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Higher Domestic Demand and Strong Rupee Slows Down Cashew Export

Strong growth in consumption and consequent demand for cashew kernels in domestic market is turning producers from export to domestic sales. Sharp appreciation of Rupee against Dollar has made the situation even worse where producers make better margin from domestic sale than export. Today, more than 50 per cent of the raw cashew nuts processed in the country are absorbed in the domestic market.

Exports during April-June 2007 stood at 28,876 tonnes valued at Rs 560.57 crore against 29,273 tonnes valued at Rs 608.13 crore in the same period in 2006-07, whereas forex earnings from exports during the first quarter of 2007-08 increased to $135.96 million from $133.74 million.

During April-March 2006-07, the country shipped out 1,18,540 tonnes of cashew kernels valued at Rs 2,455 crore against 1,14,143 tonnes valued at Rs 2,515 crore during the previous fiscal.

Exports of cashew kernels during the first quarter of the current fiscal have declines and the industry has attributed this to appreciation of the rupee against the dollar by over 10 per cent. Industry sources in Kollam, where the cashew industry in the country is concentrated for decades, told Business Line that a strong rupee had made Indian cashew kernels uncompetitive in the global market. The major competitors are Brazil and Vietnam. Cost of production/processing in Vietnam is much lower. In Brazil, too, it is comparatively lower besides being close to the US market which gives it the freight advantage. On the other hand, when the cashew prices moved up, consumers in certain markets have switched over to other tree nuts, they said. India demand However, the domestic market is strong, with a tangible growth in consumption and demand. The latest strategy of the processors is to sell in the domestic market at prices higher than that of the international market. In fact, more than 50 per cent of the raw nuts processed in the country are absorbed in the domestic market. Growing awareness about the health benefits of cashew nuts has also contributed to the increase in demand. Its use in bakery products is also on the increase and hence industry demand has also of late shown an upward trend. Exports Consequently, many major processor exporters are marketing their branded products in the domestic market through retail outlets. Exports during April-June 2007 stood at 28,876 tonnes valued at Rs 560.57 crore against 29,273 tonnes valued at Rs 608.13 crore in the same period in 2006-07, whereas forex earnings from exports during the first quarter of 2007-08 increased to $135.96 million from $133.74 million. During April-March 2006-07, the country shipped out 1,18,540 tonnes of cashew kernels valued at Rs 2,455 crore against 1,14,143 tonnes valued at Rs 2,515 crore during the previous fiscal. Imports up Imports of raw nuts have gone up substantially during the first quarter of the current fiscal to 1,58,777 tonnes valued at Rs 412.69 crore ($100.09 million) from 1,20,864 tonnes worth Rs 374.97 crore ($82.46 million) a year ago. The cashew industry in the country has a processing capacity of 12 lakh tonnes a year and almost 50 per cent of the raw nut requirement is met by imports. The indigenous production of raw cashew nuts hovers around 5 lakh tonnes and about 50 per cent of it is used by the unorganised sector for processing and marketing in the domestic market. Now a substantial portion of what is processed by the organised sector is also finding its way into the domestic market, official sources pointed out b

August 13' 2007