Cashew processors are finding it difficult to get enough raw materials because of low domestic output and insufficient credit access early this year to import raw nuts, according to the Vietnam Cashew Association.
It said many processors in the south-eastern province of Binh Phuoc, the country’s largest cashew cultivation area, had not been able to purchase enough raw ruts this year.
Hoang Manh Binh, director of the Binh Phuoc Province – based Viet Son Company, said his company had export orders until March next year, but had enough cashew in stock for production only until the end of this year.
Binh’s company is one of the few firms that were able to get loans to stock raw cashew at the beginning of the harvest season this year.
Many companies that could not get these loans are having to sub-contract processing jobs from other firms in order to ensure enough work for their employees.
Nguyen Thai Hoc, chair of the Vietnam Cashew Association, said many small-scale cashew producers were suffering a severe shortage of raw materials.
The situation would become even more serious in the fourth quarter of this year and the first quarter of next year, Hoc told the Tuoi Tre (Youth) newspaper.
Le Bong, director of Binh Phuoc Province-based Thien An Company, said his company processes about 5,000-6,000 tonnes of cashews a year, but has been able to buy only 2,000 tonnes of raw cashews so far this year.
“To maintain the company’s normal operation and have adequate work for employees, the company needs to import more than 3,000 tonnes of raw cashews,” Bong said.
The cashew industry needs a further 150,000 tonnes of raw cashews to operate at full capacity until the end of the year, according to the association.
Hoc said earlier this year most cashew processors were unable to get loans to import raw cashews to stock for production in the last few months.
This period was peak export time for the cashew industry, he said, adding that if there were not enough raw cashews for production, many firms could suffer losses.
Vietnam leads the world in cashew export with revenues of $850 million last year.
The country’s 225 cashew processors have a total capacity of 700,000 tonnes of raw cashew a year and domestic production could only meet half of this demand.
The area under cashew cultivation has reduced from 450,000ha in 2006 to 350,000ha at present as many cashew growers have switched to growing crops with higher economic value like rubber, pepper and coffee.
Cashew yield has also declined in recent years.
In 2005-06, the average yield of cashew was more than one tonne per ha, but it has reduced to 0.86 tonnes per ha at present.
Pham Van Nguyen, an expert with the Vietnam Cashew Association, said the yield was reducing because the trees were getting old.
Under the government’s plan, cashew cultivation area in Vietnam is to expand to 450,000ha in the Tay Nguyen (Central Highlands), central and south-eastern regions by the year 2020.
The plan, which was approved in 2007, also envisages that 90 percent of the area will cultivate high yield varieties with an average output of two tonnes per ha by 2020.
However, many localities under the plan have not even zoned areas for cashew cultivation yet, the Nhan Dan (The People) newspaper has reported.