Vietnam has surpassed India to become to the biggest cashew nut exporter in the world, however, it is facing a number of challenges to maintain the position, local experts warned.
The experts emphasized funding, labor supplies and international food safety and hygiene standards as the biggest obstacles.
Cashew industry has achieved the highest growth among Vietnam’s perennial agricultural product exports, making Vietnam the world’s number one cashew nut exporter in 2006 and creating jobs for 500,000 laborers.
But cashew farmers’ incomes remain low, only VND20 million (US$1,250) per hectare while rubber tree growers’ earn VND60-70 million (US$3,750-4,375) per hectare and cocoa tree growers gain VND70 million (US$4,375) per hectare, experts said.
Cashew nut processors are not eligible for preferential loans from banks and can only receive short-term loans based on harvest cycles.
Farmers often find themselves competing for loans all at once at the eleventh hour because manually processing cashews is a time-consuming task.
Costs of inputs into cashew tree nursing and harvesting as well as cashew nut processing now often exceed the returns available to exporters forced to accept international commodity-market prices.
Vice chair of the Vietnam Cashew Association (Vinacas), Nguyen Thai Hoc, also noted that when cashew-nut processing plants run short of cash, banks often reduce loans available to them by up to 50 per cent, further cramping their operations.
The labor-intensive sector is also facing difficulty in recruiting workers because new provincial industrial zones are siphoning off large numbers of workers from the agricultural sector.
To keep sufficient workers, cashew producers have had to raise wages, increasing their production costs by over 10 per cent and workers’ wage requirements are only expected to keep rising.
Several cashew processing plants now find themselves reduced to operating at only 50 per cent or 60 per cent of their capacity due to lack of labor and situation is forecast to worsen next year.
Cashew producers say two solutions to the problem exist, raising wages or upgrading their technologies for detaching and processing nuts. But both options will increase costs over the short term at least.
They add that Vietnam has taken over India’s top position because Indian producers have been facing their own labor shortage, causing a sharp drop in their export volumes, and Vietnam is expected to suffer a similar fate if its producers do not soon invest in more cost effective processing technologies.
Some propose the government of Vietnam vigorously support research into local innovations in processing technologies because the costs of importing processing equipment remain infeasible.
Some processing plants have already imported Italian processing machines to peel the silky husks off nuts. But one machine costs hundreds of thousands of USD and can only reduce labor requirements by 20-30 workers.
Another problem cashew producers face arises from importers’ food-hygiene requirements. An official from the Vinacas said the American Food Industry (AFI) has issued new standards on food hygiene.
If the US, which imports 40 per cent of Vietnam’s cashew exports, applies the stricter standards, EU nations are likely to follow. Yet over 60 per cent of Vietnamese cashew exporters have yet to meet US hygiene standards.
For all these reasons, the Ministry of Agriculture and Rural Development forecast that the area of cashew plants will be reduced from 465,000 hectares to 400,000 by 2010 as farmers convert the land from cashew plantations to more profitable crops.
Vietnam reportedly reaped US$594 million from exporting 141,000 tons of cashew nuts in the first 11 months of 2007, marking on year rises of 28.3 per cent in value and 21.3 per cent in volume.
The country is expected to increase the revenue to US$650 million by the year’s end, up from US$503.8 million in 2006. (Saigon Liberation)
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