The second wave of Covid has dampened the spirits of the cashew processing sector, which was looking forward to a better 20201 after being battered by the first wave last year.
Highlighting the trend in consumption, K Prakash Rao, Partner at the Mangaluru-based Kalbavi Cashews and former Chairman of the Mangaluru chapter of CII, told BusinessLine that the demand for dry fruits had gone up across the world post-first Covid wave.
“We have to presume that people are looking to eat healthy stuff, probably with an eye on boosting immunity. The consumption for almonds and cashews is really growing very fast,” he said, adding that Europe has been growing at around 8-8.5 per cent on an average, and India at around 4-5 per cent. Though production was disrupted last year, the cashew sector here still managed to witness growth.
“In this background, we were anticipating that the 2021 season would be smooth for us and we would be looking at a very positive season. Unfortunately, the second wave hit us again in March and it was again during our procurement season,” he said.
Procurement
Rao said the prices were stable for raw cashew nuts in East and West Africa and in India this year. West Africa started offering at $1,350 a tonne for Benin origin. In India, the market opened almost at ₹110-115 a kg.
With the arrival of the crop in the country during April-May, prices underwent correction and dropped to ₹100-105 a kg. However, the unusual pre-monsoon showers early in the season damaged the crop. The prices also dropped as the quality also affected, he said.
This year, the prices of raw cashew nuts (RCN) averaged around ₹125 a kg in Goa, at ₹115 in Maharashtra, around ₹105 in Kerala, and about ₹95-105 a kg in Karnataka.
Rao said the crop got washed away during April-May. “Many people say that is the reason why we may see a drop in the seed volumes by almost 20 per cent,” he said.
This may impact the pricing of the cashew kernels and the availability of RCNs, if the industry functions normally.
If Vietnam and India are unable to process cashew throughout the year due to the Covid pandemic, then the 20 per cent shortage may not really matter. “But at this point of time, we are anticipating that most of the Indian manufacturers have not covered their requirement beyond August,” he said, hinting prices hardening for the raw cashew nuts if Covid is not brought under control.
Vietnam imports
To a query on the import scenario for raw cashew nuts, Prakash Rao said there are no consolidated figures as of now. However, Vietnam has really increased its imports by almost 20-25 per cent. “That is a big number we are seeing from them, which means India has imported much less than what it did in the last year,” he said, adding that cashew manufacturers in India normally process about 1.5 million tonnes a year. But if Vietnam’s aggressive import continues, then Indian processing may go down to 1.3-1.4 million tonnes, he said.
India is having huge problems getting goods from Africa to India because of non-availability of containers at destination in Africa, and the ocean freights have almost doubled in many voyages. This has also impacted the imported seed prices, he said.
Subraya Pai, former President of Karnataka Cashew Manufacturers’ Association (KCMA), said that the imported nuts are becoming costlier day by day because of Vietnam’s heavy purchase in Africa. Since Vietnam does not have serious Covid problems, it has increased the production rapidly and is catering to export markets, he said.
Consumption
Prakash Rao said though there was no national lockdown in India, the States took their decisions of locking down individual cities which had high positivity rates.
Some of the major markets such as Jaipur (Rajasthan), Indore (Madhya Pradesh), Mumbai and Delhi are in lockdown at this point of time.
Even though there are channels where demand exists, logistics partners are operation fully. Even the door-to-door courier services are facing a lot of problems. They are not able to deliver the goods in their transshipment points because of the lockdowns. Their warehouses are full and that is the reason why they are now not operational, he said.
Santosh D’Silva, President of KCMA, said that the sales of ‘brokens’ grade got dented due to the curtailment and cancellation of weddings and other such celebrations. On the other hand, sales of ‘wholes’ grade were on a good upswing due to increasing awareness of the health benefits of cashew. He said processors from Mangaluru were also able to shift their sales from the bulk packs to consumer packs. Limited kernel stocks, both in the manufacturing units and at the consumption centres, kept the kernel market buoyant and active, he said.
Subraya Pai said that almost every State producing cashew – Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Odisha, and West Bengal – is under lockdown.
Since the consuming States are also badly hit by Covid, it is very difficult to predict the future, he added.