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  • Is Vietnam the only outsourcing factory in the world?

    Dec 14th, 2017

    According to recent research, Nguyen Duc Thanh, Chairman of VINACAS said that Vietnam cashew industry is mainly stopped at the export of cashew nuts, not many products with high value added content.According to the Vietnam Cashew Association (VINACAS), cashew export turnover in 2017 is estimated at over $ 3.5 billion, up about 20% compared to 2016.With this number, the sector continues to set a new record of export value; At the same time, this is the 12th year in a row, the cashew industry of Vietnam has maintained its position as the world's leading exporter of cashews.

    However, the trade surplus in the industry is not large, when the import value of raw materials in 2017 is estimated at 2.5 billion USD. Accompanying that, the value of profit for domestic enterprises and growers is still low, not matched.

    Where does the profit come from?

    According to Ta Quang Huyen, Chairman of Hoang Son 1 Co., Ltd - one of the largest cashew processing and exporting enterprises, cashew exports this year is mainly due to the consumption situation. The world is quite good, the world demand for human resources is increasing.In addition, after the domestic crop has a productivity problem, Vietnamese cashew processors have been actively importing raw materials from Africa for processing. These have helped Vietnam's exports in 2017 increase both in volume and value compared to last year.

    Remarkably, the world's cashew processing industry is about 3.4 million tons, Vietnam has processed about 1.5 million tons. In the last two years, the world cashew has been moved from India to Vietnam, becoming the largest processing and exporting center in the world.Le Quang Luyen, Chairman of the Board of Directors of Phuc An Production - Trading Company Limited, said that with the overall growth of the cashew industry, the export turnover of this company is expected to increase in 2017. 20% over last year.

    However, according to Luyen and businesses, although the export of cashew businesses are favorable but the real profit is not as expected. This year, the price of raw materials has risen sharply due to domestic production and Cambodia's crop loss.Other raw material areas in Africa also follow that trend to increase prices. Although export prices have increased, but not up to the momentum of rising prices of imported materials. This has greatly affected the profitability of both cashew farmers and cashew farmers.

    On the other hand, businesses also say that although Vietnam is the world's cashew nut processing center, it is still limited in its deep involvement in the global cashew nut value chain."Prices to foreign consumers are usually close to $ 30 / kg, while the average price of Vietnamese businesses sold at only $ 10 / kg. This means that Vietnamese businesses only account for 30% of the profit in the cashew production chain, while the remaining profits come from big distributors and supermarkets. Meanwhile, resources, money, labor ... Vietnamese businesses spend huge profits that are not matched, "Thanh shared.

    Overcome the weakness of the material

    With the reality of the industry, is Vietnam just a clue to the processing industry of the world? When referring to this issue, businesses in the industry said that this is not authentic. Because Vietnam's cashew processing sector in recent years has quite strong development steps, processing technology is considered to be the world leader.According to Tran Van Hiep, Head of Trade Promotion Department of VINACAS, the processing capacity of cashew processing plants in the country is not only stopped at 1.5 million tons but can be up to 2 million tons. While domestic production is only 250,000-350,000 tons, the rest is required to import.

    Excluding efficiency factors, the import of raw materials is mandatory to meet the production needs of processing plants. Otherwise, many cashew processing factories and factories will have to close because there is no material for production.Mr. Ta Quang Huyen, Chairman of the Board of Hoang Son 1 Company also said that with the current agricultural land, Vietnam has no more land to expand production of cashew. Therefore, the import of raw materials for processing is not necessarily bad.

    "This year, Vietnam imported 75% of raw materials, equivalent to about 1.3 million tons. With a 20% surplus value, the Vietnamese cashew industry has a profit margin of 260,000 tons, roughly equivalent to domestic production. Not to mention, the industry contributes to create jobs for many workers in rural areas ... ", said Huyen.VINACAS, in collaboration with the Ministry of Agriculture, Forestry and Fisheries and businesses in Cambodia, to build 1 million tons of raw material in Cambodia in the near future. . Apart from Cambodia, businesses are also targeting raw materials in Laos, to address the problem of raw material shortages.

    According to VINACAS, in the future, cashew industry enterprises must continue deep processing and exploitation of the domestic market.At the same time, it must be tied more closely to the raw material area, towards the clean products, such as organic, produced according to international standards ... Thus, gradually reduce the dependence on imported raw materials. Increasing prices, ensuring the sustainable development of Vietnam's cashew industry in the future.


    Source: Vietnam + / VNA