Good news for Vietnam's cashew industry
Instead of competing fiercely with each other, cashew companies have now joined hands to boost exports and focus on deep processing to obtain higher added value for their products.
In the first seven months of the year, Vietnam exported 245,000 tons of cashew nuts, an increase of 11 percent over the same period last year, but the export turnover decreased by 22 percent to $1.8 billion.
Analysts said that in such conditions cashew companies need to be united and focus on deep processing.
Vietnam has been the biggest cashew nut exporter in the world for the last 10 years, but it mostly sells raw cashew nuts to nearly 100 markets, which brings modest turnover of $3 billion.
In order to have enough cashew nuts for export, Vietnam has to import 2/3 of materials needed, mostly from Ivory Coast, Tanzania, some countries in West Africa and from Cambodia. The way cashew companies organize production is just like production of textile and garment companies.
|In order to have enough cashew nuts for export, Vietnam has to import 2/3 of materials needed, mostly from Ivory Coast, Tanzania, some countries in West Africa and from Cambodia. The way cashew companies organize production is just like production of textile and garment companies.|
Chair of the Vietnam Cashew Association (Vinacas) Pham Van Cong advised enterprises to design the terms of contracts very carefully when doing business with African companies. In case of dispute, the dispute should be put into trial in Vietnam, and hould be written in contracts between the two parties.
For many years, Vietnam’s cashew companies have competed fiercely with each other to import materials and export products. In 2018, because of the material shortage, enterprises raised import prices to scramble for raw cashews.
The unhealthy competition in material collection then led to ‘material price fever’. Vietnam is the biggest cashew nut exporter in the world with 60 percent of market share, but it cannot control the price.
The export price dropped from $8,400 per ton to $8,100 per ton, causing 70-80 percent of small processing companies in the cashew metropolis of Binh Duong and some medium companies to halt their operation.
But things are different this year. In the first seven months of the year, cashew companies joined forces to import 940,000 tons of raw cashew, worth $1.2 billion, up by 42 percent in volume. Meanwhile, the import price was 31 percent lower than the same period last year.
This has helped ease enterprises’ concerns as they now have stable supply and don’t have to compete with each other to scramble for imports, which occurred in 2018 and led to the sharp rise in prices.
Most recently, Tan Long Group, a big farm produce trading group, jumped into the cashew industry when buying 215,000 tons of materials from Africa. It is expected that Tan Long would set up a cashew trading floor to help stabilize the material prices.
Vincas predicted that the cashew nut price, which is now at the bottom, would increase in the fourth quarter as demand rises.
Cashew industry seeks ways to overcome difficulties
The Vietnam Cashew Association (Vinacas) has recently held a conference to review the industry’s performance in the first seven months of 2019 and seek solutions to the problems facing it.