India’s cashew kernel exports set to fall on waning interest from processors

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Cashew kernel exports from the country are likely to go down in the coming fiscal with nearly 700 processors in Kerala shutting shop due to nonviable operations, a top official of the Cashew Export Promotion Council of India (CEPCI) said.

With the banks unable to offer credit to processors who are in the red for the last three years, the export of kernel in 2018-19 is likely to fall sharply, CEPCI said.

India produces 6-7 million tonne raw cashew per annum and was till recently the leading supplier of kernels to the global markets.

India exported 84,352 tonne of kernels valued at Rs 5,870.97 crore in 2017-18 as against 82,302 tonne valued at Rs 5,168.78 crore in the previous fiscal. The increase is only marginal at 2.5% in volume terms.

The marginal increase shown last year was mostly due to export obligations of the traders who availed financial grant and imported raw cashew. The obligations have expired and they now have no incentive to export when the raw materials are priced high and processing is costly. Nearly 100 processors from Kerala have gone under the NPA list of the banks.

The increasing cost of raw cashews imported from Western Africa and the higher processing charges in Kerala due to the relatively higher labour charges has compounded the problem.

“Raw cashew prices have gone up by three times in the last few years when the kernel prices have only increased by 15% over the same period,” CEPCI said.

The state of Kerala requires around eight lakh kilos of raw cashew nuts in a year to ensure round-the-year work for the nearly 2.5 lakh workers, 90% of whom are women.

The processing cost in Kerala is around `3,500 per bag (of 80kg) as against Rs 1,400-1,500 in other southern states. Vietnam has completely mechanised the processing sector and can process raw cashew into kernels below Rs 900 per bag, he added.

CEPCI has sought help from banks and financial institutions for rehabilitation of cashew industry in state. The revival plan to the state government also includes wage subvention directly to the workers affected by the crisis.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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