Kochi: Inability of domestic production to cope with growing consumption is slowly transforming India into a net importer of cashew. Figures released by the Cashew Export Promotion Council of India for the period of April-January 2009-10 show that the value of raw cashew imports are higher than the value of cashew kernel exports for the same period despite the potential of value addition in processing stage.
India imported raw cashews worth Rs 2711.67 crore for the first 10 months of the current financial year whereas, the exports of kernels stands at Rs 2267.29 crore for the same period. Volume of raw cashew imports are higher by 27 % for the same period while exports of kernels are seen lower by 9%.
“It is obvious that some of the cashew is finding its way into the domestic market. The credit crisis in developed nations and good prices in domestic market are prompting many to sell their produce in domestic market,” Pratap Nair of Vijayalakshmi Cashews told FE.
Traditionally, India was the prominent supplier of nuts to the US market and commanded 50-60% of the market share. However, India’s exports have been declining in the past 6-7 years due to intense competition from Vietnam. In 2007, Indian share of the US market had slipped to 33%. Another competitor Brazil has also slipped behind from 30-40% market share to 20-25 % with the emergence of Vietnam.
Vietnam has gained market share at the expense of its two competitors. Experts say that the emergence of Vietnam has changed the dynamics of global cashew trade. US imports from Vietnam have increased from less than 100 tonne and less than 1% of all imports in 1994 and 1995 to 45 million kg and 36 % of the total in 2007. Vietnam has a price advantage over both India and Brazil. The average CIF value of cashews imported from Vietnam was $4.49 in 2007 compared to $4.80 for cashews imported from India and $4.56 for cashews imported from Brazil.
Competitiveness of Indian cashew industry lags because of its reliance on imported raw cashew kernels and the scattered non-mechanised processing sector that is largely labour-intensive.
The slow down in the global market could see traders looking more at the Indian market, which has in the recent past shown an increasing appetite for such products. “Entry of big retailers in India has helped in the sales of similar products and.realisation is better compared to the global market,” a retailer said. Entry of big retailers has helped increase domestic consumption. Private labeling is also gaining momentum in India. The booming middle class in India can afford cashews and the awareness about health aspects of cashew is increasing.
India has to import more than half of its requirement of raw cashew due to poor productivity. Indian productivity is lower by three to four times the productivity achieved by Vietnam. While Vietnam has hardly 10% of the world’s cashew farming area, it produces 34% of the world’s cashew. India, on the other hand, has the largest share of land under cashew (24%) but has a share of only 19% of the total production.
Source : Financial Express