Vietnam Cashew Association lowers export target amid weak demand
Vietnam Cashew Association lowers export target amid weak demand
As cashew exports in the first half of 2022 fell by 9.2 per cent against the same period last year, the Vietnam Cashew Association (VCA) has to adjust down its annual export target by US$3.2 billion.
Tran Van Hiep, Vice Chairman of VCA, underscored the Russia-Ukraine conflict as a major cause for the falling exports. It is the case because Russia was the 14th largest importer of Vietnamese cashews and the conflict had the country cut off from the System for Transfer of Financial Messages.
Another cause is the mounting inflation in the US and EU. Higher inflation leads to higher prices for essential items, leaving consumers with no choice but to cut back on non-essential items, such as cashew nuts. The demand for Vietnamese cashew fell accordingly.
"China is sticking to its zero-COVID policy, holding back the importation of the Vietnamese nuts," he added.
Vu Thai Son, Chairman of the Long Son JSC and Chairman of the Binh Phuoc Province's Cashew Association, revealed that many importers stockpiled cashew in 2021 for fear that the pandemic would not be over soon.
The stockpiling led to high stock of cashew this year and dragged down the importation of the nuts from abroad. Weak demand is expected to continue in the short-term as the nuts are not an essential food.
The chairman was concerned that mounting freight rates and raw input prices are adding to exporters' woes, driving them into a dire situation.
"It is impossible for cashew producers to run profitably since cashew prices are lower than production costs. Many small factories in Binh Phuoc Province have ceased operation to cut losses, whereas big ones run at low capacity," he said.
Tran Huu Hau, Deputy Secretary General of VCA, remarked that many batches of raw cashew imported from Africa to Viet Nam were kept in storage for too long, their quality deteriorated and became unfit for production.
For this reason, some batches of processed cashew, waiting in store for export, had preservatives and anti-termite agents added to remain in good condition for a longer time.
Unfortunately, agent-adding has made these batches exceed chemical residue thresholds. They were later suspended and returned to Viet Nam by trade partners.
The deputy secretary general urged trade authorities to keep firms up-to-date with the latest food-safety standards in foreign markets to avoid future returns.
He also called on the Ministry of Industry and Trade to help firms gain entry into various trade promotion programmes, whereby they could gather useful information about potential customers, consumption habits and market risks.
Amid contracting demand from abroad, VCA has to lower its export target to $3.2 billion for 2022, $600 million less than the target set at the beginning of the year.
