Monday- 14:38, 28/02/2022
(VAN) Despite the constant decrease in export price, the whole cashew industry still aims for an overall export value of USD 3.8 billion.
The whole cashew industry aims for an overall export value of USD 3.8 billion in 2022. Photo: Tran Trung.
The story of profits amidst the constant decrease in export price
Ending the year 2021 with two records of USD 3.64 billion in turnover and 580,000 tons in output, the cashew industry now is entering 2022 full of worries.
Contrary to other agro-products’ uptrend during these first months of the year, cashew export price is constantly in decline. Mr. Ta Quang Huyen, Chairman of the Board of Directors, Hoang Son 1 Joint Stock Company, said that the export price of cashew kernels was still high in November last year, but by the end of November price began to go down. This situation has extended to February 2022.
Information from the General Department of Customs also affirms this fact. Vietnam's cashew exports in January 2022 exceeded 40,000 tons, valued at over USD 238 million, down 16.9% in volume and 19.9% in value compared to December 2021. The average export price of cashew nuts was at USD 5,934/ton, down 3.6% compared to December 2021.
Mr. Huyen believed that the cashew nut inventory of importers is still quite abundant, thus the world cashew kernel market is currently saturated. The price of cashew kernels may have little opportunity for improvement this year.
However, according to Mr. Vu Thai Son, Chairman of the Board of Directors of Long Son Joint Stock Company, cashew kernels in import markets are low in stock.
The proof is that Long Son used to have to pay a lot of expenses for the cashew kernels in stock in the USA due to slow consumption in 2021. But so far this inventory has been released, and Long Son is preparing to bring a new volume of goods to the USA with the intention to keep the inventory at a certain level to maintain the market share and brand name.
Regarding the decrease in cashew kernel price, Mr. Son said that cashew importers are refraining from buying too early upon analyzing the abundance of the global raw cashew output. They are lying in wait for a price that they deem reasonable.
The downward trend in kernel price this year thus seems inevitable. In the opinion of Mr. Huyen, businesses need to build a price so that they still can earn a fair amount of profit when the price of W320 cashew kernels is at USD 2.8/kg, with the most important key point being to only buy raw cashews at a reasonable price around USD 1,100/ton.
Cashew demand is still on the rise worldwide. Photo: Tran Trung.
Cashew market will remain open and stable for the next 10 years
According to the Import and Export Department (Ministry of Industry and Trade), in the context of Covid-19’s complicated development, the demand for healthy foods has increased sharply, including cashew. Low cashew price in 2021 has further pushed its demand worldwide.
Statistics show that cashew nut imports from the USA, China, UK, France and Japan all grow positively in 2021, in which Vietnam stands among the top cashew nut export markets. Vietnam's cashew nut market share in the total import value of the USA and China in the eleven months of 2021 accounted for 88.99% and 89.12% respectively.
Mr. Vu Ba Phu, Director of the Trade Promotion Department, Ministry of Industry and Trade, said that the Ministry of Industry and Trade has conducted research and review on the agricultural product market in recent years. From the data of the International Trade Center (ITC) and the assessment of the Ministry of Industry and Trade, it can be seen that Vietnam's cashew industry need to focus on these eight market areas: the EU, the USA, China, Japan, South Korea, Australia, Russia and the Middle East.
The Vietnam Cashew Association (Vinacas) shared that the cashew industry’s strategic goal is to continue its pursuit in 2022 of keeping stable production, increasing quality and attaining better prices. Cashew kernel export turnover will strive for the USD 3.8 billion mark this year following the plan set out by the Ministry of Agriculture and Rural Development.
The world cashew market will continue its steady growth trend, at least for the next ten years. The market opportunity for Vietnam's cashew industry is ample, but great challenges await.
When reviewing the cashew industry at the end of last year, ưxperts from Switzerland raised specific challenges for Vietnam's cashew industry such as importers’ high requirements on quality, standards, chemical residues, CSR (corporate social responsibility) and environmental certification, as well as increasingly fierce competition from India, Tanzania and recent emerging sources such as Mozambique, Burkina Faso, Ghana. In particular, competition for investment in processing, distribution and branding is becoming more intense.
Vietnam currently accounts for only approximately 18% of the global cashew nut value chain. High segments such as deep processing and distribution which account for 60% of the world cashew nut value chain are not among the advantages of Vietnamese cashew businesses, thus requiring more attention and focus in the coming time.
Mr. Vu Ba Phu, Director of the Trade Promotion Department, Ministry of Industry and Trade
Authors: Thanh Son - Tran Trung