The Cashew industry stands as a cornerstone of the global economy, contributing both to agricultural output and international trade. The global Cashew market has been subject to fluctuations due to a confluence of factors, including economic uncertainties, inflationary pressures, and geopolitical conflicts impacting production and exports. The domestic market including the Cashew sector in Kerala has been grappling with a crisis. To rejuvenate this sector, the Kerala government has embarked on a groundbreaking endeavour to resuscitate this crucial industry.
Let’s uncover the intricate tapestry of the Cashew trade and its potential for growth in an evolving world economy.
The Cashew industry in Kerala, known for its quality Cashews produced under traditional methods, has faced challenging times in recent years. To rejuvenate this crisis-hit sector, the Kerala government has committed to cover 50% of the loan interest obligations for factories and has successfully negotiated an arrangement with the banks to eliminate all interest and compound interest on Non-Performing Assets associated with Cashew factories. This intervention is aimed at providing financial relief to struggling Cashew businesses.
The Kerala government is promoting Cashew cultivation by providing free grafted saplings to farmers. Additionally, the government procures raw nuts from farmers at prices higher than the market rate, thereby encouraging Cashew cultivation.
India’s Cashew exports have faced a setback, with a 21% drop in the fiscal year ending March 2023. The decline is attributed to a global slump in Cashew Nut consumption, impacting demand across markets. Despite the exports decline, the Indian Cashew processing industry has sustained itself due to a significant increase in domestic consumption over the last two decades.
While Cashew demand remains high, Kerala faces challenges in meeting this demand. The state’s Cashew production has declined over the years, leading to increased dependency on imports from African countries. Cashew factories in various Indian states, like Maharashtra, Karnataka, and Tamil Nadu, also rely on imported Cashews.
The global Cashew market has seen fluctuations, affecting major economies, including Vietnam. Despite short-term challenges, the Cashew demand is expected to rebound as economies stabilize. There is an anticipation that Cashew demand could reach USD 13.48 billion by 2024, with an average growth rate of 5.2% from 2018-2024.
Cambodia, a Southeast Asian nation known for its rich cultural heritage and breathtaking landscapes depends on Vietnam for Cashew exports. In a significant dependency, a staggering 95% of Cambodia’s Raw Cashew Nuts are exported to Vietnam, according to the Cashew Nut Association of Cambodia (CAC). However, this reliance on a single trading partner has raised concerns within the industry and prompted the need for transformation.
Currently, Cambodia possesses only a limited number of processing plants- around thirty small-scale and three medium-sized ones. In June 2023, the Cambodian Ministry of Commerce introduced the National Policy on Cashews for 2022-2027. The primary goal of this policy is ambitious yet transformative: to turn Cambodia into a leading processor and exporter of Cashew Nuts, while ensuring a sustained production of high-quality output.
To meet the ambitious 2027 target, the country will need to construct at least fifty new medium-sized processing facilities, according to the Cashew Nut Association of Cambodia (CAC). This reflects the scope of change required to shift Cambodia’s Cashew industry from being predominantly an exporter of raw nuts to becoming a significant player in processing and exporting finished products. The Cambodian government, in collaboration with industry stakeholders, is taking proactive steps to reshape the country’s Cashew sector.
Weather conditions, a variable that often impacts agricultural production, played a role in Cambodia’s Cashew sector in recent years. In 2022, adverse weather conditions led to a dip in Cashew production, resulting in exports declining to 670,000 metric tons. In 2023, the quality of Cashew production improved compared to 2022, but unattractive prices prompted many farmers to shift their focus to alternative crops.
Looking ahead, the third quarter of 2023 is predicted to bring renewed growth for Vietnam’s Cashew Nut exports. Anticipated increases in demand from the US and the EU are expected to drive this growth. Domestic factories have already secured numerous new orders, sparking an uptick in demand. The industry’s vibrancy is further reflected in the surge of production activities, with businesses expanding their processing capacities to meet the growing demands of the last two quarters of the year.
Despite the complexities posed by fluctuating global market dynamics and economic uncertainties, the Cashew demand remains substantial, both domestically and internationally. With an emphasis on quality production methods, diversification, and strategic market approaches, the Cashew industry is poised for a positive trajectory. In a world shaped by economic fluctuations and interconnected trade dynamics, the Cashew industry’s ability to adapt and innovate will ultimately define its success on the global stage.