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  • Vietnam and Cambodia Combined RCN Crop could be 500,000 - 525,000 tons in 2016

    Jul 20th, 2016

    Ashok Narayanan, Orion Commodities, Vietnam

    What is the production expectation for the year 2016 in both Vietnam and Cambodia? Has the weather been conducive so far? When is the arrival likely to start?

    Crop expectation is similar to that of last year. Vietnam crop is expected at around 400,000 tones and in the best case can extend up to 450,000 tones, whereas Cambodian crop is likely to be in the region of 85,000 and 120,000 tons. So the combined crop for 2016 is expected to be in the region of 500000 and 525000 tones.Weather is unusual and has been unseasonably hot for this time of the year, with higher than average temperatures prevailing over the last couple of months.. This is having a slight effect on the timing of the crop and we expect Vietnam crop is likely to be delayed by two to three weeks. Cambodia’s crop is expected to arrive on time.

    Vietnam is also taking initiatives to increase productivity to 1500 kg/ha on an average from the current level of 1100 - 1200 kg/ ha. Can you share some details on this?

    Vietnam has always been looking at ways of increasing productivity for raw nuts and also increasing production efficiency on the kernel side... Vietnam was the first to share hybrid plants/saplings with Ivory Coast and so on. They have a program to increase the yield per hectare over the next few years..Increasing productivity in agricultural commodities has its own natural gestation period. When you start the process with new plants, new saplings, hybrid varieties, considering the time taken for the plant to grow, it will take about 3 to 5 years to achieve desired results..

    How does the Vietnam nut compare in quality terms vis-a-vis say nuts from West Africa? (in terms of KOR, nut count, moisture etc)? What was the price during last season? What is it likely at the beginning of this season?

    Moisture tends to be higher because of local farmer harvesting practices, with most of the drying / cleaning taking place at the buyers’ factories..Average yield for Vietnam tends to be high around 51-54 KOR... Nut count is seen in the range of 170 to 195, for both Cambodia and Vietnam.Every origin has its own specific characteristics when it comes to raw nuts quality. Tanzania quality from the current incoming crop was excellent, with outturn between 52-55 per lb, with stray problems of high nut count.. From Indonesia, the yield was pretty high throughout the season in the region of 51 to 55 lb. Ivory Coast quality in the last season was well below par, and the average yield was 2-3 lb lower than normal… We believe that drastic changes in weather patterns will prevail through all producing regions, which could result in unexpected problems..

    Vietnam Price

    Prices ranged between VND 27,000 to VND 37,000 per kg last year. USD / VND rate for the better part of 2015 was around 21800, and devalued to 22400-500 late last year in line with weakening regional currencies..Tanzania season RCN price closed around USD 1690-1720 CNF last month... Hence Vietnam RCN prices are likely to start the season on the higher side, also supported by delay in start of crop season. Higher prices may not sustain, however, if there is no support from the kernel market. Starting price could be around $1450-1490 per ton delivered to factories for outturn of 52-53lbs.

    How does Cambodia quality compare with say Vietnam nuts? How easy or difficult is it to process it? Does it sell at premium to Vietnam nuts in HCM?


    Cambodia borders with Vietnam and hence the quality of goods across the borders remains pretty much the same. Cambodian prices are determined by Vietnam’s local pricing... Most of the Cambodian crop comes into the provinces across the border. In principle, therefore, we should treat Vietnam and Cambodia as one and the same.

    What is the scope for expanding RCN production in Cambodia?

    Do we see Vietnam supporting other countries such as Laos, Myanmar in expanding acreage under cashews?

    If prices continue to rule at higher levels, it will definitely encourage farmers to plant more and produce more. Today RCN prices average in the region of $1250 and $1600 per ton, higher by 30-40% when compared with prices three years ago. Any agri commodity, which has raised that much in a relatively short period of time and has sustained these levels, will definitely encourage farmers to expand their area under cashew production and to invest more.Cambodia, Laos and Myanmar share borders with Vietnam. Any neighboring country that produces cashew will definitely have a market in Vietnam. Vietnam processing capacity has been growing over the years and is currently estimated at slightly over 1.5 million tones. Vietnam produces 500,000 tones and imports close to one million tones, so there is a ready market for whatever RCN is produced in the region.

    What is the processing scenario in Cambodia?

    How likely that we see processing pick-up in Cambodia?


    Cambodia doesn’t have a processing industry to the best of my knowledge; however, there might be some small processing units, which is insignificant in the overall scenario. So far, I have not heard of any new processing units likely to be set up in Cambodia in the foreseeable future.  

    What is your assessment of the situation in West Africa crop as on date?

    There are reports emerging from Nigeria about the re-appearance of Harmattan Winds in January, which have delayed the flowering of cashew trees. So harvesting could be delayed and likely to start in the later part of this month. Otherwise, reports are favorable for a normal crop in the other parts of West Africa.

    Government intervention in cashew sector has increased. IVC sealed borders, made registration mandatory, declared minimum price and so on. Now GB has followed the same. While it has lead to slight increase in farmers’ income, it has also increased costs to processors in the last two years. Are government interventions leading to cost push? Would the market sustain such cost push year after year in excess of acceptable level of inflation?

    Government intervention in any industry indicates that the industry is growing and the government sees this as an opportunity to earn revenue out of it and / or provide some protection to farmers etc… As for minimum prices, government will always desire to support its local people- its farmers - by minimum support price but if it reaches an unsustainable level leading to business becoming unviable, exports being affected, prices being affected then the markets will automatically react, the buyers will stop buying and the government will be forced to respond suitably.. As all of these are based on demand and supply and prices are elastic, changes wrought by government intervention will be absorbed by the market to a certain extent, beyond which they will not be sustainable..

    Given the macro environment, almonds price crash and also some pile up in stocks of cashew kernel with retailers in India, should we expect to see a moderate opening in West Africa?


    Moderate opening in prices is always beneficial for the industry as the current global economic scenario is not that good. Buyers have to be cautious with Raw material pricing, as there are no foreseeable threats to the supply scenario whilst demand could be affected by overall global economic slowdown, which seems to be a looming threat in 2016…

    When almonds price were higher than cashew, it didn’t increase the demand for cashew, probably because overall mixed nut package pricing / demand were affected by the higher prices of almonds, walnuts, pistachios and hazelnuts etc. Now that the prices have corrected significantly, I think it might be good for Cashews as overall business of mixed nuts may see an improvement, with resultant benefits for cashew demand as well.

    Quality related challenges in West Africa- What is your perception. Have they improved over the years?

    Quality aspects have a large role to play not only in West African RCN but elsewhere too. Changing factors such as a huge increase in new traders / entrants, increased competition at the farm gate level etc have had a major impact on quality in recent years. There is need for extreme caution on the buyer’s part in choice of supplier and for quality consciousness and responsible performance on the part of sellers.

    Import duty on RCN is the hot topic in India. What do you see in it- Short term and long term?

     I think any form of levies / duties or other restrictive trade practice by governments is backward looking and protectionist in principle.. however, in the case of RCN into India, it’s a complex issue as on the one hand there is this huge cashew processing industry in India which will be severely affected; however, on the other hand, there is this concern about foreign exchange utilization imbalance in the outflow for RCN imports, which is roughly twice that of what India realizes from exports of cashew kernels. If the import duty is the right answer, I think it is matter for a lot more analysis before any moves are initiated by the government or the concerned industry association.. India consumes close to 10 million cartons per year of kernels. It will surely affect consumer demand, if duty levy on raw nuts is passed through as price increase for the end customer and negatively impact the processing industry.. Long term, India must increase domestic raw nut production to meet growing demand from processors; that is the real answer to this situation and the government / industry association should take aggressive and proactive steps to achieve this objective.


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