Lower local production of cashewnut hurting exports

The slow pace of growth in the indigenous production of raw cashewnut has affected cashew exports severely, forcing several units to close down either throughout the year or for a considerable part of it, in the recent years.

The domestic cashew processing industry, which is mainly concentrated in Kollam district of Kerala, requires 12 lakh tonne cashewnut a year for fully utilising the installed capacity.

But, currently, domestic production is hardly half the requirement, which is likely to pose a serious threat to the industry in the coming years, according to Walter D'Souza, chairman, Cashew Export Promotion Council of India (CEPCI).

In 2005-06, the country produced 5,73,000 tonne "� a marginal rise over 5,44,000 tonne in 2004-05, as per the estimate of Directorate of Cashewnut and Cocoa Development.

The industry is highly dependent on imported raw material for value-addition, and also, as the export market is highly competitive, growth in the indigenous production is a must for the existence and growth of the industry.

The shortage of raw material also negatively impacts the livelihood of a large number of employees, most of whom are women, as they hardly get to work for 100-150 days in a year.

D'Souza said there was an urgent need to enhance the domestic production to make the country self-reliant in raw cashewnut. The two key factors hindering production growth are the almost stagnant position of the land under cashew cultivation and the much lower productivity in the country.

In Kerala, the cashewnut acreage has been declining on lower yield and price realisation, and hectic activity in the construction sector.

Also, in Maharashtra, which become another major cashew producing centre in the country, lower productivity has stunted the sector growth.

While the country has been engaged in the production cashewnut for hundreds of years, countries such as Vietnam entered the sector just a decade back.

However, at present, the productivity of India is just 815 kg a hectare, while that of Vietnam, one of its major competitors on the exports front, is more than double at 2,000 kg a hectare.

The increasing dependency on imported raw cashewnut has also undermined the country's advantage in the global market though home-made cashew still attracts a wide acceptance worldwide.

It imported 565,400 tonne raw cashewnut valued at Rs 2,162.95 crore during 2005-06, a drop of 2.33 per cent in quantity and 1.28 per cent in value compared with previous year's import figures. However, the country had to a higher average import price of Rs 38.26 a kg against Rs 37.85 a kg in 2004-05.

In fact, cashew exports had a negative growth during April-September this year as there had been 1.53 per cent drop in quantity and a whopping 8.15 per cent fall in total export earnings.

During the period, the country exported 58,210 tonne valued at Rs 1,222.93 crore, while in April-September last year, the corresponding figures were 59,112 tonne and Rs 1,331.41 crore.

According to CEPCI estimates, cashew exports in September 2006 alone posted an impressive growth of 13.42 per cent in quantity and 8.96 per cent in earnings. Total exports were up at 7,228 tonne valued at Rs 152.31 crore compared with 6,373 tonne that earned Rs 139.78 crore.

The council expects the trend will continue in the second half, which can effectively make good for the drop experienced in the first five months of this financial year.

In 2005-06, the country had exported a total of 1,14,143 tonne valued at Rs 2,514.86 crore, a slump of 9.89 per cent in quantity and 7.17 per cent in earnings compared with 2004-05 export figures.