G.K. Nair

Kochi, Jan. 25

INCREASED availability in the world market at low prices has led to decline in exports of cashew from the country during the first nine months of the current fiscal compared with the same period a year ago.

Total exports during April-December 2005 stood at 86,404 tonnes valued at Rs 1,929 crore against 94,265 tonnes worth Rs 1,975 crore in the first nine months of 2004-05. There has been a substantial fall in the unit value, which has dropped to Rs 200 - Rs 210 a kg from Rs 250 - Rs 260 a kg for W320 in April-May last year.

Imports decline:

Meanwhile, imports of raw nuts decreased to 4.60 lakh tonnes valued at Rs 1,793 crore from 4.73 lakh tonnes worth Rs 1,730 crore. The reason attributed to the decline is increase in the raw nut price, which has gone up to Rs 39 a kg from Rs 36.50 a kg last fiscal.

However, industry sources in Kollam, the main centre of cashew processing and exporting, told

Business Line

that there were three factors responsible for the decline.

Currently, in the world market, there is oversupply of cashew kernels mainly from Vietnam at prices at least 0.10 cents/lb less than that of the Indian price. Thus, oversupply by undercutting the price has negatively affected the Indian export.

On the other hand, there has been a substantial increase in the domestic demand, where the price is about Rs 20 a kg above the international price. This phenomenon has encouraged the processors to push their product in to the domestic market and that in turn has resulted in a shortfall in the exportable surplus, they said.

Vietnam poses threat:

In fact, Vietnam has become a major threat to the Indian cashew kernel in the world market. In less than 10 years, Vietnamese industry was able to export around one lakh tonnes of cashew kernels in 2005, they said. The raw nut production there is estimated at over six lakh tonnes and given this trend, Vietnam might attain the number one position as the world supplier of cashew kernels within a year, they pointed out.

Where as, the Indian raw nut production continues to hover around 5 lakh tonnes when the raw nut requirement of the processing industry in the country is estimated to be around 12 lakh tonnes a year. In spite of all efforts, the industry could not find adequate raw cashew nuts to meet its requirements in full forcing many units to remain closed either round the year or for a considerable part of the year.

There are also large numbers of processing units in the unorganised sector catering to the domestic market. The domestic market is said to be capable of absorbing 70,000 - one lakh tonne of cashew kernels a year, they said.

The industry sources, however, maintained that there had not been any decline of late in the consumption of cashew kernels in the world market. "The only problem at present is oversupply", they said.

In fact, consumption of cashew in the US had continued to rise and was expected to continue to do so with positive health report and beneficial diets, they claimed. As a result, last year the consumption of nuts in the US was at its highest level ever with 225 - 230 million pounds. Many attributed this increase to the health reports published advising consumers that cashews may reduce the risk of heart disease by 30 per cent, they added.

(This article was published in the Business Line print edition dated January 26, 2006)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.