Economic Sector

Last updated: Wednesday, May 15, 2019


VINACAS CFO: Fourth Industrial Revolution is inevitable and cashew industry must grow faster

Posted: Tuesday, January 30, 2018

This is a statement by Mr Le Quang Luyen, Member of the Executive Board and Chief Financial Officer of the Vietnam Cashew Association (VINACAS), in an interview granted to Vietnam Business Forum on its achievements and development orientations. Quoc Hung reports.

As a very active VINACAS member who is devoted to the cashew sector development, could you please tell us what the cashew industry has achieved?
Two years ago, I was elected to the VINACAS Executive Board and VINACAS Chief Financial Officer, and joined with its leaders to work on solutions to develop the Vietnamese cashew industry in a sustainable manner, including the construction of cashew nut value chain.

According to VINACAS reports, I learn that the industry has seen steady development in the past 12 years, featuring rising annual export growth. In 2017, its export value topped US$3.5 billion, meaning this sector had surpassed many other key agricultural products on global markets and stood on par with the fruit and vegetable sector. As far as I know, the Ministry of Agriculture and Rural Development and the Government are considering assigning the cashew industry as the key economic sector of the country.

What helped the cashew industry continue to grow in 2017?
There are many reasons like (1) hard-working labourers, (2) innovative producers who invest in advanced processing machinery technology, (3) very good soil, very suitable for growing cashew trees which yield fine, delicious and nutritious products.

I also find that central and local governments, VINACAS and banks always stand ready to support the cashew industry. Previously, the cashew sector found it very difficult to access financial sources, but things have changed lately thanks to government policy, and new viewpoints from banks.

In addition to advantages, what are current challenges of the cashew industry?
The first challenge is that our production is growing at a rapid pace and on a big scale. Vietnam is now home to more than 1,000 cashew nut processors, traders and exporters. Local inputs can meet only a quarter of the demand, while the rest is imported from many countries, mainly from Africa. Over-reliance on imports causes us to spend foreign currencies and the value of exports is less significant.

The cashew industry has recorded 12 straight years of development. What is its development prospect in the coming years, especially in 2018?
Cashew trees are highly influenced by weather and diseases, and therefore is is difficult to make an accurate judgement. But I believe that, with the involvement of government, businesses and people, 2018 will be a good year for the cashew industry.

In 2017, export prices stayed high. I think that the sector will also grow steadily in a narrow range in 2018. Cashew nut prices are quite high now and producers must seek the best prices to ensure sustainable development. We do business and seek profit but we must adhere to fair trade rules and respect consumers’ interests.

What is the challenge facing the cashew processing industry, particularly in the current context of the Fourth Industrial Revolution?
This is a very big issue, something seen at a macro level. I think that the Fourth Industrial Revolution is an inevitable trend. It will come very quickly no matter if we like it or not. The technology 4.0 not only requires financial resources to change machinery and equipment, but also requires people to change their thinking. We go up from a lower and slower platform but we must learn and invest to adapt.

The cashew industry does not require as advanced technology as other industries, this is actually not a major issue in the Fourth Industrial Revolution and I think that, with our practical experience, the Vietnamese cashew industry from farmers to enterprises has more experience than needed to develop and what it wants now is mechanisms, policies and the cooperation of society and banks for facility upgrade.

At present, some markets like the United States and Europe control food safety very closely. If we do not upgrade technology, we will find it very hard to meet their requirements. Enterprises in general and the cashew industry in particular need to act more quickly, change their thinking and make bold investments.

What would you say about Phuc An cashew nut processing factory, which, in my opinion, is very proactive in the Fourth Industrial Revolution?
Phuc An earned domestic and export sales of US$50 million in 2017 and we expect to have US$60 million of revenue in 2018. That is a good thing but more importantly we have built the foundation for sustainable development.

If we do not take one step ahead, we will find it very difficult to integrate successfully when our economy integrates more deeply. Our competitors have bigger capital resources, more developed technologies and more brainpower, and we will lag behind if we do not take right action. For that reason, we must try to invest. Two years ago, we invested hundreds of billions of Vietnamese dong although our available fund was very limited. We were very anxious at that time but things have gone fine after more than one year of operation. In the past, we needed 400 workers but we need just 70 workers in the new facility for a treble output. In addition, it will result in higher product quality, lower costs, and increased competitiveness.

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