The Hindu Business Line : Weak rupee, poor crop affect cashew exports

Short supply of cashew kernels in major growing countries in Africa, due to reported drop in crop coupled with depreciation of rupee against dollar, appears to have pushed up the prices of raw cashew imported by the Indian cashew processing industry in 2008-09.

The industry paid Rs 48 a kg for raw nuts in February and imported 50,000 tonnes against Rs 28 a kg footed between April 2007 and February 2008, according to Mr Sasi Varma, Secretary, Cashew Export Promotion Council of India (CEPC), here.

unit value realisation

At the same time, the unit value realisation for the cashew kernels dropped in the international market after shooting up to around Rs 380 a kg in mid-2008, in the wake of the ongoing economic recession which has started pinching from September last. The exports have also witnessed a drop during the current fiscal, he said.

Exports of cashew during April-Feb of the current fiscal stood at 99,348 tonnes valued at Rs 2,719.79 crore ($597.62 million) against 1,03,139 tonnes valued at Rs 2,033.18 crore ($505.14 m) in the corresponding period a year ago.

Average unit value realisation during the current fiscal has been Rs 273.76 a kg compared with Rs 197.13 a year ago.

Shipments of cashew kernels in Feb 2009 were 7,968 tonnes (8,350 tonnes), a 4.20 per cent drop. The unit value realisation dropped from Rs 297 a kg during last quarter of 2008 to Rs 267 a kg in Feb 2009.

Re fall impact

Sharp fall in the value of rupee against dollar has pushed up the cost of imported raw nuts, while it has raised the unit value realisation on exports. This phenomenon has made the exports unattractive, Mr Varma told Business Line.

Availability of indigenously produced raw nuts has been almost stagnant at around six lakh tonnes against 12 lakh tonnes required by the industry. The price of raw nuts in the country has also correspondingly gone up to Rs 50-52 a kg and even more in some areas, he said.

Dependence on imported raw nuts continue to remain a perpetual phenomenon as there hasn’t been any proper and consistent effort to promote the cultivation of cashew in the country, official sources in the Union Ministry of Commerce said.

cashew board

They said that the proposal to set up a cashew development board aimed at developing cashew cultivation in a scientific manner failed to take off because of the road blocks created by the Union Agriculture Ministry and the Ministry of Finance.

Imports during the current fiscal up to Feb 2009 were at 5,89,103 tonnes valued at Rs 2,557.49 crore ($561.96 million) against 5,73,092 tonnes valued at Rs 1,612.37 crore ($400.59 million) in the same period a year ago.

The average unit value of the raw nut was at Rs 43.41 a kg this fiscal as against Rs 28.13 a kg last fiscal.

The foreign exchange outgo towards import of raw cashew nuts during the current fiscal increased by $161.37 million where as the corresponding increase in the forex earnings from export of cashew kernels during the period this fiscal was only $92.48 million.

Recovery of kernals

Assuming that the recovery rate of cashew kernels is 25 per cent, the total recovery from the imported raw nuts should come to 1,47,275 tonnes from 5,89,100 tonnes imported during Apr–Feb 2008-09, experts connected with the industry say. Since the exports up to February this fiscal were at 99,348 tonnes the balance should have been sold on the domestic market at almost double the price overseas. From 5,73,092 tonnes of raw nuts imported last fiscal, the cashew kernel recovery must have stood at 1,43,273 tonnes and of which only 1,03,139 tonnes were exported and rest must have gone to the ever-growing domestic market.

Thus, it gives the impression that the organised sector is solely marketing imported nuts in the export as well as domestic market. They get high premium price in the domestic market and thus export sales are made at the cost of the domestic consumers in India, they alleged.

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