Export of cashew nuts faces difficulties post Covid-19

The difficulties caused by the Covid-19 pandemic caused the cashew industry to lower its export target of USD 4 billion set for the whole year. It is forecast that, in the future, although the Covid-19 epidemic is controlled, Vietnam's cashew exports will still decrease in both quantity and value.

One USD billion may be missed

According to MARD, cashew exports in the first three months of the year were estimated at 86,000 tons and USD 609 million, up 8.2% in volume but down 4.7% in value over the same period in 2019. The US, Netherlands and China remained the top three biggest cashew import markets of Vietnam, accounting for 35.4%, 12% and 6.1%, respectively. The average export price of cashew nuts in the first two months of the year reached USD 7,046 / ton, down 14% compared to the same period in 2019.

Mr. Pham Van Cong, Chairman of Vietnam Cashew Association (Vinacas) said that the cashew industry had just overcome the crisis period in 2018 and early 2019 with heavy losses. The evolution of the Covid-19 epidemic caused the industry to enter a very difficult period again and not to foresee the negative impacts on each enterprise and the whole industry.

“The quantity of exported cashew kernels and prices will sharply decrease; the plan of USD 4 billion in exports in 2020 of the Vietnamese cashew industry will have to be reduced. The specific reduction of the plan will be considered and adjusted by Vinacas Executive Committee, but I personally think it will probably reach only USD 3 billion,” Mr. Cong said.

The Chairman of Vinacas further analyzed that the world cashew industry, including Vietnam, is facing great and unpredictable challenges. China initially controlled the Covid-19 epidemic, but more than 180 countries around the world, including the US and Europe, are the main markets of Vietnamese cashew nuts. Africa is the main source of raw cashew nuts of Vietnam cashew processing industry – they also have to "fight" against the epidemic. The cashew industry in Vietnam and many countries in the world is at the time of major production and processing every year, so it must suffer the heaviest influence from Covid-19.

Exports decline after the epidemic

According to Vinacas, some customers ask factories to deliver goods as soon as possible because they are concerned that the upcoming transportation of goods in the world may be difficult due to blockades and isolation among regions as well as increases of freight fees. In addition, some customers recommend that the factories not sell off as they are doing now because when the price decreases continuously, psychology of buyers is afraid of falling prices and wants to wait for more. They also recommend that factories buy raw cashew slowly, when it sees a suitable price, which is also an opportunity to earn profits for this year.

Vinacas says supermarkets and importers are considering evaluating the impact of Covid-19 on the market and the grain industry to have a new trading strategy. Although they found the price to be very good, they bought a small amount, then waited a few days and paid lower prices to explore the market to see how much the price dropped.

Mr. Cong said that after the epidemic is under control, with devastation to the world economy, people will face many difficulties. Cashews are a by-product and will reduce their consumption compared to before. In this serious context, Vietnam's export of cashew kernels will certainly decrease in both quantity and turnover. The level of reduction also depends on when the epidemic is extinguished and how harmful it is.

With an optimistic view, the Import and Export Department (Ministry of Industry and Trade) said that cashew nuts are a daily food with high nutritional value, so even though it will be seriously affected by the Covid-19 epidemic and strong competition from other nuts, the demand will be still sufficient. According to market analysts, the cashew export market will recover after the Covid-19 epidemic. Enterprises can calculate the plan to boost exports for the last six months of this year. In particular, the potential from the EU market is huge.

The Import and Export Department recommends businesses to closely monitor the disease situation to have appropriate production and business plans, including purchasing raw cashew nuts, selling cashew nuts for processing and storing raw materials and finished products. At the same time, there are plans to transform trade promotion forms such as online promotion, connecting online businesses to maintain and develop the market even when epidemics are happening; ensuring that it can quickly restore all activities as soon as the epidemic is controlled and ends.

Vinacas recommends that in the future, factories should buy and sell slowly, update market information continuously from many sources to offer the most appropriate trading plans in the difficult situation and the competition of the cashew industry. This problem also means that businesses must pay attention to product quality to limit complaints from buyers and contribute to the sustainable development of Vietnam's cashew industry. In addition, the plant should also have a plan for 2021. This year, prolonged drought may mean a bad crop in 2021. Therefore, if the price is good and financially balanced, businesses can buy and dry it for use in the first quarter of 2021, avoiding passive dependence on crude sources of Tanzania and Indonesia, which are often at very high prices.