Cashew Industry Set to Feel the Pinch

KOLLAM: Cashew exports, which earned the country $800 million or `4,200 crore during the financial year that ended on March 31, may be severely affected if the 10-day relay protest by the Kerala Cashew Workers Centre (CITU) from Monday spreads to 800-odd private export companies in the state.

Kerala accounts for nearly 60 per cent of Indian cashew exports and more than 95 per cent of its total exports come from private players. Kerala Cashew Workers Centre would begin protests outside 40 factories under the Kerala State Cashew Development Corporation (KSCDC) and Kerala State Cashew Workers Apex Industrial Co-operative Society (Capex) from July 21 to 30, demanding among other things doubling of minimum wages for cashew workers and immediate disbursement of gratuity dues.

If unresolved, the protest would spread to private factories in Kollam, Thiruvananthapuram and Alappuzha, said J Mercykuttyamma, head of Kerala Cashew Workers Centre. Kollam, state’s cashew export hub, has 400 cashew factories. The Kerala Cashew Workers Centre is also demanding opening up of factories of Cashew Development Corporation and Capex.

Industry officials said that the cashew export sector was going through a very delicate phase and any attempt to disrupt the slow revival in the sector after last year’s slump would result in grave consequences. The export value declined 20 per cent in the financial year ended on March 31, 2014. Similarly, volume declined 13 per cent to 100,105 metric tonnes in the same period. “This protest is just a ploy by the trade union to extract money with festive bonus in sight. The protest, howsoever innocuous will have an impact on productivity, lead to loss of work hours and many owners would be forced to shut their units,” said a senior official with Kollam-based Vijayalaxmi Cashew Co, the top exporter from the state. The company has 19 large factori es in Kerala, 59 small units in Tamil Nadu and Andhra Pradesh.

Though cashew factory owners in Kerala have factories in other states, they prefer having their export units based in Kerala mainly due to the skilled labour in the state.

According to Sasi Verma, executive director at Cashew Export Promotion Council of India, the industry is at a stage where the exporters are not able to realise even the production value.

Companies are finding it unprofitable to run the factories when the cashew nuts are priced high and the exported kernals are getting low value in the international markets. Even the top exporter like Vijayalaxmi Cashew Co was shut for 45 days in the April-May period, he pointed out.

Some companies went ahead and imported raw cashew nuts from East African countries such as Tanzania paying $200 per tonne above the market rate, without understanding the cyclical nature of the trade. Many companies are limping back to normalcy after prices of raw nuts dipped a little in West African countries such as Ghana, Ivory Coast etc.

Any production disruption at this stage would sound a death knell for those firms which have huge debt on its books, said industry officials.