Enhancing the value of Vietnam's cashew seed

Enterprises are focusing on intensive processing products. Photo: st.

Insecure with the price of raw materials

According to preliminary statistics of the General Department of Customs, cashew exports in February are estimated at 23,414 tons with a turnover of $ 240.3 million. The first two months of 2018 reached 54,000 tons and $ 556.87 million, an increase of 107% in volume and 140% in value over the same period in 2017. The positive point is the high average export price at $ 10,253.6 a tonne, up 12.7 percent from the same period last year and up 1.3 percent from the end of 2017.

According to the Vietnam Cashewnut Association (Vinacas), the global demand for cashew nuts is projected to increase by about 10%, which will be favorable conditions for Vietnam's cashew nut export in the coming years. However, raw material inputs are still a big challenge for the cashew industry. In 2017, Vietnam's cashew nut export turnover reached USD 3.62 billion, holding the world's No. 1 position in processing and exporting cashew kernel. However, there is a big gap between the growth rate of processing and growing industries. In 2017, the domestic raw production only meets about 20% of the demand for export processing. Accordingly, in 2017, Vietnam had to import $ 2.56 billion of raw materials. Thus, despite being the world's number one and holding a market share of over 60% of global cashew exports, the value of cashew nut is still low.

According to Dang Hoang Giang, vice president of Vinacas, in the past time the price of raw cashew nut from Africa has been up unreasonable. Specifically, the price of raw cashew nuts increased 30-40% while the price of cashews on the world market increased only about 10-15%. In 2017, Vietnamese enterprises have to import raw cashew nuts at an average price of $ 1,956 / ton, the highest ever. Last season's price of raw cashew nuts in Africa is also rising in the first two months to over $ 2,000 / tonne, even $ 2,100 / tonne. Due to the high price of raw cashew nuts, Vietnamese companies have temporarily stopped importing raw cashew nuts. Similarly, Indian businesses have also halted imports. Facing this situation, it is likely from mid-March the price of raw cashew nuts in African will go down.

However, according to Vinacas, import of raw cashew from Africa this year will continue to meet difficulties as local traders want to achieve more profits than last year in the context of the market: The price of cashew nuts has been on the downward trend, while the price of raw cashew nuts has continuously increased.

In that context, according to forecasts of cashew processing enterprises, the weather this year is relatively favorable, so the output this year may be higher than in 2017, reaching about 400,000 to 500,000 tons. Similarly, cashew production in Cambodia is also good, in collaboration with the Cambodian Ministry of Agriculture, Forestry and Fisheries, the amount of raw cashew purchased from Cambodia will help Vietnamese enterprises reduce import pressure from Africa.

Centralized deep processing

There is a supplier from Cambodia and an increase of domestic cashew production, both supplies are still unable to completely replace the raw material imported from Africa. Due to the volatile material situation, Vinacas and its member have agreed to improve the quality and decrease the quantity, focus on deep processing and develop the domestic market. Specifically, the cashew industry set up targets to export cashew nuts in 2018 to 300,000 tonnes instead of 362,700 tonnes as in 2017. That corresponds to a turnover of $ 3 billion in 2018, lower than 3.62 billion dollars compared with the previous year.

Explaining this downfall, Mr Nguyen Duc Thanh, Chairman of Vinacas, said that with the current high price of raw materials, cashew processing enterprises will certainly suffer losses due to the fact that the cashew kernel can not be increased due to extra dependency on the market demand. Therefore, the only way is to reduce the price of raw materials to a reasonable level of $ 1,800 per ton. The cooperation with the Ministry of Agriculture, Forestry and Fisheries of Cambodia to develop the cashew area, with the goal of increasing production to 1 million tons in the next 10 years, is one of the solutions Vinacas is urgently implementing to reduce the dependence on raw materials from Africa, which is uncertain both in terms of price and quality.

Mr. Thanh also expects the State to have policies to support businesses to stabilize production by means of mechanisms and policies in the credit, banking and plant quarantine sectors...to ensure the source of raw materials with high quality for processing, exporting the fruit effectively. Along with that, we need to support businesses to build national brands and brands of food in Vietnam; To support investment, expand production, cooperate in production and consumption of agricultural products in the direction of cleaner production, ensuring hygiene and food safety.

Mr Thanh said that Vinacas would accompany farmers in intensive farming and cashew improvement programs to bring the sector's trade value to the highest level. At the same time, creating favorable conditions for farmers to cooperate, link production and consumption with processing businesses to produce cleaner and market oriented products.

Nguyen Duc Thanh, Chairman of Vinacas, said that with the current high price of raw materials, cashew processing enterprises will certainly suffer losses due to the fact that the cashew kernel can not be increased due to extra dependency on the market demand. Therefore, the only way is to reduce the price of raw materials to buy a reasonable level of $ 1,800 per ton. And with the cooperation from the Ministry of Agriculture, Forestry and Fisheries of Cambodia to develop the cashew area, the goal of increasing production to 1 million tons in the next 10 years is one of the solutions Vinacas is urgently implementing to reduce the dependence on raw materials from Africa, which is uncertain both in terms of price and quality.

Mr. Thanh also wants the State to have policies to support businesses to stabilize production by means of mechanisms and policies in the credit, banking and plant quarantine sectors ... to ensure that raw materials of high quality for processing, exporting the fruit effectively. Along with that, we need to support businesses to build national brands of Vietnamese food; supporting investment, expanding production, cooperating in production and consumption of agricultural products in the direction of fresh production, ensuring hygiene and food safety…

Mr Thanh said that Vinacas would accompany farmers in intensive farming and cashew improvement programs to bring the sector's trade value to the highest level. At the same time, creating favorable conditions for farmers to cooperate, link production and consumption with processing businesses to produce cleaner and market oriented products.