The now-scrapped farm laws have helped Mangaluru emerge as a hub for the raw cashewnut (RCN) trade. This is because Karnataka was among the first States to implement the laws that were passed in September 2020 but scrapped in November last year following protest by a section of farmers in Punjab, Haryana and Uttar Pradesh.
As part of the farm reforms , the Karnataka government withdrew the agricultural produce marketing committee (APMC) levy on goods traded outside the market yard.
A levy of 1.5 per cent on the value of RCN traded, irrespective of whether inside or outside the APMC market yard, had put Mangaluru at a disadvantage before the farm laws came into force.
Highlighting the reasons behind Mangaluru emerging as the hub for RCN trade, K Prakash Rao, partner at the Mangaluru-based Kalbavi Cashews, told BusinessLine that the withdrawal of the APMC levy, the significant processing base in Karnataka and the logistical advantage from Mangaluru to major processing centres in the country are some of the reasons for Mangaluru emerging as a hub.
Rising imports
He said India imported around 8.5 lakh tonnes (lt) of RCN from East and West Africa last fiscal. Almost 50 per cent of that quantity came to Mangaluru. More than 1 lt of RCN was imported in the last one month itself. Estimating that India’s import may cross 10 lt this year, he said Mangaluru may import around 5 lt during the period.
Bola Rahul Kamath, proprietor of the Karkala-based Bola Surendra Kamath & Sons, said earlier traders avoided Mangaluru because of the additional 1.5 per cent expense they had to incur, though Mangaluru had several other advantages for the trade.
On the other advantages, he said many processing centres in Maharashtra, Goa, Kerala and Tamil Nadu are equidistant from Mangaluru making the transportation of the commodity easier. Earlier traders were dependent on Tuticorin for cashew trade.
Tukaram Prabhu, Managing Director of the Mangaluru-based cashew brand MMP (M Madhavaraya Prabhu), said Mangaluru has always been progressive in terms of processing. It was quick in adopting the latest available technologies in the sector.
Avoiding blind purchases
The trade is flourishing in Mangaluru after the withdrawal of APMC levy for the trade outside the market yard. Today the processors from other parts of the country can see the material in Mangaluru and then procure. The uncertainty factor of blindly buying a cargo from an international origin is also reducing. This is helping the processors a lot.
Prabhu said the withdrawal of the APMC levy has helped the government also as it is getting more revenue from the trade, and more people are getting employed in the cashew sector.
Santosh D’Silva, President of Karnataka Cashew Manufacturers’ Association (KCMA), said the traders have adequate warehouse facilities in Mangaluru. Some processors would not stock much, and they buy based on their requirements. Mangaluru ensures the availability of the commodity throughout the year.
Though the APMC levy was being collected earlier, it was not of much use for the farmers in Dakshina Kannada and Udupi districts, as the amount was not spent on improving cashewnut production in the region, D’Silva said.
Asked if the trend would continue considering the fact that some African countries are encouraging processing facilities in their own countries, Rahul Kamath said world cashew crop is growing, though some countries are encouraging domestic processing of the commodity.
Stating that the world RCN crop is around 40 lt, he said Mangaluru imported around 3.5 lt of that last year, and that is not even 10 per cent of the world crop. Vietnam is importing around 15-16 lt. Though there will be problem on a long-term, he did not see any issues in the short-term.
Tukaram Prabhu said there is a need to focus on increasing the domestic production of RCN, if the trend has to continue in the long-term.
Prakash Rao said India’s RCN production was 3.45 lt in 2021-22. Of this, Karnataka’s share was 82,500 tonnes.