'State, Centre will jointly address Kerala's cashew crisis'
mid-day speaks to S Kannan, executive director & secretary at The Cashew Export Promotion Council of India
Is it true that Kerala floods adversely impacted the cashew market at the local and international level? Also, do explain in figures the state-wise contribution at the national level.
Due to substantial increase in the raw nut price as well as higher labour cost in Kerala and restrictions imposed by the banks, more than 700 cashew processing units out of the total 834 were closed. Around 50 units are on the verge of closure. This has also reflected in the export of cashew kernel. From April to June 2018, the estimated export was only 14,330 MTs as against 23,000 MTs reported during the corresponding period last year, a dip of around 38 per cent.
Sources tell me most of the cashew dealers from Kerala have moved out of the business post the floods, and some cashew processors have even committed suicide. What measures are being taken to prevent such a situation in the future?
Abnormal increase in raw nut price has invited huge operational finance, forcing small entrepreneurs to pledge their houses as collateral security. After 2014-15, the processing in Kerala has become non-viable largely due to the state government increasing wages by 35 per cent, which has resulted in an increase in the cost of production by 45 per cent, including perks. Also, limited finance/restrictions imposed by banks have led to reduction in production and increase in overheads. This increased the interest burden, which drained the operational finance, and units ended up in bankruptcy. The crisis is to be addressed jointly by the state and central governments with active involvement of trade unions and financial institutions. Bankers have been requested to share the interest burden by 50 per cent. The balance is expected from the state government.
How is the international market for cashew at present?
Due to reduction in the raw material price from $2,000 per MT to $1,400 and adequate carry over stock of previous year's crop from major producing countries, the prices are expected to continue at this level. The situation is expected to improve the raw material availability for processing and opening many of the closed units, which will result in more employment opportunities and additional production to feed the market.
What about the demand for cashew this festive season?
The cashew industry is expected to get a better response in the domestic market. The GST problem prevailed earlier has been subdued. However, surge in import under preferential/Free Trade Agreement largely by mis-declaration is also disturbing the market and depressing the price level. Customs officials and CEPCI have taken adequate measures, including sampling and testing, to control import by improper means.
Lastly, how has the dollar v/s rupee battle impacted export and import?
Because the cashew industry is largely dependent on import of raw cashew nut, rupee depreciation will affect importers. From April to July 2018, India has imported around 4 lakh metric tons, as against the normal requirement of 8-9 lakh MTs; the depreciation in rupees may affect the outflow. Export of kernels during the next three months is not expected to be better than that in the previous period.
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