Cashew paradox: farmers cut trees, firms import

Cashew paradox: farmers cut trees, firms import

While local farmers have been jostling to chop down their cashew trees due to dirt cheap prices, cashew manufacturers have had to import half of the raw materials needed for production.

The import rate is expected to rise further in the future, as the local areas for cashew plantations have increasingly decreased, despite the fact that Vietnam is the world’s top cashew nut exporter.

In the southern province of Binh Phuoc, farmers are still busy emptying their cashew plantations, as prices have nearly halved compared with the same period last year.
“Prices have fallen from VND30,000 a kg last year to only VND17,000 a kg now,” said Bui Minh Tien, from Loc Ninh District.

Tien said he is switching to growing pepper, which will yield bigger profits, as he is no longer able to make ends meet with the VND45 million (US$21,500) annual income from the 3.5-hectare cashew plantation.

Following the trend, other farmers in neighboring localities have also replaced their cashew gardens with pepper or rubber crops.

And this tree cutting wave is out of authorities’ control, Nguyen Van Toi, director of the province’s Department of Agriculture and Rural Development, admitted.

“Cashew manufacturers do not buy the products directly from farmers, but via a multilayer chain of traders and small plants, and farmers are thus forced to sell at low prices,” he explained. “So there is no surprise when farmers rush to empty their plantations.”

Increased imports

In an opposite race from the farmers, manufacturers have had to increase imports of raw cashew for their production.

Local manufacturers are expected to import an additional 400,000 tons of cashew this year, according to its governing body, the Vietnam Cashew Association (Vinacas).

In the year to mid-August, some 215,000 tons of cashew have been shipped to the country, according to figures from the General Customs Department.

However, the director of a cashew manufacturer in Dong Nai said the number is much bigger, as some companies are using a large amount of raw material imported in late 2011.

“Some major businesses have been exporting products made merely from imported materials this year,” an industry expert, who wished not to be named, said.

“Manufacturers prefer importing than buying from local farmers because imported prices from Cambodia and African countries are far lower than domestic rates,” explained another company director, who also wished to remain anonymous.

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