Local cashew processing and exporting enterprises are facing numerous challenges in finding bank loans to develop business, even though they expect a thriving year in 2007, according to the Vietnam Cashew Association.
A Vietnam Cashew Association (Vinacas) official said that between March and May this year, cashew enterprises would need VND4.5 - 5 trillion (US$281-$312 million) to purchase farmers’ cashews to meet yearly production target.
“But capital they have meets just 10-13 per cent of their purchasing demands,” he said.
“Within three months, it is very difficult for us to acquire such a large sum of capital,” Dao Van Chan, director of Ninh Thuan agricultural products export company, said.
The severe dearth in capital, which follows a US$62.5 million loss in export revenue in 2005 and other unnumbered losses in 2006, has led cashew enterprises to depend heavily on bank loans.
“Currently, more than 80 per cent of capital is from banks,” the Vinacas official said.
Vinacas has been calling for loans from banks such as Vietcombank, Incombank, Agribank and Techcombank.
However, a representative from the Bank for Investment and Development of Vietnam (BIDV) explained that losses made by the sector in 2005 and 2006 might discourage banks from providing loans.
“I am not sure whether the bank will provide loans for the cashew sector this year,” he said.
Techcombank deputy general director Nguyen Thi Tam said her bank would lend the sector VND600 billion-VND1 trillion ($37.5-$62.5 million) this year.
However, the Vinacas official said cashew enterprises still needed an amount of capital four-times higher than the designed Techcombank loan.
He also said this year was favorable for cashew export and enterprises should be able to obtain bank loans as in previous years. “The world’s cashew importers have almost no store of cashews, which creates favorable conditions for local exporters,” he said, adding that Vietnamese cashews have established a niche in the world market with its own Vietnamese brand names.
Vietnam, the world’s second largest cashew exporter, exports to over 40 markets such as the US (33 per cent), Europe (42 per cent), China (22 per cent), Hong Kong and Canada.
In 2006, the country exported over 130,000 tons of cashew worth of $520 million. It is expected that the cashew growing area will be increased to 500,000 hectares by 2010 with an estimated output of 750,000 tones.
In Jan of 2007, Vietnam earned $40 million from exporting only 10,000 tons of cashew nuts, up 20.1 per cent on year in value despite a fall of 47 per cent in volume, latest report from the General Statistics Office showed.
The country recently joined hands with India, the world’s biggest cashew exporter to set up an alliance promoting global cashew consumption. (VIR)
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