It has first position in the world, but Vietnam has only participated in 18% in the value chain of the cashew industry. Photo: N.H

Partner becomes competitor

In 2022, the cashew industry aims to export US$3.8 billion in cashew kernels, an increase of 3.9% compared to 2021.

This target is based on the positive results achieved in 2021. Despite the difficulties and challenges of the Covid-19 pandemic, the cashew industry still maintained a growth rate of 14% compared to 2020 with a turnover of over US$3.6 billion. This result helps Vietnam maintain the No. 1 position in terms of cashew kernel exports, accounting for 80% of the total global export volume of cashew kernels.

In key markets around the world, Vietnamese cashew nuts hold a dominant market share, such as in the US and China with a market share of 90%, the Netherlands with 80%, Germany with 60%.

However, Mr. Nguyen Minh Hoa, Vice Chairman of the Vietnam Cashew Association (Vinacas), assessed that Vietnam's continued imports of a large amount of pre-processed cashew nuts from African countries continued to show its dependence on sources of imported material. This concern is even greater when in recent years, these raw cashew suppliers of Vietnam are stepping up investment in processing and exporting cashew kernels directly to Europe due to the advantage of geographical location.

African countries also levy a 5% tax on raw cashew exports. This has led some businesses to increase their imports of pre-processed cashews from Africa, instead of raw cashews.

Mr. Hoa said that in 2021, Vietnam imported more than 88,000 tons of pre-processed cashews from Africa, up sharply from just over 30,000 tons imported in 2020. Notably, this kind of hard shell has only been peeled not peeled silk imported to get C/O of Vietnam. Because the processing technology is not equal to Vietnam, this product will affect the quality of cashew kernels for export in general.

Currently, African countries are encouraging the export of pre-processed cashew nuts by offering a subsidy policy of several hundred dollars per ton. In addition, the import of this item will help save transportation costs because five containers of raw cashews can be processed into one container of cashew kernels. However, according to Mr. Hoa, if pre-processed cashew kernels continue to be imported with the current high growth rate, it will create a good environment for the development of cashew processing activities in Africa and move towards direct competition with Vietnamese cashews.

Another challenge for Vietnam's cashew industry is that although it holds the No. 1 position in cashew kernel exports, the added value is still low.

Mr. Vu Ba Phu, Director of the Trade Promotion Department, Ministry of Industry and Trade, said that international experts estimate that Vietnam has only participated in 18% of the world cashew value chain.

While high-value segments such as finished product processing, distribution are estimated to account for 60% of the cost, it is not yet the advantage of Vietnamese enterprises. In addition, the dependence on imported raw materials also poses challenges in terms of food quality, hygiene and safety. This is something businesses need to pay close attention to when bringing goods to large markets and achieving good prices; products need to be controlled in terms of chemical residues and pesticides.

Increase quality and increase price

Cashew businesses said that after achieving impressive results in the context of the Covid-19 pandemic, cashew exports in 2022 will be difficult to maintain the same growth rate as in 2021. Accordingly, before concerns about the disruption of the supply chain due to the pandemic, importers in the US and Europe have boosted imports and currently the inventory is still quite large. But now the situation has stabilized again, the supporting factors like in 2021 are no longer there, so it is expected that the price of cashew kernels will not be as good as in 2021.

Besides, the conflict between Russia and Ukraine is also posing great challenges for businesses.

Mr. Ta Quang Huyen, General Director of Hoang Son 1 Company, said that some importers of Hoang Son 1 have requested to stop delivery due to the devaluation of the ruble making it difficult for them to pay. In addition, the Western countries' embargo on Russian banks makes payments even more difficult. Therefore, businesses are now very careful in production and business to avoid possible risks.

Taking a longer-term view of the cashew industry, Minister of Agriculture and Rural Development Le Minh Hoan said that the cashew industry needs to actively change its production and business thinking with a strong focus on improving the quality of the cashew industry with high added value for cashew products.

“The cashew industry can open a contest to develop new products although it will take 5-10 years to get results. It is necessary to have a new perspective to improve the value of cashews as well as to combine cashews with other foods to complement and enhance each other's values," Mr. Le Minh Hoan suggested.

Mr. Pham Van Cong, Chairman of Vinacas, also said that the strategic goal of the cashew industry in 2022 will continue to be "keeping the quantity stable, increasing the quality and increasing the price". In which, the cashew industry will focus on developing deep processing to meet the diverse needs of the market; achieve a worthy position in the global cashew value chain, while developing the domestic market.

In addition, the raw material area will be strongly developed in the direction of quality and efficiency, both creating an initiative in the source of quality raw materials for processing and contributing to the successful implementation of the State's three-farm policy.

Vinacas also suggested that the Government should soon issue a policy to limit  the import of pre-processed cashew kernels (with silk skin and white kernels), and at the same time prevent the transfer of technology and equipment for cashew processing abroad, registration for protection of intellectual property, useful solutions to technological processes, cashew processing equipment, proposal to impose export tax on cashew processing machinery and equipment.

The quality of imported raw cashew nuts also needs to be controlled through completing the General Department of Vietnam standards on raw cashew nuts and the norms of imported raw materials. Vinacas will also study and propose to the State solutions and policies to control the import of raw materials with a low recovery rate.

Mr. Vu Ba Phu also said that, in order to affirm the position of Vietnam's cashew industry, the Government, the Ministry of Agriculture and Rural Development together with Vinacas need to have close coordination to create linkages and support businesses to achieve certifications on food hygiene and safety, certification of quality standards of markets.

Besides, the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development also need to work closely with Vinacas to update the situation of the market model, connecting businesses to retailers, connecting businesses together to develop the market together, thereby helping Vietnam exploit greater value instead of just staying at 18% in the current value of the cashew industry.