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Cashew industry thirsty for materials
Cashew processing workshops now find it hard to arrange enough material for processing as domestic output has been decreasing dramatically while it is not easy to find foreign supply sources.
According to the Vietnam Cashew Association (Vinacas), the cashew harvests have finished in Dong Nai province, in the Central Highlands and coastal areas in the southern central region. Meanwhile, in Binh Phuoc province, weather changes have caused the loss of 50,000 tonnes.
Analysts have warned that the cashew plantation area has been narrowed as farmers tend to chop down cashew trees to plant other industrial trees to get higher profit.
In order to offset the shortage, enterprises have to boost material imports for local processing. They imported 150,000 tonnes of cashew from Cambodia and Africa in the first half of the year. Ivory Coast alone provided 50% of Vietnam’s cashew imports.
Some 20 of the biggest enterprises now import cashew materials to feed themselves and other enterprises. However, the enterprises are complaining about the increased prices and unstable quality of the imports. The import prices from Western African countries surged to $900-1,300/tonne in late May and early June, while they were $820/tonne at the highest in early May.
Nguyen Duc Thanh, Acting Chairman of Vinacas, said that suppliers have been deliberately delaying deliveries because of increased prices, which has been severely damaging the production plans of enterprises.
The quality of imported materials proves to be worse than domestic products. In some cases, suppliers mix low-quality Nigerian cashews (46-48Lbs/80kg) with Ivory Coast cashews (48-52 Lbs/80kg) to sell at a price applied for a shipment of solely Ivory Coast products.
Meanwhile, difficulties have arisen in making payments via banks. As Vietnamese banks and West African banks do not have cooperation relationships, enterprises need to make transactions via third banks, which costs money and wastes time. Many African countries do not have big container ships, only ships with low handling capacities.
Due to the bad management of export countries, exporters have to pay a lot of expenses, which has pushed export prices up. Also because of the problems, Vietnam failed to negotiate about importing cashews from Guinea Bissau in late May and early June.
Vinacas has advised its members to diversify currencies used in payment. As for Chinese dealers, enterprises can negotiate on making payment in VND or yuan instead of dollars. As for American and European clients, enterprises can think of making payment in euro, the pound or other hard foreign currencies.
Thanh said that production costs have increased by 40% so far this year (40% in materials, 30-35% in labour cost, 30-50% in other expenses, and 40-50% in bank loan interest rates).
Meanwhile, the cashew nut export price has increased by 25-30% only compared to the same period of last year.
As such, Thanh said, cashew enterprises are incurring 15-20% losses on production costs. Meanwhile, they have been also incurring losses due to the exchange rate fluctuations.
The exchange rate fluctuations in March and April alone caused the loss of VND2.5-2.7mil/tonne of exported cashew nuts.
“Vietnam’s cashew industry’s competition is now at the lowest level in the last two years,” Thanh said. The export price has decreased by UScent3-5/lb compared to India’s products.
VNN
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