The State of Vietnam’s Cashew Industry: Challenges and Solutions

In the first seven months of this year, Vietnam spent nearly $2.3 billion importing raw cashew nuts to meet production and export demands. This situation highlights a concerning reality: the domestic supply of cashew nuts is increasingly insufficient. One primary reason is that many farmers are switching from cashew cultivation to more economically viable crops, such as durian.

Causes and Current Situation

According to preliminary statistics from the General Department of Vietnam Customs, as of August 15, Vietnam exported nearly 451,600 tons of cashew kernels, earning $2.55 billion. Compared to the same period last year, the volume of cashew kernel exports increased by 25.2%, and the value rose by 22.6%. Despite Vietnam maintaining its position as the world’s leading cashew kernel exporter for nearly two decades, approximately 90% of the raw materials used in production have to be imported, primarily from Africa and Cambodia. This reliance on imports is due to the shrinking domestic cultivation area, which cannot meet the growing demand.

The area dedicated to cashew cultivation in Vietnam has significantly decreased, from 440,000 hectares in 2007 to just 300,000 hectares in 2023. The primary reason is that the profitability of cashew farming is much lower than that of other crops. For example, durian farming can generate an income of around 1 billion VND per hectare, whereas cashew farming only brings in about 35-40 million VND per hectare. This considerable income disparity has led many farmers to cut down their cashew trees to plant durian, putting further pressure on the domestic supply of cashew nuts.

Consequences and Challenges

Vietnam’s heavy reliance on imported raw materials makes the cashew industry vulnerable to price fluctuations and supply chain disruptions. Earlier this year, cashew prices soared, and some international suppliers either demanded higher prices or canceled orders, causing difficulties for domestic cashew processing factories.

Furthermore, the lack of strict quality control on imported cashews has led to substandard products being mislabeled as Vietnamese cashews and sold widely in the market. These low-quality products may contain insects or mold, posing health risks to consumers and tarnishing the reputation of Vietnamese cashew brands.

Proposed Solutions

To address these challenges, experts suggest that the cashew industry adopt strategic measures to reduce reliance on imports and enhance value-added production. During a recent session of the National Assembly Standing Committee on August 21, delegates emphasized the importance of building a strong cashew brand and improving product competitiveness to stabilize production activities and increase farmers’ income.

Minister Le Minh Hoan mentioned the model of growing red lingzhi mushrooms under cashew trees as a solution to increase the economic value of cashew orchards. By creating multi-layered value within the same cultivation area, farmers can increase their income and be more inclined to continue cashew farming. Additionally, the Minister highlighted the need to promote the production of One Commune One Product (OCOP) items from cashew trees and establish robust supply chains linking cashew growers with processing companies.

Experts also stress that the Vietnamese cashew industry must establish stable raw material regions for sustainable development and ensure farmers’ profitability. Without guaranteed profits from cashew farming, the “plant-cut” cycle will likely continue, leading to instability in the industry.

Vietnam’s cashew industry is facing significant challenges, including raw material shortages and competition from other crops. To maintain its leading position and ensure sustainable growth, government and business support is needed in building raw material regions, improving product quality, and securing farmers’ incomes. Only then can cashew trees truly become a strategic crop, bringing economic value and upholding the reputation of Vietnamese cashews on the international market.

Source: Vietnamnet

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