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  • Cashew industry feels the heat of ill-conceived policies

    Aug 8th, 2015

    by Jayachandran Elankath

    The cashew industry, which once had a crucial role in Kerala’s economy, is facing the biggest crisis in its history. The public sector undertakings in the sector are standing mute witness to the crunch as lakhs of labourers and companies stare at a bleak future.One of the main reasons for the cashew industry’s current crisis is its refusal to embrace innovative methods to suit the changing needs of the market. The State which enjoyed a monopoly of sorts in cashew processing and exports, was eventually overtaken by the fully-mechanised industry of Vietnam. The fast-growing cashew industries of Tamil Nadu, Karnataka and Andhra too pose a serious threat to Kerala’s decade-long dominance.

    There are around three lakh workers employed in over 600 factories in the State’s cashew sector, which was once hailed as a major traditional industry in the State. It is unfortunate that there are no efforts to formulate a scheme for rejuvenation of the industry which contributes millions to the State's exchequer every year. The problems confronted by private players have also gone from bad to worse as they grappled with increasing dip in profits. The Kerala State Cashew Development Corporation Limited (KSCDC) and the Kerala Cashew Workers Apex Industrial Cooperative Society (Capex) have sunk in the red long ago. As many as thirty factories under the KSCDC have remained closed since last February. The corporation’s woes could deepen if the CBI initiates an enquiry into the alleged corruption in the report submitted to the government by additional chief secretary (Finance) K M Abraham.

    *Private players condemn Govt policy *

    According to executive director of the Cashew Exports Promotion Council of India, K Sasi Varma, the decision to bring down the incentive under the Marketing Development Assistance (MDA) from 5 per cent to 2 per cent has worsened the cashew sector’s crisis. “As there is a tight competition between India and Vietnam in the global market, we are forced to lower the prices of cashew kernels. But the move to reduce the MDA came as a big blow to us,” he said. The subsidy extended by the central government to rent stalls at international expos was also withdrawn. The huge slump in exports recorded in the first quarter of the fiscal was due to the ill-conceived policies of the government. As a result, a majority of the cashew unit operators sell their products in the local market. Apart from the fall in production of the, the rise in the prices of raw cashew nuts gave a severe blow to the industry. The raw cashew nut prices hovered around Rs 100 this year as against Rs 85 last season. The cost for processing could not be recovered at this rate. Moreover, the 35 per cent hike in labour charges in the State has further deepened the crisis, the owners said. Besides the daily wages of Rs 400, the workers are entitled to over 60 per cent of the total wage as in the form of ESI, PF, welfare fund and bonus. This has forced many factory owners to divert investments and shift their base to the neighbouring states of Tamil Nadu, Karnataka and Andhra. There are several Kollam-based industrialists who have set up factories in Vietnam!The organisations of cashew unit owners pointed out that the government needs to guide the industry to stability and prosperity by taking steps to introduce full mechanisation in the sector. The cashew industry in many other states such as Karnataka is almost fully mechanised, but Kerala has so far shown little interest in exploring the possibilities of mechanisation.The private players also demand an action plan for the proper rehabilitation of labourers who would be affected by mechanisation.

    Labourers cry foul

    The cashew unit owners who resorted to pressure tactics by shutting down factories to express dissent over the directive to hike salaries, however, conveniently hide the soaring price of kernels, alleged office-bearers of labour unions.Reeling out figures to substantiate their claims, the union leaders said there is a huge demand for cashew kernels in the local market. Last year, the total amount of imported raw cashew nuts was 13 lakh tonnes. Though it yielded approximately 4.5 lakh tones of cashew kernels, only about 1.35 lakh tonnes of the total production were exported with the rest being sold locally, said the CITU-affiliated Cashew Workers’ Centre state president J Mercykuttyamma.The artificial price hike of raw cashew was the result of an illicit practice in which traders purchase raw cashew at lower prices from African countries like Guinea-Bissau and Ivory Coast and sell it to medium-scale factories at a high price. The big operators could pocket huge profits without going through the burdens of processing and marketing. Even as those who indulge in such irregular practices benefit from the excise tax relief for imports, the medium factory owners who purchase cashew from them continue to suffer from losses due to the inflated procurement price.

    Despite the government’s claim that the wages of the cashew labourers were hiked, all the factories managed by the KSCDC has remained closed for about six months. The corporation is yet to disburse the arrears pending since last Onam. It has also failed to remit the provident fund contributions of employees amounting to Rs 10 crore. Gratuity was also yet to be disbursed for many retirees. The corporation which had over 34,000 employees once has only 14,000 workers now. The recruitment process is also being stopped.The 30 factories under the corporation had functioned only for 39 days this year. It is high time the authorities woke up from their deep slumber and devised strategies to revive the industry with a sense of commitment.