Already reeling under a dip in exports due to the COVID-19 impact, the mass cancellation of events and temple festivals has brought the cashew sector in the State to a virtual standstill. While processors are bracing for a serious setback, the latest tenders floated by the Kerala State Cashew Development Corporation (KSCDC) and Kerala State Cashew Workers Apex Industrial Cooperative Society (Capex) have been considerably underbid, leading to a huge financial loss. While there is a gap of over ₹40 lakh in KSCDC’s last two top bids, Capex registered a loss of ₹17 lakh on Thursday.
“The participation in e-tender has also been very poor with the number of bidders coming down to four from the normal 14 or 15,” says S. Anilkumar, Managing Director, Capex. Since Holi celebrations were called off in most northern States, traders who stocked up for the festival season could not sell the majority of their product.
“As a result, the demand has come down and we are bleeding dry. Everything from the general economic slowdown to the decline in tourist inflow and cancelling of celebrations, including weddings, have affected the sector,” he says.
Nizamudeen. I, a processor who is currently in Nigeria to source raw cashew nut (RCN) for the next season, says the uncertainty in the sector has deepened since the latest outbreak of COVID-19 in Kerala.
“Last year I could procure over 2,000 tonnes of RCN from Nigeria for our domestic processors. But since the market is not stable, this time I couldn’t close any deals. As of now, processors can not decide whether to go ahead as the situation is highly unpredictable,” he says.
While the export market remains dull, lightly blemished whole (LWB), one of the most moving grades in domestic market along with splits, has skidded from ₹12,000 per box weighing 23.68 kg to ₹9,500. At the same time, the price of raw cashew nut (RCN) has been falling since Vietnam, the biggest global player, has cut down on procurement and processing.
“RCN prices are crashing and it has come down to $1,200 per tonne from $1,600. This is another reason stopping the processors from procuring huge volumes of RCN. If it goes down again that will amount to heavy losses later,” adds Mr. Nizamudeen, also the president of the Federation of Cashew Processors and Exporters.
All stakeholders agree that it is an unexpected blow for the industry on a recovery mode and extra efforts will be required to stabilise the situation.
“Since it’s a food product we have closed all our factories as a precautionary measure. Currently we are trying to strengthen our domestic marketing network and online sales to tide over the crisis. We have already deployed a team for that and we are also planning to recruit marketing personnel in each district,” says S. Jayamohan, chairman, KSCDC.