Reconfigure the global cashew supply chain to prevent disruptions

Speaking at the conference, Pham Van Cong, Chairman of VINACAS, stated that since its inaugural event in April 2008, the International Cashew Conference has always been a crucial trade promotion event for the Vietnamese cashew industry, serving as a "golden rendezvous" for global cashew entrepreneurs.

The event aims to promote the brand of Vietnamese cashew products, boost exports, stimulate consumption, and build and strengthen sustainable, long-term relationships among businesses, the Vietnamese Cashew Association, and the world.

Numerous risks

In 2022, 2023, the global supply chain, including the cashew industry, has gradually recovered from the Covid-19 pandemic. However, alongside the severe aftermath of the pandemic, the global economy and society have been significantly affected by the conflicts between Russia-Ukraine and Israel-Hamas. High inflation worldwide, central banks implementing tight monetary policies, stagnation in the global economy, and declining consumer purchasing power have strongly impacted the cashew industry in Vietnam and globally.

Cong stated that the export price of Vietnamese cashew kernels had already decreased significantly in previous years and continued to decline sharply in 2023. The prices of cashew kernels from other major producing countries such as India, Ivory Coast, and Brazil also saw substantial decreases.

Meanwhile, although the price of raw cashews also decreased, the rate of decrease was much slower compared to cashew kernels despite a significant increase in raw cashew production. This phenomenon has not only occurred in 2023 but has been present in previous years. The reasons are not only due to bidding competition among processors but also because some countries stipulate minimum export prices, impose taxes, and various fees on raw cashew exports.

The higher cost compared to the selling price has caused most cashew processing and exporting businesses in Vietnam and other countries to incur losses or have no profit. Many processing businesses have had to temporarily suspend operations or reduce production.

The risk of mass closures is imminent. The continuous decrease in cashew prices also significantly affects importers, causing them to be less willing to sign long-distance purchases as before and mainly opt for short-term delivery. Additionally, there are concerning signs regarding the quality and food safety of both raw cashews and cashew kernels, such as pesticide residues and high moisture content in raw cashews, mixing old crop raw cashews with new ones, and insect infestation in cashew kernels in some factories.

Vietnam is the hub of the global cashew supply chain, importing nearly 65% of the world's raw cashew nut production and accounting for nearly 80% of cashew kernel exports. "If a situation of mass factory closures occurs, the global cashew supply chain will be broken, leading to a shortage of cashew kernels in the market and an excess of raw cashews.

Thus, it will cause overall damage to the cashew supply chain and lead to many repercussions, with the greatest risk being that farmers in many countries will abandon cashew trees due to the inability to sell raw cashews. If farmers become indifferent to cashew trees, it will have a significant long-term impact on the global cashew supply chain," Cong expressed concern.

To reshape the global cashew supply chain

To stabilize the cashew industry in Vietnam and globally, Cong expected the 13th Vietnam International Cashew Conference to provide solutions to reshape the global cashew supply chain. This will contribute to the strong and sustainable development of each business, each cashew industry in each country, and the global cashew industry.

In line with Cong's views, Michael Waring, Chairman of the International Nut and Dried Fruit Council (INC), stated that the global cashew industry needed to come together to boost consumption demand in the market. Regarding the INC's efforts, Michael Waring said the INC would increase global consumption to ensure a healthy balance between supply and demand.

Furthermore, the INC prioritizes health and nutrition research activities to promote various types of nuts and dried fruits globally. The INC will also collaborate with international organizations to enhance market access and overcome challenges posed by trade barriers and supply chain issues.

Observing the global cashew market since2018, Adama Coulibaly, CEO of the Ivory Coast's Cotton and Cashew Council (CCA), has also noticed the continuous decline in cashew nut prices, leading to a decrease in the price of raw cashews.

During the same period, however, cashew nut prices sold to consumers at supermarkets and stores have increased. This inconsistency and unfairness in the cashew industry value chain. “It requires a responsible industry that benefits all parties involved," emphasized Adama Coulibaly.

Currently, Ivory Coast is the world's number one raw cashew producer, accounting for 25% of global raw cashew nut production, with a production volume of 1.25 million tons in 2023. Vietnam is the largest buyer of Ivorian raw cashews, accounting for about 65-85% of annual production. Adama Coulibaly noted that Ivory Coast was actively attracting investment in the cashew processing industry by offering incentives to investors.

Source:Custom News