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Cashew industry’s difficult period over?
Vietnam’s cashew industry has been experiencing a lot of ups and downs in the last few years. However, insiders believe that the most difficult time for the industry is over.
In 2005, Vietnamese cashew companies incurred the heavy loss of VND1tril. It was because importers lowered import prices. It was also because cashew exporters did not deliver products to partners when the prices were high, and the importers made a claim for damages.
The heavy loss forced the chairman of the Vietnam Cashew Association (Vinacas) to resign. A lot of other troubles occurred after that as the association’s members did not accept the new chairman. The business of the cashew industry, therefore, was severely damaged.
The current trouble, in which foreign importers are threatening to sue 38 Vietnamese cashew companies, is a continuation of the troubles of the association in recent years.
However, the situation seems to have improved. A new chairman of Vinacas has been elected. Cashew companies have been able to sign good contracts recently at the prices of $6,200-6,600/tonne, which means the pre-tax profit of over $2,000 for every tonne of cashew nuts.
In the first five months of the year, cashew companies processed 50,000 tonnes of cashew nuts, and they are expected to crank out 200,000 tonnes of cashew nuts this year. Vinacas said that the figure is within reach, and could help cashew companies to settle their business troubles.
According to Vinacas, the total cashew cultivation area is now 400,000 ha, which can give the output of 400,000 tonnes, and allows Vietnam to match India in terms of output. Therefore, the goal of exporting $1bil by 2010 proves to be feasible.
Vietnam has become the leading country in the world in terms of processing products for export, and according to Nguyen Duc Thanh, acting Chairman of Vinacas, this is the advantage of Vietnam, and has made foreign importers stay with Vietnam.
One of the biggest problems now for cashew processors is lack of capital. However, according to Dr Hoang Binh, an expert, the problem can be settled if cashew companies process cashew nuts right after they buy materials. This method allows companies to save capital, while they don’t need to have large storehouses to keep materials. Currently, in order to store 1,000 tonnes of raw cashew nuts, enterprises need to borrow VND17bil, and they have to pay the interest of VND350mil every month on the loan (the current lending interest rate is 25% per annum).
Cashew processors have another reason to be optimistic about their future: they now have modern peeling machines. These allow them to have a high clean nut ratio of 87% and low broken nut ratio of 6-7%. The machines previously imported from Italy only had the clean nut ratio of around 40%.
VNN
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