Cashew nut farmers struggle to profit from fruits of their labour

Cashews had become one of the main cash crops in the country prior to 2016 for many smallholders, said Nguyen Duc Thanh, head of the Vietnam Cashew Association, and in good years had allowed families to earn a decent living.

But unfortunately, in 2016 and again this year, harsh weather combined with the ever-increasing dependence of farmers on imports from Africa resulted in low earnings and growers didn’t benefit much from the fruits of their labour.

Due to the lack of quality nuts available in the domestic market, and low earnings, said Mr Thanh, many smallholders had been forced to shutter their doors and moved on to other cash crops.

Currently, nearly two-thirds of all nuts processed by Vietnamese ag are imported, principally from Africa, he noted, adding that the processing industry in the African continent is continuing to expand making it harder to compete.

West Africa, where 80% of the cashew nuts of the continent are grown is increasingly seeing more multinationals investing in manufacturing plants and processing more of the output.

Last month, Nigeria alone unveiled that six more cashew processing factories will open for business, one each in the states of Enugu, Imo, Benue, Kogi, Kwara and Oyo, which lie on the cashew belt of the continent.

In addition, the Nigerian press reported last month that Walmart and Nigeria announced a 130,000-metric ton deal that could be worth as much as US$7 billion for cashew nut exports to the US market.

This rising dominance by multinationals in Africa very often has and will continue to result in their absorbing the higher quality nuts leaving only lower quality product available for export to countries like Vietnam.

Nguyen Quang Huyen, head of Hoang Son 1 Co, Ltd, a leading cashew nut processor, said the shortage of raw cashews in the domestic market is nothing new for the Vietnamese industry.

He noted that the larger cash heavy businesses in the domestic industry squeeze out the smallholders by buying up all the higher quality nuts at the start of the year and storing in inventory.

Strapped for cash, the smallholders aren’t in any position to compete for domestic produced nuts and the only good option for them is to rely on imports from Africa or close their doors and switch to growing other crops.

It’s important to keep in mind that Vietnam is not the largest producer of cashews, it is only one of the largest processors, and therefore highly dependent on imports, which greatly undermines its sustainability.

Ever since the disruptions to supplies during 2016, Vietnam ag has struggled to process enough cashews to satisfy the high global demand and prices started climbing as a result.

But because there are limited cashew nut supplies, the Vietnam industry is in no position to cash in. Cashew exports from Vietnam have been estimated to have fallen 10% year-on-year during the first months of 2017.