Challenge for cashew to become major export by 2020

“The cashew industry is striving to become a major export of the country by 2020,” is the topic at the Vinacas International Customer Conference 2011 held by the Vietnam Cashew Association (Vinacas) in Ho Chi Minh City

“The cashew industry is striving to become a major export of the country by 2020,” is the topic at the Vinacas International Customer Conference 2011 held by the Vietnam Cashew Association (Vinacas) in Ho Chi Minh City. However, this goal seems, according to many participants, an impossible mission.

Bottlenecks at input and commerciality

Vietnam was the world’s largest cashew nut exporter from 2006 to 2010. In 2010 alone, Vietnam exported 198,000 tonnes of cashew nut worth US$1.135 billion, accounting for more than half the world’s export volume. An official from Vinacas forecast that the industry’s export turnover was expected to reach US$1.4 – 1.5 billion in 2011, representing a year on year rise of 30 percent.

At the conference, Vinacas announced the objective that Vietnam’s cashew industry will retain the world’s number one exporter position through 2020. However, this target is said to be unfeasible because the cashew industry is facing numerous difficulties. Mr Nguyen Thai Hoc, Chairman of Vinacas, admitted that biggest difficulties facing the cashew industry now are the unstable supply source of raw materials for export processing, and the shrinking cashew acreage, productivity and output. To ensure export targets, Vietnamese cashew nut processors have to import raw cashew nuts for processing from other nations. The Vietnamese cashew industry is also facing a serious shortage of labourers for shelling and processing, while manual workers account for 30 to 40 percent in this industry. What’s more, products are not diverse, the domestic market is weak, input costs are rising, technologies are backward, and business scales are small.

In Binh Phuoc province, dubbed the capital of the cashew industry, farmers are cutting down cashew trees to grow crops with higher economic value like rubber trees, said Mr Bui Van Thach, Vice Chairman of Binh Phuoc Province People’s Committee. Specifically, the province now has 155,000 ha of cashew trees, of which 144,000 ha are at the stage of commercial production with an annual output of 140,000 tonnes. However, he added that according to the cashew industry development strategy of this province for the 2010 – 2015 period and vision to 2020, the acreage will be shrunk from the current 155,000 ha to 150,000 ha in 2015 and only 137,000 ha in 2020.

Attending specialists pointed out that the cashew industry will be unlikely to achieve the target if it fails to fix existing problems. Mr Luong Le Phuong, Deputy Minister of Agriculture and Rural Development, said if Vinacas is unable to solve current difficulties, objectives for the next 10 years may be out of reach. He explained that since deeply processed cashew nuts account for only 3 percent of export volume, the target of 30 percent of deeply processed cashew nuts will be a huge challenge if currently inadequate machinery and equipment are not upgraded.

Mr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said the economic value of cashew trees is not as high as that of other popular industrial crops in Vietnam like coffee, rubber and tapioca; thus, it is not a surprise to see a decline in acreage. This is a huge challenge for the cashew industry development strategy through 2020, he added.

He noted that he had carefully studied the report released by Vinacas, and the target of becoming a major export of the country by 2020 caught his attention most. To put this into effect, the cashew industry must have a clear and convincing roadmap, he concluded.

Cashew industry branding

Branding is a persistent weakness of the Vietnamese cashew industry and it is also absent in the development plan put forth by Vinacas.

According to attending experts, without an established brand, Vietnam is unlikely to raise the price, instead continuing as an offshore processor for foreigners. It is time the Vietnamese cashew industry invested in downstream processing to raise the value of cashew nuts.

Ms Pham Thi Thanh Minh, Deputy Director of the Import and Export Department under the Ministry of Industry and Trade, said if foreign investors want to invest in downstream processing of cashew nuts, the ministry will provide the best support for them.

Mr Vu Tien Loc called foreign companies to use the Vietnamese brand and name for their deeply processed cashew nuts in Vietnam. He noted that foreign firms will feel more comfortable with intellectual property and investment laws if they process cashew nuts in Vietnam rather than import Vietnamese materials for processing in the United States and Europe. They will also pay less for highly skilled workers in Vietnam than in other nations.

Mr Luong Le Phuong put forth three solutions for cashew industry development: (1) long-term human resources development plan; (2) downstream processing; and (3) introduction of science to improve the quality of cashew nuts. He added that the first solution requires State involvement for planning and financing. – VCCI

Tags: Vietnam cashew, Vietnam Cashew exports