Reshaping the global cashew supply chain

Risk of supply chain disruption

The 13th Vietnam International Cashew Conference 2024 will take place from February 26-28, 2024 in Dong Hoi City, Quang Binh Province, jointly organized by the Vietnam Cashew Association (VINACAS) and the Trade Promotion Agency (Ministry of Industry and Trade). This is an event under the National Trade Promotion Program of Vietnam; an important event for the cashew industry in Vietnam and the world.

Speaking at the conference, Mr. Pham Van Cong, Chairman of the Vietnam Cashew Association, said: In 2022 and 2023, the global supply chain, including the cashew industry, is gradually recovering after the pandemic, but will be greatly affected by the Russia-Ukraine conflict; Israel-Hamas and high inflation globally.

Mr. Pham Van Cong - Chairman of Vietnam Cashew Association spoke at the conference

Accordingly, the export price of cashew nuts from Vietnam, which had decreased significantly in previous years, continued to decrease in 2023. The price of cashew nuts from other major producing countries such as India, Ivory Coast, and Brazil also decreased sharply. Meanwhile, the price of raw cashew nuts also decreased, but the decrease was much slower than that of cashew nuts, despite the sharp increase in raw cashew production. The reason is not only due to the competition for early season purchases by processors, but also because some countries set minimum export prices; imposed taxes and many types of fees on raw cashew exports.

“The higher cost price than the selling price has caused most cashew nut processing and exporting enterprises in Vietnam and other countries to suffer losses or have no profit. Many processors have had to temporarily suspend operations or reduce output. The risk of mass closure is imminent. Meanwhile, Vietnam is the center of the global cashew supply chain because it imports nearly 65% ​​of the world 's raw cashew output and accounts for nearly 80% of the exported cashew nuts. Therefore, if a series of processing factories close, the global cashew supply chain will be broken, leading to a shortage of cashew nuts in the market and a surplus of raw cashew nuts. This will cause general damage to the entire cashew nut supply chain and lead to many consequences, the biggest risk of which is that farmers in many countries will neglect cashew trees because they cannot consume raw cashew nuts. If farmers are indifferent to cashew trees, it will have a huge impact on the global cashew nut supply chain in the long term,” Mr. Cong analyzed.

Reshaping the global cashew supply chain

According to a representative of Starlink Global Nigeria Limited, Vietnam is the center of the global cashew supply chain, from importing raw materials (Africa, Cambodia, Indonesia) to processing and exporting cashew nuts to major markets such as the United States, China, EU countries...

In fact, before the Covid-19 pandemic, when the cashew supply chain operated smoothly and all parties made profits, processing factories in Vietnam increased rapidly in both quantity and processing capacity with nearly 1,500 large and small factories and processing facilities.

Processing cashews for export at a Vietnamese enterprise

The cashew growing area in Africa and other countries has also increased rapidly, leading to a sharp increase in output. Ivory Coast alone, the country with the world's leading area and output of raw cashews, has increased from 680,000 tons/year to 800,000 tons/year, now 1.25 million tons/year; Cambodia from 200,000 tons/year to 650,000 tons/year. Raw cashew production will continue to increase due to the large new planting areas in African countries and Cambodia in recent years maturing and yielding (Cambodia is striving to achieve an output of 1 million tons of raw cashews in the next few years).

Lessons from other industrial crops show that hot growth leads to an imbalance in supply and demand, and when more instability appears, the imbalance in the entire supply chain becomes more evident. It is difficult to predict the consequences when the center of the global cashew supply chain in Vietnam is disrupted.

Therefore, it is time to adjust and reshape the operation so that all parties in the chain can operate effectively. In particular, adjusting to allocate the global cashew value chain more reasonably for all parties to develop together plays a particularly important role.

“In addition to connecting trade, providing information, and strengthening bilateral relations between international organizations related to the cashew industry and Cashew Associations of other countries with Vietnam, the conference will focus on analyzing, evaluating, commenting and proposing solutions and initiatives to reshape the global cashew supply chain, including appropriate adjustments to the global cashew price chain. This will help the Vietnamese and world cashew industry develop stably and sustainably in the coming time,” said Mr. Pham Van Cong.

According to VINACAS, in 2023, Vietnam's cashew nut exports will reach 645,316 tons, an increase of 24.33% compared to 2022. This is a new record in the history of Vietnam's cashew industry (previously, the highest amount of cashew nut exports was in 2021 with 609,260 tons).

Not only did it set a new record for the amount of cashew nuts exported in a year, but also in 2023, the Vietnamese cashew industry set a record for exports in a month, with the export volume in October being over 64,067 tons. In November 2023, the amount of cashew nuts exported was also very high at over 63,968 tons.

In terms of export turnover, in 2023, the Vietnamese cashew industry brought in nearly 3.583 billion USD, an increase of 18.78% compared to 2022.

Thus, after negative growth in both volume and export turnover in 2022, the Vietnamese cashew industry has recovered and grown quite well in 2023.

Explaining this, Mr. Pham Van Cong, Chairman of the Vietnam Cashew Association, said that cashew nuts are now considered an essential food in many markets, especially in Europe and North America. Therefore, although the world economy is in a difficult period, markets still have a need to import and consume cashew nuts.

Source: https://congthuong.vn/dinh-hinh-lai-chuoi-cung-ung-dieu-toan-cau-305523.html