Cashew Exports Face Difficulties

The Ministry of Agriculture and Rural Development said Vietnam exported 26,000 tonnes of cashew nuts worth US$168 million in June, totalling 115,000 tonnes and US$723 million in the first half of 2013, up 15.9 percent in volume and 5.7 percent in value over the same period of 2012. However, the average export price in the first five months was US$6,185 per tonne, down 10.5 percent from US$$6,913 from a year earlier.

 

The US, China and the Netherlands continued as the largest importers of Vietnamese cashew nuts with respective market shares of 31.1 percent, 16.1 percent and 10.5 percent. Although exports to other markets such as Canada and India rose sharply in the first five months of the year with a double increase over the same period of 2012, most other markets saw a steep decline in export value. China, the Netherlands and the UK saw respective declines of 10.9 percent, 12.2 percent and 13.4 percent.

 

At a review meeting on first-half cashew export and second-half 2013 plan organised on July 13, the Vietnam Cashew Association (Vinacas) said both cashew farmers and traders expected a bumper crop in late 2012, with no frost and no disease. However, when cashew trees blossomed, heat and drought withered a lot of trees. At first farrow, the quality of cashew fruits was very good. However, the quality worsened in the second and third farrows (accounting for about 25 percent of output). Therefore, the harvest time in the southeast region ended earlier than previous years, usually falling on late March and April. On fears of material shortage, some traders combed cashew nuts at high prices when the harvest began instead of taking import options into account. The average price of dried cashew nuts was VND28,000 -30 000 per kg. This price rate posed more risks to processors.

 

According to cashew companies, this year’s output declined. Normally, the volume kept by farmers at the end of the harvest time accounts for 10 -15 percent. Nevertheless, farmers are now holding smaller amount than previous years. In the first six months of 2013, the country imported 220,000 tonnes of crude cashew nuts worth US$226 million, up 88.9 percent in volume and 94 percent in value over the same period of 2012.

 

Aside from cost and supply constraints, capital is a major hurdle for any companies. During the harvest time, many companies complained that they could not borrow money from banks because of requirements like evidence for transparent finances, project feasibility and collateral assets. Meanwhile, many had assets blocked by banks because they had not repaid old loans. But, when the harvest time was almost over, at the direction of the Prime Minister and the State Bank of Vietnam (SBV), commercial banks agreed to extend loan maturity for businesses by 6 months to one year, but companies still found it hard to borrow money from banks due to their credit downgrades by lenders. But, the cashew nut industry is more prestigious among banks than many others.

 

Vinacas said in the last six months of 2013 the sector targets to export 105,000 tonnes of cashew nuts, bringing the full-year volume to 220,000 tonnes, up 5 percent over 2012.

 

To achieve the above targets, Vinacas suggested businesses to base on market developments and financial capacity to purchase and import inputs, not importing in large volume but focusing on improving quality and developing new products for export. Besides, they need to pay attention to product quality, hygiene and safety and join more trade promotion activities to seek partners. They also need to join forces, share information and agree on common prices to sustain market stability.

 

Vicasa also asked the Ministry of Industry and Trade for support to launch a trade promotion programme in Dubai (market survey), a similar event in the Australia (market survey coupled with attendance to INC Conference 2014), and the eighth international customer consumer conference in Vietnam in 2014. It will also work with the Vietnam Chamber of Commerce and Industry (VCCI) to reform administrative procedures concerning the granting of certificates of origin (C/O) to facilitate export activities and grasp advantages of free trade agreements (FTA).