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  • Rising costs, price correction make Goan cashew nuts lose their bite

    Oct 1st, 2018

    The increase and then drop in cashew nut prices have left retailers in a tight spot with tourists preferring to buy from other states. Ajit John spoke to individuals involved in the business to understand the state of affairs

    We all like to eat them salted or plain and is something that is closely associated with the State. Something like football and this small nut that is slightly off yellow in colour. The cashew nut is as Goan as Sarpotel is. The cashew nut may be grown all over the coastline but Goan cashew has a brand resonance all its own.

    The State grows less than 25,000 tonnes of raw cashew and realisation is usually 25% of the weight. India grows 7 lakh tonnes of cashew every year. It is grown along the entire coastline. Cashew from states like Maharashtra, Kerala, Tamil Nadu, Orrisa and imports from West Africa. Earlier imports came from that other important competitor Vietnam, but after the government levied import duty on kernels it did not make economic sense. Earlier certain markets in Mumbai and Delhi would get cashew from that country but not anymore.

    For one of the State’s biggest players, business has been good. Siddharth Zantye of Zantye Cashew said overall business was good though the international market had crashed due to a disparity in pricing. Stock was purchased in March, April and May at Rs 166 per kilo and it has now dropped to Rs 125 per kilo.

    He said “The kernel market is down and the domestic prices are also down. It has been an interesting year. India has been facing stiff challenge from Vietnam which went into a major automation drive which meant their prices dropped dramatically affecting our international market.”

    The consumption in the State is increasing and cashew is coming in from all over the country. According to Siddharth there is an increase in sales every year of approximately 8-10%. This year however the realisation of each kilo of sale is resulting in a loss. He said sales were being conducted but no profit was being generated. What was earlier sold at Rs 900-1000 per kilo had reduced by Rs   150 a kilo. This he said would have an effect next year. Cashew he said had witnessed a price rise for three consecutive years. From Rs 90 four years ago it had now reached Rs 175 per kg. This was an increase that made the farmers very happy and justified its place in the list of cash crops.

    A walk in the lanes of Panjim and phone calls made to retailers in other towns confirmed that business was down for the retail trade.  Sonu who refused to give his full name who has an outlet called ST Enterprises on 18 June road said business was down. He said “At this time of the year, people would be walking into buy cashew and other products but that has not been the case. It is cheaper to buy cashew in Orrisa, Telegana, Bengaluru where it is Rs 600 per kilo and in Goa where it retails at Rs 960 per kilo. Attempts to talk to other retailers proved futile as preferred to duck the question.

    Zantye said the problem in Goa was that the total sales market was dominated by traders. He said “We are the only company to have a brand and the Goa brand is very popular. In Kerala cashew is sold for Rs 30-40 less. These traders mix cashew from all over in a bag and pass it off as Goan cashew which is essentially cheating. We only sell Goan cashew in the domestic and export market. 20% is sold in Goa, 40% domestic and 40% to Europe, USA and Japan.”

    The absence of automation is also a very big problem. The capital needed is on the higher side and the industry is asking for a subsidy to invest in automation. Production, industry sources said would increase and the cost would reduce. With production cost approximately 25 % to 30%, automation will reduce cost by 25%. Small producers will have to get into mechanisation that is the only way forward.” A government report cited the problems facing the industry concisely by saying the cost of production in India is higher compared to her competitors mainly due to the low level of mechanisation coupled with high labour cost. The average cost of production in India varies from Rs 25,000 to Rs 40,000 a ton compare to USD150 (Rs 9750) per MT in Vietnam. The installed capacity of Indian cashew processing is 25 Lakhs MT per annumagainst the production of raw cashew nuts at 7.8 lakh MT. Another 7.7 lakh MT is sourced by way of imports, making the raw nuts available for processing toa total of 15.5 lakh MT only (Capacity utilisation 62%). Due to low levels ofprocessing costs, competitors can always beat India in the international marketby 15% more on raw nut prices, and to run the industry in India, the Indianexporters are forced to buy raw nuts at the same price offered by competitors incurring heavy loss in exports.

    A government project named Projections 2020 aims at increasing export value by USD 1.2 billion, increase the area where cashew is grown, push Indian processing to 22.5 lakh MT and importantly achieve 60% mechanisation to cite a few of its goals. While Pranesh, Rupa and Steven may like their cashew they may not be willing to spend such high prices to procure it and the industry will have to take corrective steps at the earliest.


    Source: https://www.heraldgoa.in