Chinese businesses are seeking to import large quantities of cashew nuts as their government has decided to import some kinds of farm produce from the US.
China is one of three of Vietnam’s biggest markets. However, Vietnam’s cashew nut exporters may fail to meet the opportunity to boost exports to China because of the lack of raw materials for processing plants.
Vietnam’s cashew nut processing industry has been relying on import materials for many years. As a result, Vietnamese enterprises find it difficult to draw up their production and business plans.
In Vietnam, distribution is controlled by foreign invested enterprises (FIEs), and Vietnamese producers have to pay 98 percent of contract value in advance when making transactions with foreign partners. The remaining 2 percent will be paid after products are delivered.
|Vietnam’s cashew nut processing industry has been relying on import materials for many years. As a result, Vietnamese enterprises find it difficult to draw up their production and business plans.|
Reviewing 2019 collection activities, Cao Thuc Uy, managing director of Cao Phat Cashew in Ba Ria – Vung Tau province, said he wants the selling prices to increase, but he doesn’t expect a sharp increase for cashew prices. Cao Phat has set the raw material purchasing price on the basis of the current price in order to avoid risks in the future.
To arrange enough input materials, T&T Group had to make ‘shuttle trips’ to African countries to collect raw cashews.
According to Truong Si Ba, president of Tan Long JSC of the T&T Group, it took T&T six months to obtain the contract on buying 176,000 tons of raw materials.
Pham Van Cong, chair of the Vietnam Cashew Association (Vinacas), said the import price of $1,360 per ton on average in 2019 was ‘reasonable’ for processors. However, he fears that the import volume would be lower this year.
Despite great efforts, Vietnam still cannot settle the problems in raw material supply. The Ministry of Agriculture and Rural Development (MARD) reported that Vietnam imported 94,000 tons in November 2019, worth $130 million and 1.51 million tons, worth $1.99 billion in the first 11 months of 2019.
The largest cashew supplier for Vietnam in the first 10 months of 2019 was the Ivory Coast (32.7 percent).
The raw material price has great influences on the cashew nut export price. According to MARD, the amount of cashew nut exports in the first 11 months of 2019 was 419,000 tons, worth $3.04 billion, increasing by 23.6 percent compared with the same period 2018. Vietnam planned to export 450,000 tons in 2019.
T&T Group consumes 15 percent of total cashew imports. It has signed an MoU with a representative of Guinea Bissau on importing 150,000-200,000 tons of cashew a year.
Viet Nam stood out as the world’s largest cashew exporter last year but there remains many challenges ahead for the country to retain its leading position in the future.
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.