Vietnam’s cashew exports face fierce competition in the international market
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- Business
- 13:29 21/03/2024
DNHN - Despite Vietnam accounting for nearly 80% of exported cashew nuts and consuming nearly 65% of the world’s raw cashew nuts, the Vietnamese cashew industry is still facing many challenges.
Previously, the global cashew nut market was mainly supplied by Vietnam and India, with Vietnam accounting for more than 80% of the market share. However, new sources of supply have recently emerged, especially from some African countries, causing Vietnam’s share of cashew nuts in the market to decline.
At the recent International Cashew Conference organised by the Vietnam Cashew Association, several countries affirmed their efforts to rise to the top of global cashew imports and exports.
Mr N’Guettia Assouman, President of the Association of Cashew Exporters of Cote d’Ivoire (AEC-CI), said that with 25% of the world’s raw cashew production, Cote d’Ivoire is now the second largest cashew importer and exporter in the world, after Vietnam. Currently, Vietnam consumes from 65% to 85% of Cote d’Ivoire’s raw cashew production, and the country’s cashew industry is undergoing a modernisation of production and processing to expand exports to demanding markets such as the US and EU, while still maintaining the sale of raw materials to traditional partners.
From 2018 to 2023, the price of cashew nuts has continuously decreased by about 10% each year, as a result of the global supply of raw cashew nuts being higher than the total consumption of cashew nuts.
According to Mr Mohamed Diaoune, President of the Interprofessional Federation of the Cashew Sector of Guinea (IFA), the Republic of Guinea has a stable raw material area that is supplying Vietnamese businesses. This raw material area is located near Cote d’Ivoire, Senegal, Burkina Faso and Nigeria, countries with strengths in cashew production. Currently, Vietnam is one of the major partners in raw cashew nuts.
Africa currently accounts for 57% of the world’s raw cashew production. The rapid growth of the cashew production and processing industry in Vietnam as well as in some African countries is creating competition in the market and becoming a risk to the global import and export system in the cashew industry. Despite Vietnam accounting for nearly 80% of exported cashew nuts and consuming nearly 65% of the world’s raw cashew nuts, the Vietnamese cashew industry is still facing many challenges.
In addition, coordinating and reshaping the global cashew market is also a challenge for domestic businesses. Despite being advised to be cautious in buying and considering selling at the beginning of each crop, businesses still face difficulties due to self-developing raw material prices and selling processed products as they wish.
Mr Pham Van Cong, Chairman of the Vietnam Cashew Association (VINACAS), said that although it is a cashew nut processing centre, Vietnam does not have a raw material area, and the domestic planting area and output are shrinking. Meanwhile, African countries have policies restricting the sale of raw cashew nuts to develop the domestic cashew processing industry. This issue is putting further pressure on the price of raw cashew nuts. Some countries have invested in cashew processing machinery and equipment, targeting the US and EU markets. Although not much, producing directly in the raw material area will reduce many costs and improve prices. This is the key reason why Vietnamese factories have to compete to buy raw cashew nuts from Africa, and the selling price is subject to fierce competition.
Mr Cong said that when the price of cashew nuts and raw cashew nuts is not balanced, it will lead to businesses losing money and closing down in large numbers. In fact, in 2023, about 100 factories in Binh Phuoc had to close down. It is estimated that in the next 5 years, the country will lose thousands of factories.
In addition, another reason is that businesses import raw cashew nuts for processing into cashew nuts but cannot sell them, do not have money to pay off debts and have their debts seized by banks. To recover capital, cashew businesses often compete to sell at very low prices. As a result, the price of cashew nuts, which has already fallen, has fallen even further.
“Importing countries of nuts always know that the pressure on Vietnamese businesses is financial, so through brokers, they put pressure on them, saying ‘If you don’t sell at this price, you will have difficulties’, and in the end, Vietnamese businesses have to sell because of pressure from banks. If this continues, it will lead to more dangerous consequences. Specifically, hundreds of businesses in Binh Phuoc have had to close down. Therefore, this issue needs to be addressed directly to find a solution,” Mr Cong emphasised.
P.V
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