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  • Cashew industry strike to hit exports

    Mar 19th, 2015

    Cashew exports are likely to fall as about 50 per cent of the cashew processing factories in Kerala have remained closed since the beginning of this month. Kerala is the major processing hub in the country with over 1,000 processing units in the organised sector, employing around three lakh workers. “Following substantial hike in wages introduced by the State government from March 1, the processing cost has increased to `3,200 per bag of 80 kg raw nuts making processing uneconomical. The cost is `1,200 in other States,” P Sundaran, Vice-Chairman, Cashew Export Promotion Council of India (CEPCI), told BusinessLine. Tax structure At the same time, the rise in imported raw cashew nuts during the current fiscal has also added to their woes. Apart from this, for the raw cashew purchased from Kerala, units are liable to pay 5 per cent tax. Processors from outside the State, on the other hand, have to pay only 2 per cent CST. Raw cashew does not attract sales tax in other States, he said. All these factors have affected the cashew industry, he said. Prices rise Raw cashew prices have touched `102 a kg in select markets of Goa and Kerala in the current season. Traders say this is a record opening price of the season. Around the same time last year, raw cashew nut prices ruled at `95/kg before dropping to `83. The trigger for the steep spike in prices this year is short supply. In Kerala, farm-gate prices are between `94 and `97 a kg, he said. “Normally, prices will be high at the beginning of the season and decline as harvesting progresses. This year, it is unlikely to see a big fall as there is a shortage of material even in Tanzania and West Africa,” an industry source in Mangaluru said. As a result, most of the processors in Kerala have set up processing facilities outside Kerala and even abroad in Vietnam. Raw cashew exports this financial year have been to their units in Vietnam. Vietnamese competition Processing facilities in Vietnam have increased substantially in recent years. Vietnam’s cashew industry exported more than $2 billion worth of the kernels in 2014 for the first time and remained the top exporter for the ninth consecutive year. Roughly 3,06,000 tons of locally produced cashew kernels were shipped out from Vietnam, registering a 17.4 per cent increase, Sundaran said. However, continued demand has pushed up overall cashew exports during April -February of the current fiscal compared with the same period a year ago. Total shipments were 1,23,307 tons valued at `4,985.86 crore at an average unit value of `404.34/kg. Shipments were 1,10,644 tons valued at `4,658.73 crore at an average unit value of `421.06 a kg in the year-ago period. In fact, over 50 per cent of the cashew processing industry’s annual requirement is perpetually met through imports as indigenous is below the industry demand. Consequently, an upsurge in imports of raw nuts is visible during April-February 2014-15 at 8,73,998 tons valued at `6,093.86 crore despite rise in the raw cashew prices, from 7,40,819 tons valued at `4,313.96 crore. The average unit value was `69.72/kg against `58.23 in the corresponding period a year ago, they said.