Global shortage of Cashew nuts affects industry

KOCHI: A global shortage of raw cashew has kept prices escalated at unprecedented highs affecting India’s cashew industry. India, the largest consumer of the nut and a major exporter of processed cashew kernels, meets about 60-70% of its processing needs through imports.  The Indian cashew production has been stagnant for the past few years with output ranging 6-7 lakh tonnes while the country’s processing capacity has expanded to 2 million tonnes. India imports 9-10 lakh tonnes of raw cashew to process and exportas kernels.

While the processors for the domestic industry have to pay exorbitant prices to get raw cashew from abroad, the rise in kernel prices in the export market has adversely hit the shipments.  The cashew crop in Vietnam and Cambodia, countries that both process and export cashew like India, have fallen short by 40%. These countries have turned aggressive buyers putting pressure on the raw cashew available from West African countries, which do not process the nuts. “Right now around 60% of the raw cashew from Africa is going to Vietnam and only the rest is available to us,” said K Prakash Rao, managing partner of Kalbavi Cashews.

Expensive raw cashew has pushed up kernel prices in the export market to more than $5 per pound after a long time.

The Kerala cabinet has accorded in-principle nod for formation of a special purpose vehicle to take up import of raw cashew and its distribution to processing companies in the public/ private sectors. If necessary, the new company would be allowed to intervene in the trading/marketing of processed cashew nuts, an official spokesman said here.

In doing so, the cabinet extended its approval to recommendations made by a high-level committee that featured representatives from the Reserve Bank, commercial banks and the state government. The committee had advised that the state government float the new company and make banks, the Cashew Promotion Council, the State Trading Corporation along with itself the main shareholders.

The company will seek to become a major player in the market by directly contracting import of raw cashew from the main producing countries. The decision has been taken in the light of a crisis in the cashew sector due to sustained lack of raw cashew. The sector provides the only livelihood option to three lakh women and their families. Cashew processors in the state need supplies of at least six lakh tonnes to fully engage their factories. Domestic production of raw cashew amounts to no more than 80,000 tonnes. Currently, the Kerala state Cashew Development Corporation and the Cashew Workers’ Apex Society float tenders and engage middlemen to import raw cashew.