Cashew Industry Faces Challenges: Import Costs Soar as Farmers Switch to Durian

The Vietnamese cashew industry faces a paradox. Despite being the world’s leading exporter of cashew kernels, the country has spent nearly $2.3 billion on raw cashew imports over the past seven months. A shrinking domestic supply and farmers replacing cashew trees with durian are at the heart of the issue, raising concerns about the industry’s sustainability.

Vietnam’s Growing Reliance on Cashew Imports

According to preliminary data from the General Department of Vietnam Customs, as of August 15, Vietnam exported nearly 451,600 tons of cashew kernels, earning $2.55 billion. This marks a 25.2% increase in export volume and a 22.6% rise in value compared to the same period last year. In 2022, Vietnam’s cashew exports reached 644,000 tons, valued at $3.64 billion, maintaining the country’s position as the world’s leading cashew exporter for nearly two decades.

However, due to the limited domestic supply, approximately 90% of the raw materials used in Vietnam’s cashew industry are imported from Africa and Cambodia. In 2023, Vietnam imported around 2.77 million tons of raw cashews, worth $3.19 billion—a 46.2% increase in volume and a 19.6% increase in value compared to the previous year. From January to August 15 this year, the country spent nearly $2.3 billion on importing approximately 1.88 million tons of raw cashews, a slight increase from the same period last year.

The Impact of Import Dependency on the Industry

Vietnam’s heavy reliance on imported raw cashews poses significant challenges. Earlier this year, soaring cashew prices led to demands for higher prices or order cancellations by suppliers, causing domestic cashew processing plants to face material shortages. Additionally, the Binh Phuoc Cashew Association recently raised concerns about low-quality cashew products being falsely marketed as Binh Phuoc cashews online. These cheaper imported cashews from older crops were of poor quality, containing worm-infested and moldy nuts that lacked the distinctive flavor of Vietnamese cashews and posed potential health risks to consumers.

The Vietnam Cashew Association (Vinacas) has expressed concerns that Vietnam’s leadership position in the global cashew supply chain is at risk due to the heavy reliance on imported raw materials. Cashew-growing countries in Africa and Cambodia are increasingly focusing on developing their domestic processing industries and reducing raw cashew exports. They are implementing policies to attract investments in cashew processing plants and imposing high export taxes on raw cashews while exempting processed cashews from taxes.

The Paradox: Leading Cashew Exporter Yet Increasing Raw Cashew Imports

Vietnam’s paradoxical position as the world’s leading cashew exporter while increasing raw cashew imports has created difficulties for local farmers. Many find it hard to sell their products, leading to a drop in the purchase price of fresh cashews. The low competitiveness of domestic cashews compared to imported ones and insufficient income have forced many farmers to cut down their cashew trees and switch to other crops, such as durian, which offers higher economic returns.

Over the years, Vietnam’s cashew cultivation area has steadily decreased. From 440,000 hectares in 2007, the total cashew area nationwide fell to 305,000 hectares in 2022 and further declined to 300,000 hectares in 2023, with a production volume of 347,600 tons.

Minister’s Reflections: A Bitter Reality

On August 21, during a question-and-answer session with the National Assembly Standing Committee, the challenges facing the cashew industry were discussed. Questions were raised about building a strong cashew brand and improving product competitiveness to stabilize production and exports, ultimately increasing farmers’ incomes.

Minister of Agriculture and Rural Development, Lê Minh Hoan, recounted a visit to Bu Dang (Binh Phuoc), where he observed farmers cutting down cashew trees to plant durian. He asked them why they were abandoning a crop that had been part of their lives for generations. The farmers responded straightforwardly: “Growing durian can earn us 1 billion VND per hectare while growing cashews only brings in about 35-40 million VND per hectare. What do you think we should do?”

The minister admitted that this response left him with a bitter feeling, as it highlighted the harsh realities faced by farmers. He emphasized the need to adapt to market dynamics and suggested that other economic tools be employed to support farmers.

Innovative Solutions: Diversifying Cashew Farms

In response to the challenges, the Ministry of Agriculture and Rural Development has introduced innovative agricultural extension models, such as growing red lingzhi mushrooms under cashew tree canopies. This approach aims to create multi-layered value in cashew farms, with the potential for high economic returns from mushroom cultivation. By increasing farmers’ incomes, these initiatives can encourage them to stick with cashew farming.

Furthermore, the Binh Phuoc Young Entrepreneurs Association members are diversifying cashew processing, focusing on developing One Commune One Product (OCOP) items from cashews. Establishing strong links between cashew farmers and processing enterprises can help stabilize the industry and address the issue of Vietnam’s reliance on imported raw cashews.

Conclusion: A Call for Sustainable Development

Experts believe that businesses must establish their own raw material supply regions for any industry to stabilize production and achieve sustainable growth. However, ensuring a stable income for farmers is crucial to achieving this goal. Without it, the cycle of “planting and cutting” will continue, and the industry’s sustainable development will remain out of reach. The future of Vietnam’s cashew industry depends on innovative solutions, strategic changes, and the commitment to supporting local farmers.

Source: Vietnamnet

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