Cashew export: short happy days?

Despite a lack of due attention, cashews turned out to be the most successful export in the last two decades. However, the glorious days may for cashews may end soon as cashew industry is struggling with a shortage of materials.

The unique exploit

There are no official statistics about the area and cashew output of 1991 and earlier. Meanwhile, according to the Food and Agriculture Organisation FA), in 1961, Vietnam only had 1000 hectares of cashew and an output of 700 tons. Twenty five years later, the cashew nut export volume increased to 1300 tons and brought five million dollars in turnover. At that time Vietnam appeared in the world market as an exporter of the rare and valuable farm product.

The figures released by FAO show that this might be the only export item of Vietnam which has exhibited impressive progress in both export volumes and export prices.

It took Vietnam nearly one decade to increase the export volume of 1300 tons (1.7 percent of the total exports of the world) in 1986 to 20,000 tons (14.5 percent). With its achievement Vietnam ranked the third largest cashew exporter in the world after India and Brazil. However, just five years later, the export volume soared to 34,200 tons, accounting for 22.2 percent of the total exports of the world, putting Vietnam into the second position among biggest cashew exporters, just after India. And after six more years, in 2006 Vietnam surpassed India to become the largest cashew exporter with the export volume of 126,800 tons, providing 37.3 percent of the total output in the world.

As such, over the last two decades, Vietnam’s cashew exports have been growing by 26.7 percent on average, or 3.3 times higher than the world’s average growth rate of 7.9 percent, and much higher than the average growth rates of India (5.4 percent) and Brazil (2.3 percent).

Regarding the export prices, in the last 23 years, Vietnam exported more than one million tons of cashews to the world market at the average price of $4351 per ton, or $26 higher than the average price in the world.

In fact, the export price is still the lowest compared with the export prices of the “big four” ($4381 of Brazil, $4867 of India and $5039 of the Netherlands), but this should still be seen as an impressive success of Vietnam.

In the first years when Vietnam began exporting cashews to the world, it had to offer low export prices in order to compete with other giant exporters. Meanwhile, in recent years, it has been increasing export volumes, while sharp exports increases always means pressure to force prices down.

Short happy days?

Despite the great success, the cashew industry is facing big difficulties.

Official statistics show that the proportion of cashew plants in the six long term industrial plants has reduced from 24.1 percent in 2006 to 20.6 percent in 2009, while the growing area has dropped from 440,000 hectares to 398,000 hectares.

Once the pride of Vietnam, the cashew processing industry is facing a serious material shortage.

Though the average yield increased by 5.4 percent in the last 17 years, the raw material output increased by 16 percent only due to the decreased growing area. Meanwhile, Vietnam’s cashew nut export has been growing by 18.2 percent.

Vietnam began lacking cashew nut materials in 2005. In 2006 and 2007, it lacked 10,000 tons of materials, while the figure jumped to 60,000 tons in 2008 and 70,000 tons in 2009 and then 194,000 tons in 2010.

The main reason behind the material shortage is the low average yield of cashew plants. The average yield only increased by 5.4 percent in the last 17 years, and with such a speed, it will take Vietnam three more decades to obtain the current average yield in the world.

Meanwhile, Vietnamese farmers are abandoning cashew plants to grow other plants which can bring higher profit. If dividing the total export turnovers in 1992 into the numbers of growing areas of four kinds of plants, the figures would be $2391 for pepper, $832 for coffee, $523 for cashews and $315 for rubber. In 2007, the figures were $3209, $2871, $964 and $2189, respectively.- Thoi bao Kinh te Saigon

Tags: Vietnam cashew, Vietnam Cashew exports