Joint Efforts to Retrieve Vietnamese Cashew Industry

 

Cashew is one of the Vietnam's main plant products. Vietnam now has only some 421,000 hectares of cashew growing area, accounting for 4.6 per cent of farmland, but cashew contributes 10 per cent to the country’s export value of agricultural products. Costs for cashew cultivation are lower than many other crops as it can grow well on impoverished soil. Cashew also helps boost Vietnam’s poverty reduction programme.

 

Vietnam is the second largest cashew producer worldwide with a total growing area of 421,000, just behind India (800,000 hectares). However, Vietnam’s cashew output is higher than India’s. Vietnam’s output is estimated at one tonne per hectare, while India’s is at 0.8 tonne per hectare. The figure is expected to climb to 2 tonne per hectare if the country injects more investments into developing the sector.

 

In 2006-2008 period, the Vietnamese cashew sector surpassed India to become the number one cashew nut exporter in the world. Presently, the cashew industry, which was little known in the 1990s, has affirmed its status in the global market. Its export turnover has dramatically increased over the past years with impressive numbers of US$504 million 2006, US$651 million in 2007 and US$920 in 2008. These successes partially show the importance of cashews in the farming produce for export.

 

Socially, cashew also plays a vital role in contributing to the income for more than one million farmers in Vietnam, comprising 450,000 growers and excluding over 600,000 directly working at processing factories and related services. The cashew industry has made a remarkable contribution to Vietnam’s agricultural production in particular and economic development in general.

Despite the active contributions, Vietnam’s cashew industry is coping with huge challenges. According to the Ministry of Industry and Trade, in the first two months of this year, Vietnam exported 23,000 tonnes of cashew, bringing export turnover of US$104 million, up 12 per cent in volume and 6 per cent in value on-year, but 4 per cent and 15 per cent respectively compared to the last two months of 2008. Cashew export prices have continually dropped as demand in some big markets such as the EU, the US and China has fallen to the lowest level over the past few years due to impacts of the global economic slowdown.

 

Not only facing outlet difficulties, the sector is in dire need of input materials. This year, because of harsh weather conditions, the country’s cashew output is forecast to be reduced by 29 per cent against 2008 at around 200,000 – 250,000 tonnes of dry cashew. This will result in input material shortage for processing factories which require a big material volume of more than 600,000 tonnes.

 

The Vietnam Cashew Association (VINACAS) forecast the cashew production and business will encounter many challenges from now to the year end because of the world economic decline’s impacts. Outlets and export markets have shrunken, even both traditional ones such as China, the US and the EU potentially new destinations like Eastern Europe, the Northern Asia and the Southeast Asia.

 

Moreover, the 2009 cashew crop has met many difficulties involving seedlings. This led to reduction in both volume and quality. As a result, enterprises had to import a large amount of raw cashew from Africa, Indonesia and Cambodia at high prices. Vietnamese cashew industry depends on up to 40 per cent of imported materials.

 

Furthermore, prices of cashew nut have continually decreased recently, discouraging farmers. Currently, cashew’s competitiveness is weaker than many high-value crops like rubber, coffee and sugar cane. Average income of cashew growers is at some VND20 million per hectare, much lower than that of rubber growers (VND60 – 70 million/ha), cacao (VND70 million/ha). The local cashew industry is in an extremely critical situation as a range of farmers cut off cashew to sell wood, or grow other agricultural plants. According to the Ministry of Agriculture and Rural Development, cashew growing area has gradually shrunk from 450,000 hectares to about 400,000 hectares. This is a warning alarm for the Vietnamese government, associations as well as farmers.

 

The local government, concerned agencies and growers as well should join hands to recover cashew’s strength and potentials in order to realise the set target of earning US$1 billion export turnover in the coming time.