Cashew turns crunchy

Mon Mar 13 2017

Robust local consumption supports Goa’s cashew processing industry and most unit owners are making steady profits, finds out, Shoma Patnaik

Goa’s cashew season for 2017 is opened on a positive note. The first arrival of the crop in the market is good and expectations are of the trend continuing in future. Weather however could be the spoilsport. Climatic conditions have flipped after being ideal so far. The night temperature is drooped by two-three degree while the daytime temperature is high. Another major concern is early morning dew witnessed in recent days. It could make no-show out of a bountiful harvest and so fingers are crossed on the season’s produce.

On the price front the scenario is pro farmer. Prices of raw cashews have shot up to record high of Rs 160 per kg which is nearly 40 per cent higher than the 2016 opening price of Rs 115 per kg.  High prices are rewarding to farmers as cashew is turned out truly a cash crop as it is classified to be.

On the other hand the situation looks not so advantageous to the cashew processing industry. Unit owners have started complaining of high raw material cost although they are certain to pass on the raw material price hike to consumers.

There is news that processors may import kernels from other states to subdue local prices. “Cashew kernel price in Goa is highest compared to other states,” says Madhav Sahakari, president, Goa Cashew Manufacturers Association (GCMA). He points out that kernel in Kerala is quoted at Rs 138-Rs 142 per kg while the rate is Rs 145 per kg in Maharashtra and Rs 135 per kg in Orissa.

Sahakari who is a grower as well as processor expects raw nut prices to come down as the season advances. He says that, prices could drop by about Rs 10 per kg and stabilize at Rs 150 per kg levels at which rate it is cost-effective to the processing industry. “Arrivals in the market have not regularized and lot will depend on the harvest and the crop outlook,” says Sahakari.

Yet ground level check reveals that despite steadily increasing raw nut prices (see Table1), the scenario is not all that worrisome to the processing industry. Most unit owners have made good profits thanks to passing on increase in raw material cost to the consumer. Strong demand for nuts in the retail market (from tourists as well as residents) is resulted in processors hiking up the cost of finished cashews each year and making consistent profits. Over the years finished cashew prices from the factory end have gone up from Rs 620 per kg to Rs 850 per kg and it is not impacted shop sales.

“The outlook for cashew processing industry in 2017-18 is going to be challenging,” feels A Kamath, processor and exporter. He explains that, cost of raw material is high and unit owners are incurring expenditure on working capital to hold inventory. “Buyers in the export market are not doing long-term contracts for purchases,” says Kamath.

Kamath reveals that currently international market for cashews is at the peak in terms of price realization to exporters. The danger is of demand dropping as the nut faces competition from other dry fruits like almonds and pistachios.

The cashew processing industry in Goa comprises about 30 odd units, big and small. Big units are handful, of which there are only two exporters, viz. Ajanta Industries and Zantye Cashew. Most established large units prefer to sell in the local or domestic market. Meanwhile the small units operate out in primitive conditions. They do not incur expenditure on improving infrastructure although they are in profit.

“The industry prefers to sell locally to avoid the hassle and formalities of exporting,” says Sahakari. The uncertainly of international market and volatile global price trend discourages them from exporting, he says.

Cultivation of cashews in Goa is over an acreage of 56,600 hectares and the area under cultivation is been more or less stagnant. Likewise production is also stagnant at around 24,000 to 25,000 tons. The problem associated with cashew cultivation in Goa is of low yield as farmers make little effort to increase produce through irrigation or better farming practices.  Rapid urbanization and booming real estate is shrinking the number and size of plantations. Farmers are selling out to builders due to non-availability of labour and relative lower returns compared to other activities.

However the industry needs to be encouraged as it has several positives for the state. Cashew processing is green industry that is totally non-polluting with zero effluent discharge. The industry is labour intensive and employs women from the hinterland. The working hours are tailored to suit women so that they can take care of the home as well as earn income.

Experts point out that in the last two years, at least four units have closed down as entrepreneurs do not find it attractive enough vis-à-vis other sectors. Further while the industry in other producing states has gone in for automation, Goan units have lost on competitiveness by not keeping pace with latest trends. Consequently Goan cashews are out priced in other states although they are of high quality and tastier.

Says, Mr Kamath, “Processing machines help to reduce the cost as well as improve the efficiency.” Therefore units need to keep up with the trend and also keep a watch on the supplies from originating countries to keep themselves in the health.

Although Goa is a cashew producing state, production of the nut is fluctuated significantly in recent years.  Productivity is low in most plantations except in certain areas like Pernem where farms are irrigated and growers use modern methods of cultivation. There are growers in Pernem getting 20 kg of cashew per tree but otherwise the yield is low for most growers. According to agriculture officers, farmers do not put in inputs or efforts and the crop suffers from pests and low productivity.

To boost cashew production the government is going to provide organic inputs (neem cakes) and also encourage vermin-composting. Cashew plantation offers good scope for vermi-composting, according to him. The top cashew cultivating talukas are Sattari, Pernem, Bicholim, Bardez and Sanguem.

The government support price for cashew is Rs 100 per kg and it is remained the same for the last three years. Cashew farmers do not need support price since the prevailing market price is higher. And processors do not need support either as cashew nuts are lucrative business.

Cashew exports from India receive competition from countries like Vietnam and Indonesia.

Source: http://www.navhindtimes.in/cashew-turns-crunchy