Although cashew exports in the first quarter of 2023 grew by double digits, cashew enterprises are facing new competitive pressure.
According to the Import-Export Department (Ministry of Industry and Trade), it is estimated that Vietnam’s cashew exports in March 2023 reached 60,000 tons, worth 355 million USD. This result increased by 75% in quantity and 79.5% in value compared to February 2023. Compared to March 2022, it’s up 50.4% in volume and 48.6% in value. In the first quarter of 2023, Vietnam’s cashew exports are estimated at 122,000 tons, worth 708 million USD, up 16.6% in volume and 14.2% in value over the same period in 2022.
The cashew industry is under new competitive pressure.
In March 2023, the average export price of Vietnam’s cashew nuts was estimated at 5,913 USD/ton, up 2.6% compared to February 2023, but down 1.2% compared to March 2022. In the first quarter of 2023, the average export price of Vietnam’s cashew nuts was estimated at 5,826 USD/ton, down 2.1% over the same period in 2022.
In the first quarter of 2023, exports of most types of cashew nuts decreased, except for cashew W450. Although cashew exports grew by double digits in both quantity and value in the first quarter, the cashew sector is facing many difficulties when export prices are falling. On the other hand, Vietnam’s cashew is suffering from competition in the export market.
According to Chinese Customs, the country’s cashew imports in Feb 2023 reached 9.15 million USD, up 37.2% compared to February 2022. In the first 2 months of 2023, China imported 19.42 million USD of cashew nuts, down 25% compared to the same period in 2022. In the first 2 months of 2023, China reduced cashew imports from Vietnam, but sharply increased imports from Africa such as Ivory Coast, Togo, Tanzania, and Benin. This shows that Vietnam’s cashew sector is subject to fierce competition from other countries in exporting to China.
Eurostat said that in 2022, the imported cashew nuts of the EU reached approximately 207,000 tons worth 1.37 billion EUR (equivalent to 1.48 billion USD). This figure was down 4.0% in quantity, but up 5.2% in value compared to 2021. In 2022, the EU imported cashew nuts mainly from the external supply with an amount of 151.62 thousand tons, worth 992.2 million EUR (equivalent to 1.07 billion USD). This result was down by 2.9% in quantity, but up by 9.0% in value compared to 2021. In particular, the EU reduced imports of cashews from Vietnam, India, and Brazil, but sharply increased imports from Ivory Coast.
As one of the two largest cashew exporters in the world, besides domestic supply, Vietnam has to import raw cashew nuts for processing. Vietnam’s success is to create technology to produce cashew nuts efficiently, helping to increase productivity and reduce costs. The development of technology helps enterprises get more profits and this has also promoted the development of Vietnam’s cashew industry.
However, Mr. Bach Khanh Nhut – Vice Chairman of the Vietnam Cashew Association (VINACAS) expressed his concerns for the cashew industry and questioned whether Vietnam’s advantages would be maintained or not.
Mr. Bach Khanh Nhut shared that in the past, Africa sold 100% of its raw materials to Vietnam. Now they import machinery from Vietnam to process cashews and instead of selling raw materials, they operate processing factories. But they are newly born and lack experience, so they cannot do all the stages to export cashew nuts of the same quality as Vietnamese enterprises. That means they separate the hard shell and then sell the pre-processed cashew nuts back to Vietnam. “Instead of earning one dong for selling raw cashew nuts, they sell pre-processed cashew nuts for 2 dongs and so they have a lot of profit,” said Mr. Bach Khanh Nhut.
Vietnam’s success is to create technology to produce cashew nuts efficiently, helping to increase productivity and reduce costs.
The fact that enterprises import raw materials for processing is good for Vietnam’s manufacturing industry. However, if we import semi-finished products, it will cause many immediate and long-term consequences.
Mr. Bach Khanh Nhut analyzed, firstly, many workers lose their jobs.
Secondly, Vietnam’s continued import of semi-finished materials will create opportunities for African enterprises to improve their production and technique. Only about 2 years later, they will create cashew kernels, pack the same goods as us, and compete directly with Vietnam’s cashew markets over the world. Vietnam, from holding the world cashew market, now African businesses “interrupt”, leading to Vietnam’s cashew market shrinking, and losing market share from some African countries.
Thirdly, when they invest in processing, most likely, the raw and pre-processed cashew sold to Vietnam can be at low-level, and they keep high-level goods for sale. Vietnamese enterprises importing these cashew nuts will have to mix them with high-quality cashew nuts for export. This leads to the consequence that our customers will under-evaluate the quality of Vietnamese enterprises.
In the face of the above concerns, cashew enterprises are proposing to the VINACAS to report to the authorities and the Vietnam Chamber of Commerce and Industry (VCCI) to make suggestions to the Government to have policies to intervene in the import of cashew. This is to protect the domestic cashew industry./.