2009-10 cashew exports down .

Cashew exports from the country during 2009-10 declined 1.3 per cent in volume and 2.8 per cent in value on stiff competition from other suppliers in the world market.

Total shipments during the last fiscal stood at 1,08,120 tonnes valued at Rs 2,905.82 crore ($612 million) against 1,09,522 tonnes worth Rs 2,988.40 crore ($649.79 million) the previous financial year.

The average unit valued realised in 2009-10 was Rs 268.76 a kg against Rs 272.86 a kg a year ago.

Speaking to Business Line, the Chairman of Cashew Export Promotion Council of India (CEPC), Mr Shahal Hassan Musaliar, said the main reason for the decline last fiscal was competition from other producing countries – Vietnam and Brazil. He said India enjoyed the number one position in the world market till 2007-08.

During the last five years, exports declined 10.5 per cent and Vietnam took advantage of it. Its export increased 67 per cent during this period and is now claiming to export 50 per cent more than India.

On the other hand, Brazil, which is the second largest producer of raw cashew, also became a competitor mainly in the US and CIS markets, he said.

Strong Re

The rupee's appreciation against the dollar has also contributed to the declining trend. In contrast, the Vietnam devalued its currency in three phases by 15 per cent.

During this period, the rupee appreciated against the dollar by over 14 per cent.

As a result, “we have become about 30 per cent less competitive in price terms against our major competitor and the export earnings have been lower than the levels budgeted for raw cashew nut procurement”.

Next was the global recession, which had a severe impact on the cashew industry with demand from the US and Europe dropping.

Consequently, the prices and volume of sales fell in the international market.

Export ban

Added to this was the ban on export of agriculture products to Russia in 2008 that remained in force for two years.

During this period Vietnam captured the Russian and CIS markets.

According to Mr Musaliar, banks are not allowing exporters to avail themselves of enough Foreign Currency Packing Credit, citing non-availability of dollars.

Exporters are forced to avail themselves of rupee packing credit at 7 to 9.5 per cent. The sharp appreciation of the rupee has also taken a toll.

He said that costs of raw cashewnuts and processing had gone up. Even though the Government announced that service tax exemption would be granted for export activities, cashew exporters are being levied service tax for transport of goods from farm/port to factory and from factory to port, commission paid to foreign agents, etc. All these have added to the cost of production. At the same time inadequate availability of domestic raw nuts has forced the industry to depend on imports, he said.

“Our domestic production is around 7 lakh tonnes while our processing capacity is about 14 lakh tonnes. Hence we have to depend on imported raw cashew nut for more than half of the requirement.

“Vietnam is also competing with our processors for sourcing raw cashew nut from African producing countries, resulting in increase in raw cashew prices,” he said.

Other surrogate nuts such as almonds, macadamias are being promoted in the major world markets on the basis of health claims and large amounts are being spent by the grower associations, supported by the Governments.

“Since cashew is produced by developing or least developed countries, the farmers are not in a position to spend large amounts for promotion,” Mr Musaliar pointed out.

On the rise in imports of raw nuts which had gone up by 24.26 per cent in 2009-10 from the previous fiscal, the CEPC Chairman said, “Our domestic production is around 7 lakh tonnes while our processing capacity is about 14 lakh tonnes.

“Hence, we have to depend on imported raw cashew nut for more than half of the requirement and for protecting the employment of thousands of cashew factory workers. Four tonnes of raw cashew nut need to be processed for producing one tonne of cashew kernels”.

India imported 7,52,854 tonnes of raw nuts valued at Rs 3,037.35 crore in 2009-10 as against 6,05,850 tonnes valued at Rs 2,632.41 crore in 2008-09. The import value increased by 15.38 per cent while the unit import price by 7.71 per cent.

On the current trend, he said, “The rupee is strengthening and the effects of recession and financial crunch are continuing”.

However, the factories need to be run for providing employment to lakhs of workers.

Therefore, at this critical juncture, the industry needs the full support of the Centre for survival. Mr Musaliar expressed the hope that cashew may be included in the priority sector along with leather, handlooms, handcrafts, etc, for support from Government.

“We hope the the recession will be over and trade will increase during the second half of the current financial year and exports pick up to reach Rs 3,000 crore.”

Source : Business Line