The festive season is not off to a good start - traders and wholesalers at Agriculture Produce Market Committee (APMC) have been cribbing about the volatile market conditions adversely impacting the cashew industry. They say they've barely had any business this season, and fear that the condition in the coming months will only get worse.
Rupee touching 74.34 to a dollar has added fuel to already burning pockets, which has led to over hundreds of containers (import) laden with cashews lying at JNPT port for the past few weeks with no takers. And if cashew market players are to be believed, many more such containers are expected to arrive in the next few weeks.
Shailesh Ashar of H S Traders, dry fruit market, in the industry for the last 25 years, said, "The cashew business is going through its worst phase; in the coming months, it will lead to bankruptcy of traders and wholesalers due to the volatile market rates in both local and international markets. And a falling rupee has only added fuel to the fire.
"We have hundreds of containers of cashew from newbie importers, who are still unaware about how this market functions; containers imported from Vietnam, Africa and elsewhere are lying at the port awaiting clearance and purchasers. Unlike earlier, when an importer would have a ready market, the scenario today is different - first the commodity is imported, then importers look for a market."
Elaborating the volatile market condition, Ashar said, "These imports were done when a ton of cashew cost $2,150-2,200. Now, with the rupee sliding, the rates have been brought down to $1,350-1,650, and these might be further reduced to $1,100, if they fail to find buyers. But you can imagine the revenue loss to the importer." Kamlesh Nagda, proprietor of Heer Kamal Enterprises, another old cashew trader echoed Ashar. "This festive season has been one of the worst in terms of business; we haven't even broken even yet, or earned half of how much we did last season. Usually, by this time, we should start getting inquires from corporates and business houses, but it's been dry so far, as many business houses, too, have been impacted."
When asked about bulk purchases by retailers, Nagda dejectedly said, "Gone are those days, when a stockist would buy 200 or 300 10-kg tins of cashew nuts; today, they only place order as per their immediate need (five to 10 tins). The market that earlier allowed 21 days credit, is not getting money even against sale for two to three months."
Also, price of raw cashew nut, which was Rs 45 a kg eight years ago, is Rs 170 a kg today for the processor, who, after processing, charges the wholesaler around Rs 830 a kg, which gets levied with five per cent GST and 80 paise per Rs 100 APMC internal cess.
Besides this, many processing units have started supplying directly to hotels and manufacturers of confectionary, ice cream, sweets, etc, who are willing to sell the product at a price below the prevailing market rates. This has left the wholesaler at the receiving end with a mere 4 to 5 per cent margin in business, besides having to pay GST and cess.
Cashew is cultivated in 17 states in India. The total area under cultivation is 10.41 lakh hectares, and the estimated production is about 7.80 lakh MTs with an average production of 753 kg/ht, accounting 25 per cent share in the world production. India is the largest producer of raw cashew nut (7.8 lakh MTs), processor of cashew (16 lakh MTs), as well as largest consumer (2.70 lakh MTs) in the world, as per statistics available with Cashew Export Promotion Council of India.
proprietor, M/s Arjan Baldevdas
'The trend today in the cashew industry is to buy and sell small quantities, because now, if a trader wants to buy stock worth Rs 1 crore, he has to pay advance GST of five per cent (Rs 5 lakh), which was not the case earlier. Also, only after he sells the entire stock and gets money for the sale can he place another order. When the economy itself is undergoing a massive reformation, markets will definitely take time to settle down. In the long run, it will show positive results, but the present scenario is not favourable'
proprietor, M/s A R Bhandary & Company
'Even after having goodwill in the market and with banks for the past few decades, we are facing this pressure. The only way to sustain in the cashew industry is to go strictly by books of accounts and need-based stock holding, anything above and beyond will only lead to heavy losses and maybe shutdown. We are surviving due to smaller demands from consumers and retailers, but without breaking even'
Shailesh Ashar,HS Traders
'We have hundreds of containers of cashew from
newbie importers, who are unaware about how this market functions; containers
imported from Vietnam, Africa and elsewhere are lying at the port awaiting
clearance and purchasers. Unlike earlier, when an importer would have a ready
market, the scenario today is different - first the commodity is imported, then
importers look for a market'