Small Cashew Companies to Crack a Hard Nut

KOLLAM: The chimneys that billow dark fumes even as they spread a nutty aroma had for long been the identity of this once-vibrant cashew processing hub.

They are now set to be history as small-time processors, fighting lower margins due to increased labour cost and fierce international competition, are planning to upgrade the processing with mechanised boilers.

Miffed by the decision to introduce a hike in the minimum wages, allegedly without their representation, around 600-odd small and medium term manufacturers, who provide 70 per cent of export-worthy cashew to the big players, are planning to accelerate the mechanisation process and also look for overseas markets.

At present, large manufacturers who hold a monopoly over the raw cashew provide portions to small manufacturers for commission processing. It insulates them from the hassles of statutory obligations related to employees. Small manufacturers under the Kerala Cashew Processors and Exporters Association (KCPEA) claim that they used to get a margin of Rs 100 for processing a bag of cashew worth Rs 2,200, before the new wages were announced last month. The major cashew exporters have set up factories in other states and abroad, and are diverting larger quantities of raw cashew tothese facilities due to the high labour cost in the state.

KCPEA members, who visited machine manufacturers in Gujarat recently have placed orders for boilers, cutting, peeling and grading machines. They are in a hurry to mechanise the plants by February when the rate hike is likely to become effective.

Depending upon the capacity, the mechanisation process can cost anywhere between Rs 1 crore to Rs 5 crore for a factory. Labourers in Kerala are known for their skills in processing roasted cashew.

But with boilers replacing the roasting process one could soon see a Bengali or a Bihari labourer operating the machine. “Seventyfive per cent of our labourers are from other states,” said association secretary K M Nazar. A traditional factory that processes 200 bags of cashew requires around 1,000 employees to operate it while the mechanised one requires just 400 people. The number of broken cashews increases by 20 pc in machine processing but it spares them from the hassles of dealing with the statutory obligations of the workers and the constant bargaining from the trade unions.

A 35 per cent increase in the minimum wages for cashew workers was announced on December 1 by Cashew Minimum Wage Advisory Committee convened under the labour minister.

“I dropped my plans to set up a 70 feet chimney which would cost me Rs 15 lakh after watching a boiler plant,” said  R Vikraman, a commission processor.  A consortium comprising association members was formed to get the export license to gain entry into the $800 million export industry. They have also sought membership from the Cashew Export Council, that will enable them to avail grants for mechanisation and other export duty benefits.  “Besides the grants-in-aid, council membership enables them to attend trade fairs, buyer-seller meets etc,” said Executive Director & Secretary of CEPC, K Sasi Varma. Under the duty drawback scheme and Vishesh Krishi Aur Gram Udyog Yojana the exporters will get a total incentive of 6 per cent of their free-on-board (FoB) value.

The Association on an average produces 2,250 metric tones of export-worthy cashew in a month. To market their products they are connecting with top international brokers such as Africa Product, BLB New York, Richard Franco etc.

“The consortium will collectively bargain for raw cashew like big manufacturers do,” said Nazar. Number of large cashew factories in Kollam has reduced drastically over the years. Industry experts demand a comprehensive study as most government policies are not benefiting them. Their concern is that the industry would meet the same fate as that of coir and matchbox unless a study is undertaken.

- newindianexpress.com