Cashew Industry Feels the Pressure

Việt Nam is known for its thriving cashew export market, but the industry is now facing some tough challenges. Despite an impressive rise in exports, with a 22.9% increase in volume and a 21.8% growth in turnover from the previous year, rising raw material costs are causing concern. The average export price for cashew nuts is USD 5,706 per tonne, but the soaring cost of imports is squeezing profits.

Crunching the Numbers: Is a Trade Deficit Looming?

In 2023, Việt Nam exported cashews worth USD 3,64 billion, while raw material imports cost USD 3,1 billion. This gave the industry a surplus of about USD 500 million. However, the gap between export revenue and import costs is shrinking. By August, Việt Nam had already spent USD 2,7 billion importing raw materials—close to last year’s total. If this keeps up, the feared trade deficit might be just around the corner.

The Supply Struggle: Can Việt Nam Keep Up?

Việt Nam is a global leader in cashew nut processing, but only 10-12% of the raw materials needed come from domestic production. The country relies on imports, mainly from Africa and Cambodia, to keep its factories going. This year, it’s been especially hard. Drought and stricter export controls in African nations have led to a 40-50% increase in raw cashew costs.

Meanwhile, local farmers are feeling the pinch. Many are switching to more profitable crops, and the Việt Nam Cashew Association (VINACAS) reports that cashew-growing areas have dropped dramatically. Back in 2007, cashew trees covered 440,000 hectares, but by 2019-2020, that number had fallen to 302,500 hectares. The outlook for 2024 isn’t much better, with only 305,000 hectares expected to produce around 370,000 tonnes of raw cashews.

Rising Prices and Industry Struggles

At the start of the year, cashew prices shot up, with some suppliers demanding higher rates or canceling contracts entirely. Domestic processors are finding it tough to secure raw materials at these inflated prices. Adding to the pressure, the El Niño phenomenon has hit cashew production in Africa, particularly in the Ivory Coast, causing prices to rise even further.

What’s Next for Việt Nam’s Cashew Industry?

Bạch Khánh Nhựt, VINACAS's permanent vice chairman, voiced concerns about Việt Nam’s ability to maintain its top spot in the global cashew market. Without timely changes, the country could lose its leadership. Smaller local factories are struggling to compete with larger, foreign-backed enterprises. This intense competition could push many smaller businesses into bankruptcy, consolidating power among the bigger players.

Conclusion: Việt Nam’s Cashew Industry at a Crossroads

Việt Nam’s cashew industry faces a critical moment. Without swift changes, the country risks losing its position as a global leader. Strategic decisions and stronger support for local processors are crucial to securing the future of the industry and helping it thrive on the world stage.





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