Industry sector is facing difficulties because of rising raw material prices - Vietnam

In mid-2016, the price of cashew nuts is only 37,000 VND / kg but up to 50,000 VND / kg. Compared with the current time, each ton has increased about 13 million. The price of raw materials is too high so the small establishments do not dare to "hug" the goods, to buy to buy there, sometimes not buy.

Not only is the cashew processing plants in Trang Bom, Dong Nai but also many others in the "dilemma". The owner of a large cashew processing enterprise in Xuan Loc district also said that from January 2017, his company had reduced production by 30% because of limited supply. According to him, at the time of source is difficult as today, enterprises are easy to "hug" the imported goods of poor quality and when the processing is very vulnerable to losses. To avoid risks, enterprises must be cautious.

When raw material prices increase rapidly, the risk in production is very high. In fact, manufacturers will be very pressured when the price of raw materials increases sharply, because export orders are often locked in front of the price.

The price of 50,000 VND / kg of raw cashew nuts is now considered the highest in many years. In my opinion, the cause of the cashew price increase is due to weather conditions cause crop failure in the 2016-2017 seasons. The last thing, the output of the country only reached nearly 400,000 tons, down about 30% compared With the previous article. Meanwhile, the processing needs of the export business are about 1.3 million tons. Not only that, imported goods from African countries, India this year is also more difficult. In India, processors are also pushing up prices to buy new products for processing. In Ivory Coast alone, up to 40% of cashew nut production for Vietnamese processing enterprises has also reduced production by about 100,000 tons.

Due to the status of goods, many importers are "distorted" because partners do not deliver on time, affecting production. There are companies that accept an additional $ 100 per tonne of goods. In the early process, there are many costs, if the cost of inputs and outputs can not be balanced; the possibility of losses is very high.

Nguyen Duc Thanh - Chairman of Vietnam Cashew Association

Source: Business Forum Newspaper (column: Cafe Entrepreneur