Cashew kernel price fall hits farmers, processors

KOLLAM, FEB. 26. A 46 per cent drop in kernel prices in the international cashew market coupled with a 20 per cent hike in processing charges here between 1999 and 2004 has placed both farmers and processors of cashew of the State in a precarious situation.

The development has resulted in raw cashew prices falling alarmingly at a time when the raw nut harvest in the State has just commenced. It has given rise to a situation in which the farmers are not willing to sell the raw nuts at the prevailing market rates and the processors are unwilling to purchase the nuts at rates above the prevailing market price.

The cashew industry here has a capacity to process seven lakh tonnes of raw nuts per annum. Out of that, the raw nut contribution from the State stands at one lakh tonnes. While another 2 lakh tonnes comes from other States in the country, the major portion of the processing process is met by raw nut imports mainly from some of the African countries.

Yet the raw nuts produced in Kerala has its own unique properties vis-a-vis in meeting W-320 kernel quality standards which is the real export item in demand. In the year 1999, the price of local raw nuts stood at Rs. 48 per kg. At the time, the price of kernels in the international market was US $ 3 per pound. At present the kernel prices in the international market has dropped to $ 1.84 per pound whereas the processing charges from 1999 in Kollam had leaped by over 20 per cent. The fall in raw nut prices during the corresponding period stands in the vicinity of 30 per cent and stands at Rs. 32 a kg.

It is these figures which are creating the problem for the farmers and the processors. While farmers insist that they need a price of at least Rs. 36 on a kg of raw nuts to meet the breakeven point, processors argue that raw nuts imported from Africa currently works out to only Rs. 31 a kg. Moreover, the local raw nuts at this stage would not be fully dry thereby showing additional weight, standing at around 6 per cent, and these would also invite purchase tax.

While the international kernel market has turned highly competitive due to the entry of Vietnam and Brazil, prices would remain competitive. Moreover the new entrants are highly subsidised in their own countries whereas the industry in India is not. Hence the processors are unwilling to gamble with the raw nut prices. There is also a fear that with the cashew crops elsewhere in the country due for harvest in April, the prices of local raw nuts would fall further. And for that matter, raw cashew is a commodity which cannot be kept in store for long with expectations of a price rise.