, and falling export prices, Thoi bao kinh doanh newspaper reported.

This year's cashew harvest was completed last month, with the Ministry of Agriculture and Rural Development saying output was down 20-50 per cent from a year ago due to unseasonable rains at the end of last year.

Besides, cashew farmers have been switching to other crops because of declining yields, volatile prices, and low or no profits.

As a result, after Tet domestic raw cashew nut prices were up by 10-15 per cent year-on-year.

But export prices dropped 14.6 per cent to US$6,036 per tonne.

The Viet Nam Cashew Association (Vinacas) said they paid VND27 million (US$1,280) for a tonne of local raw cashew. Consequently, processors suffer a loss of $330 per tonne.

But importing cashew yields them a profit of $150-180 per tonne, and it is encouraging its members to import, it said.

"If any cashew processing enterprise or exporter has not purchased and stocked raw materials by May, it will just close down," it said.

Though Viet Nam is the world's largest cashew exporter, 50 per cent of the country's raw cashew needs are imported from Africa, Cambodia, and Indonesia.

But it could reduce this year since, according to Nguyen Duc Thanh, chairman of Vinacas, African countries are planning to invest in processing and stop export of raw cashew nuts.

Dang Hoang Giang, general secretary of Vinacas, said the shortage of funds to buy raw materials has been resolved with support from ACB and VietinBank.

ACB has earmarked $100 million for cashew businesses and exporters in the first half-year at an interest rate of 5.6 per cent.

Giang said the cashew industry needs around VND7.5 trillion ($360.5 million) and $300 million in this year to buy raw materials and for processing costs respectively.

The Ministry of Agriculture and Rural Development said cashew exports in the first four months topped 61,000 tonnes, an increase of 9.7 per cent year-on-year. But revenues were down 1.8 per cent to $374 million.

Viet Nam's major export markets were the US (25.1 per cent), China (19.9 per cent), and the Netherlands (11 per cent). — VNS