Cashew sector needs restructuring
  • | | June 21, 2018 09:42 AM
A large number of cashew companies in Vietnam have ceased operations after failing to compete with bigger competitors from in and outside the country according to the Vietnam Cashew Association (Vinacas).

Illustrative photo.

According to Vinacas chairman, Nguyen Duc Thanh, 12 of 33 cashew processing and exporting companies have closed in the southern province of Long An. The country's cashew basket of Binh Phuoc also saw about 70-80 per cent of firms ceasing operation.

"Most of the closing firms are small-sized and have been characterised by a lack of co-operation and a failure to compete with larger competitors," Thanh said. "Material shortages and falling export prices have made them unable to survive."

Statistics from Vinacas show that there are over 450 cashew export companies and more than 1,000 state-owned, private and foreign-invested cashew processing firms in Vietnam.

“Many these firms are small-sized and do not co-operate or consider mergers and so they can’t compete with large local firms or Indian companies," Thanh said.

Le van Duc, vice head of the Ministry of Agriculture and Rural Development's Department of Cultivation also admitted that there are now too many firms exporting cashews but most of them were small and lacked investment which resulted in poor product quality.

Many of these firms previously traded in rice, coffee or pepper and have now turned to cashews," Duc explained. "80 per cent of them have export revenue of below USD5 million a year. They don't have proper processing plants and sell their products at low prices. This has badly affected the whole sector."

Better plan needed

A report from the Ministry of Industry and Trade said that May’s cashew exports marked a fourth consecutive increase this year, reaching 35,000 tonnes, and USD 330 million in value. By May this year, Vietnam had exported 141,000 tonnes and earned USD1.40 billion, which showed an increase of 21.4% in quantity and 25.3% in quality against last year's number.

Although Vietnam is the world's biggest cashew exporter with export turnover reaching over USD3.6 billion in 2017, local farmers still cannot earn a good living.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said that they will focus on reconstructing the cashew sector to ensure proper earnings for local farmers and traders.

"We'll just keep 300,000 hectares of cashew growing area but try to double or triple productivity by selecting suitable varieties," Cuong said. "We'll also try to raise the cashew processing quality by choosing and investing in capable firms.

The agriculture minister also vowed to restructure the processing and trading chains in which farmers, processing and exporting firms will closely connect with one another. Cuong raised the need to promote the products in the domestic market which has long been neglected.

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