The Hindu Business Line : Financial turmoil pushes down cashew exports

Kochi, Nov. 18 The cashew industry has started feeling the pinch of the credit squeeze overseas with the closing down of around 15 units rendering thousands of workers jobless.

Drop in cashew kernel prices overseas, coupled with fall in demand, is affecting the industry.

Exports in October dropped by 1,992 tonnes to 7,895 tonnes from 9,887 tonnes in October 2007. The price fell sharply from $3.60 a pound in June-July to $2.66 a pound in October.

But depreciation of rupee against the dollar has raised the value realised.

Therefore, the unit value in terms of rupee in October 2008 stood at 292.78 a kg. Last year, it was Rs 189.44 a kg in October as the rupee was stronger, while the kernel prices were ruling low, Mr Sasi Varma, Secretary, Cashew Export Promotion Council, told Business Line.

Export Value

Total exports during April-October were 66,574 tonnes, valued at Rs 1,817.81 crore with a unit value realisation of Rs 273.05 a kg.

During the same period last year, the shipments stood at 67,044 tonnes valued at Rs 1,284.37 crore at a unit value of Rs 191.57 a kg.

Because of the high prices prevailing in the middle of the first half of the current financial year and the depreciating rupee in recent months, the export earnings during the first seven months of the current fiscal increased by 33.44 crore despite the decline in volume of shipments.

Costly imports

At the same time, imports of raw cashew nuts have become costly. The average unit value of the imported raw material has almost doubled to Rs 41.97 a kg from 24.65 a kg in April-October 2007. The imports have increased to 4,59,458 tonnes valued at Rs 1,928.20 crore in April 2008 from 4,40,222 tonnes valued at Rs 1,085.26 crore in the corresponding period last year. The imports have become costlier and compared to the same period last year the import cost in April-October 2008 has increased by Rs 842.94 crore.

The prices have dropped “un-naturally to $2.30-$2.60 a kg now and because of the credit squeeze, overseas buyers are not able to place orders,” industry sources in Kollam told Business Line on Tuesday.

On the other hand, the raw material price has also shot up. Thus, because of the disparity between the kernel prices and the raw material cost, already 10 to 15 units have been closed down last month rendering around 30,000 workers jobless, they said, adding that if the current trend continued this number would double.

Meanwhile, Kerala Labour and Excise Minister, who also looks after the cashew industry, Mr P.K. Gurudasan, told Business Line that the buyers in the US are controlling and fixing the price for cashew kernels.

Some mechanism needs to be there to regulate the price for cashew kernel as it is a food product, he added.

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