Kernel purchase grinds to a halt
Price of raw cashew remains high
Government blamed for high prices of raw nuts
KOLLAM: Since the past two weeks, there has been no kernel buying activity in the cashew industry here. This is in spite of the fact that kernel price in the international market is at a low of $1.97 a pound, a decline of 40 per cent from the price in the corresponding period last year.
The situation has triggered panic in the cashew industry. The sporadic buying activity witnessed during January has now come to a halt. The domestic market is expected to revive again only in September, with the commencement of the festival seasons.
With regard to the international kernel market, there is no indication of what is in store. The industry fears that the situation would lead to huge stock accumulation in the near future, which would lead to shutdown of cashew factories.
Paradoxically, in spite of the low kernel prices, the price of raw cashew remains high, both in the international and domestic markets. Sources said compared to the kernel price, the raw nut price was simply “unaffordable” at this juncture. At present, it is the raw nut season in Tanzania.
The private sector has procured raw nuts from Tanzania at $975 a tonne (cost and freight). This price would generate profits here only if the kernel price was $3 a pound.
The price of raw nuts in the domestic market is also too high, sources said.
Industry sources blame the State government for the high price of raw nuts. Instead of allowing the traditional purchase system to operate, the government gave leverage to Tanzania by inviting a delegation from the Cashewnut Board of Tanzania (CBT) last November and announced the signing of a deal for supply of raw nuts to the public and cooperative sector factories.
This put the CBT in a position to dictate the price to the private sector and there was panic buying out of fears that the CBT-Kerala government deal could deny raw nuts to the private sector. But the fact is that the State government indefinitely shelved signing of the deal.
Industry sources said if it were not for the deal threat, Tanzania would have sold raw nuts at the rate of $800 a tonne.
Now, with the start of the season for the domestic Malabar raw nuts, the government is resorting to election politics in the cashew sector, sources alleged.