Why does the cashew industry continue to reduce its export forecast in 2023?
The export market is facing difficulties and is subject to fierce competition from African cashew nuts along with internal difficulties, causing the cashew industry to continue to reduce its export forecast.
Concerned about the quality of cashew nuts
According to a report by the Vietnam Cashew Association (VINACAS), in the first 6 months of the year, the cashew industry exported 279,000 tons of cashew kernels of all kinds, with a turnover of about 1.6 billion USD, an increase of 9.49% in volume and increased 7.65% in value but the average export price of cashew kernels only reached about 5,717 USD/ton, down 1.73% over the same period last year.
Mr. Bach Khanh Nhut - Vice Chairman of the Vietnam Cashew Association (VINACAS) - said that in the first half of this year, Vietnam's cashew industry has faced many difficulties, most of which come from objective factors such as: geopolitical crisis. ; Central banks' tightening monetary policy, global inflation, low purchasing power in key markets, global consumer spending reduction...
Referring to reflections from members and customers, Mr. Bach Khanh Nhut said that many contracts of raw cashew sales signed with Asian customers had to renegotiate the price or the buyer requested price support, reduced recall... from the seller's side.
In the context of general difficulties, as noted by VINACAS, the delay in delivery or quality of raw materials is the main cause leading to the above incident.
One of the reasons given by VINACAS is that African countries are gradually moving towards self-production and processing of cashew kernels (similar to what factories in Vietnam are doing), so African raw materials imported to Vietnam Men are usually low-grade raw cashew nuts. Importing businesses store goods in warehouses for long periods of time, leading to a decline in the quality of processed cashew kernels.
"Recently, VINACAS received complaints from European importers, reflecting the reduced quality of cashew kernels of Vietnamese enterprises and many shipments with live insect residues," said Mr. Bach Khanh Nhut. that maintaining product quality is a vital element of Vietnam's cashew industry, because many of the previous advantages are no longer available, and competitive pressure from African countries is growing day by day.
Another reason mentioned by VINACAS is that according to the reflections of businesses, the phytosanitary procedures for imported raw cashew shipments currently take a long time, making the storage time at the tow yards take a long time. Long term increases business costs.
Therefore, leaders of VINACAS suggested that the Government continue to consider issuing policy adjustments to limit the import of pre-processed cashew kernels; Actively remove credit problems and promote trade to find new markets...
"Purchasing demand decreases, inventory holding time is longer than usual, leading to a question mark when the quality of raw materials reaches buyers at the end of 2023," Mr. Bach Khanh Nhut asked.
2 scenarios for the cashew industry from now until the end of the year
Not worried about the supply of cashew nuts in the last months of the year, according to Mr. Bach Khanh Nhut, the amount of raw materials is quite abundant, processing enterprises do not have much pressure to buy and store raw materials compared to every year, most of them has enough goods needed for production until the end of the fourth quarter of 2023 and the first quarter of 2024.
According to cashew businesses, due to weak purchasing power in key markets, cashew businesses will face difficulties in business activities in the first half of 2023. The trend of spot purchases in small quantities is dominant. On this stage, it is difficult for the selling price to decrease deeply, but it is also difficult to increase suddenly as in the previous periods.
From the last 6 months of 2023 to the first quarter of 2024, the growth of the cashew industry continues to face many difficulties and challenges. VINACAS also built 2 scenarios for this industry.
Accordingly, with the "good" scenario, businesses that sell goods to stimulate demand and accelerate consumption will help reduce inventories in major markets such as the US and Europe, and at the same time push up purchasing demand at the end of the year. However, strengthening quality control in key markets will make it difficult for low-priced, low-quality cashew kernels to access these markets.
In the "not good" scenario, the global economy continues to decline, cashew nuts are not an essential commodity, so the demand of "end consumers" will continue to decrease.
However, the big challenge for the cashew industry today is still the problem of purchasing raw materials. For example, as the "capital" of the cashew raw material area, Binh Phuoc province is currently not developing the cashew growing area, but it is also shrinking because farmers cut and destroy cashew trees to convert to other crops.
According to VINACAS, in 2022, the cashew acreage in the provinces: Binh Phuoc, Dak Nong, Dong Nai will shrink significantly, Binh Phuoc alone from 175,000 to 180,000 hectares previously reduced to 150,000 hectares.
This leads to dependence on raw cashew imports from Africa and Cambodia. It is worth mentioning that many cashew nut processing enterprises have had to "live or die" when the price of raw materials is high, while the price of processed cashew kernels has decreased.