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  • Cashew sector in a tailspin

    Jun 23rd, 2016

    80 per cent of private sector factories remain closed owing to high production costThe cashew sector of the State, which is largely concentrated in Kollam, is on a downward spiral.About 80 per cent of the private sector factories and 30 factories under the public sector Kerala State Cashew Development Corporation (KSCDC) are remaining closed.While “unbearable” production cost has been blamed for the closure in the private sector, lack of government allocation has been cited for the closure of the KSCDC factories. The closure in the private sector began soon after the government declared a 35 per cent wage hike for cashew workers.

    Wage hike

    Processors said the wage hike resulted in high production costs that rendered cashew kernels from Kerala uncompetitive in the international market.They said that compared to Kerala, production costs worked out to only one-third in other States. In Vietnam, a leading global cashew processing country, the cost was even less. The 10 per cent import duty on raw cashew imposed by the Centre had added to their woes. “The duty created a situation wherein the processors could burn their fingers even if they dabbled with processing,” said a processor, who had shut down his factory.

    Slump in import

    The closure of factories had resulted in a slump in the import of raw cashew by the private sector as the processors are dependent on imports.Though some belts in the State produce raw nuts, these are not procured by the processors within the State “because of commercial tax hassles”.Almost the entire cashew produced in the State is going to factories outside the State as there is not much hassles for processors there to procure it.The processors said that of the 752 private cashew factories in the State, more than 600 were lying closed, rendering thousands of workers, the majority of them women, jobless.The processors said though the sector employed more than two lakh workers, successive governments had concentrated on the public sector factories that employed around 16,000 workers.Some of the processors here had shifted operations to other States. There is also uncertainty over the reopening of the KSCDC factories.