cashew tree nut india

The world-wide economic slowdown has come home to roost for India’s cashew nut farmers, and with international demand dropping rapidly the Cashew Export Promotional Council of India (CPECI) has forecast a 20 per cent drop in exports over the coming year.

India’s cashew sector is already facing fierce competition from Vietnam and Brazil, but the industry managed to hold its own in 2008, according to CPECI, who reported cashew kernel exports had fallen only marginally from 1.15m tonnes in 2006/07 to only 1.1m tonnes in 2007/08.

As spending decreases in the country’s main export markets of Europe and the US, that may change, reported India’s Economic Times.

“Cashews are considered to be a luxury item, so it is one of the first commodities to take a hit in a situation like this,” said Suresh Zantye, chief executive of Zantye Narayan Ganesh Prabhu And Co, one of India’s leading cashew export firms.

With its traditional markets falling by the wayside, India’s cashew sector is looking to develop markets closer to home in Japan, Israel and Saudi Arabia.

The domestic market is also seen as a solid fallback position for exporters – India is one of the largest raw cashew nut consuming countries.

That market may also be at risk, with imports from countries using lower-cost production methods out-price local cashews.

“The import cost is much lower than buying raw nuts in India,” an unnamed cashew trader told the Economic Times.

Indian cashews cost about Rs.50-55 (US$1.02-1.12) per kg on the domestic market, but imported nuts cost only RS.45-48 (US$0.91-0.97) per kg.

“When it comes to cashews most people do not know the quality, it is the price that determines sales,” said Mr Zantye.

The Indian cashew sector is beginning to use more modern production techniques, which will likely lower the cost of domestic nuts.

“We have developed technology to increase productivity to meet the rising demand. Unfortunately this is used abroad rather than in India,” said AS Kamath, president of the Goa Cashew Manufacturers' Association.

Indian production growth has been outstripped by its competitors in recent years. In 2001 India produced 450,000 tonnes of cashews, which in 2006 grew to 573,000 tonnes. Vietnam, in comparison, went from 293,000 tonnes in 2001 to 942,000 tonnes in 2006.

India also re-exports some imported nuts, which make up the difference between exports and production from India’s roughly 300,000 cashew farmers.