High processing cost pricing out India cashew

Cashew exports fell 18 per cent in 2016-17. Total shipments in the year stood at 80,033 tonnes valued at 5,009.30 crore, against 96,346 tonnes valued at 4,952.12 crore in the previous fiscal.

Total revenue realisation showed an increase, albeit marginal, due to a 22 per cent rise in the unit value. Average unit value realised in 2016-17 went up to 625.90 a kg from 513.99 in 2015-16, said S Kannan, Executive Director and Secretary, Cashew Export Promotion Council of India (CEPCI). CEPCI Chairman Sundaram Prabha attributed the fall in exports mainly to non-receipt of parity price for kernel.

“A sharp rise in raw cashewnut (RCN) price, which has gone up to around $2,250-$2,300 a tonne, coupled with high processing costs here, has made the Indian product non-competitive in the world market,” he told BusinessLine.

The unit value for RCN increased by over 29 per cent to 115.57 a kg last fiscal from 89.33 a kg in 2015-16 , he said. The landed cost of imported RCN thus comes to around 150 a kg, he added.

Indigenously produced RCN also costs around 140 a kg, he added. Sundaran said only 40 per cent of the factories are running at present in Kerala because of the high processing costs there, and competition from other States. With a processing capacity of 20 lakh tonnes of raw nuts, the industry is perpetually dependent on imports for over 50 per cent of its annual requirement.

The indigenous production of raw nuts hovers at around 7 lakh tonnes, he added. In 2016-17, RCN imports fell 21 per cent following the closure of factories.

The CEPCI Chairman said the industry is facing a grim situation, as there is no level playing field for the processors due to various reasons. These include high cost of production; inadequate support/incentives from the State and Central governments; high cost of funds; stagnant overseas markets due to recession; and competition from Vietnam and other processing countries which were traditionally suppliers of RCN to India. The processing cost in Kerala comes to around 3,500 for an 80-kg bag, against 1,000-1,350 in other processing States.

Source:http://www.thehindubusinessline.com