Price rules over quality in cashew nut market

On the surface, it may seem that import of cashew nuts into India, or for that matter, Goa, is like coals to New Castle. Though India is a leading producer of cashew nuts in the world, it is also the top consumer at 0.228 kg per capita and hence the import to meet the gap. 

India currently produces around 3.5 lakh tonnes of cashew kernels in states like Maharashtra, Goa, Karnataka, Andhra Pradesh, Odisha, Tripura and some parts of Assam. It is not meeting the demand. The import of raw cashew is around eight to nine lakh tonnes every year to settle the balance. India exported 84,352 tonnes of cashew kernels in 2017-18. The issue is that if domestic demand is so high in India, why export?

In value terms, exports went up almost 18 per cent to $911 million in 2017-18.

Domestic demand is high and the supply is low, hence import of cashew nuts. The domestic buyer believes he is buying Indian cashew nuts, but in reality the nuts are imported from Africa and processed in Goa and elsewhere in the country.

According to the sources in Horticulture Department of Goa, the State produced 27,588 tonnes in the year 2018-19, (five years of cashew nut production by Goa in Chart 1).

Finance Minister, Nirmala Sitharaman’s decision to hike the minimum import price (MIP) in June last year for whole and broken cashew did bring cheer to the cashew nut processing sector. The stakeholders observed that low-quality cashew kernel shipments from Africa and Asean countries had hit the domestic industry. But still the production of cashew in India, particularly in Goa is abysmally low, primarily because loss of interest by the cultivators and paucity of land in Goa. 

It is interesting to note that cashew plant was indigenous to northeastern Brazil, and the Portuguese colonists began exporting them during the 1550s. Currently, the leading producers of cashews are Ivory Coast, India, Nigeria, and Vietnam. West Africa produces about 46 per cent of the global cashew nuts, with Cote d’Ivoire producing 48 per cent of the crops followed by Guinea-Bissau and Nigeria. Other top producers include Vietnam, India, and Tanzania. Apart from being one of the cashew nuts producers in the world, India is also one of the leading importers of cashews. The total amount of cashews India imports has grown by 3,139 metric tons from 2006 to 2016. Due to their cashews processing capacity, India imports cashew seeds from Africa. In 2016, 24 per cent of the cashew India imported came from East Africa and 75 per cent came from West Africa. 

What Goan cashew farmers now need are incentives from their government to hike up production. “Maharashtra government some years ago had given incentives by refunding the value added tax (VAT) to their cashew farmers and that instilled the confidence amidst the farmers growing cashew. Goa too needs it as land is getting scarce due to the booming real estate market,” said a source in the Goa Cashew Manufacturing Association, which has over 25 units as members and employs over 2500 workers.

The average yield of cashew per hectare in Goa is about 600-700 kilograms. “Goa cashews will soon lose its shine. At the end of the day when the world is moving towards four million tones, Goa’s 28000 tonnes becomes insignificant. Goan cashews are very expensive and people outside Goa are not ready to buy. They want cheaper quality which they may get elsewhere in the country. Goan cashew comes in the month of March, April and May and factory owners cannot spend much to preserve it till February next year. If one does so there will be huge invested capital which will remain blocked. Hence we have a huge quantity of African cashew imported to Goa and after its processing it is sold as Goan cashew which is of low grade and gives bad name to the State. For a retailer who has set-up his shop on high rent, is not interested in the quality but the price which people will accept to buy,” said the source in Goa Cashew Manufacturers Association.

Prakash Velip a former Member of Legislative Assembly of Goa from Quepem and a keen observer of agriculture and cashew production is part of a cooperative society for cashew farmers which has over 26,500 farmers members. 

He said, “For the last year we as members of Aadarsh Society have paid Rs 16 crore extra above the market rate to the cashew farmers in Goa. This figure has been for the last 20-25 years. Unfortunately low quality cashew nuts are brought into Goa from outside and packed as Goan cashew nuts. The tourists subsequently buy nuts of a very low quality. Last year the rate of raw nut was Rs 130 per kg but the landed cost of African nuts was only Rs 95. The recovery is about 22-23 per cent and it is much cheaper than Goan cashew. The tourists are willing to buy because it is cheaper. However, it is certainly giving a bad name to Goan cashew nuts as the buyers have no idea of the difference between local and imported nuts. The government must check this and come with some method to brand locally sourced nuts so that the rest of the country knows the difference in quality. The Goan cashew nuts must be sold at a premium.”

When asked why Goa has been importing cashew from African nations, partner at Zantye Cashew Industries, Rohit Zantye said, “It is a two way game. Goa actually is not short on supply. Goa’s production is more than what processing capacity is installed in the State. Actual Goan cashew is more expensive and you get a premium only when you sell it in Goa. Outside Goa people are not ready to pay a premium for Goan cashew nuts. Everyone wants cheaper and you cannot compete with African nuts.”

National Chairman of MSME, Assocham, Manguirish Pai Raiker said, “Since the Goa production was low and the demand was high, it started to import. In early nineties the Central government stepped in and offered subsidies, support price etc to the farmers for planting cashew trees. Many states benefitted from this scheme and wasteland was use to grow cashew. Our Goan production also went up but subsequently our exports also rose. If we are talking of multiplying the income of farmers, it is now time for the government to step in to save this crop which is so dear to Goa.”