Cashew industry: Time to make a bold move

“Thousands are engaged in the cashew industry,” said Nguyen Duc Thanh, chairman of Vinacas, in a key speech at the forum. More than half are farmers who cultivate the crop, while the remainder are involved in import, export and processing activities in an estimated 1,000 businesses nationwide.

Mr Thanh pointed out that though the industry has been a major player in the global market, accounting for a 40% market share of processed nuts, it currently lacks long-term profitability and sustainability.

The primary constraint that stakeholders face, undermining their efforts to realize the full trade potential for cashews is lack of access to credit to obtain working capital to expand domestic production.

This in turn has led to an overdependence on import of raw nuts from Africa, said Mr Thanh, which are more often than not, of low quality and riddled with contamination from aflatoxins.

Over the past few years, the industry on the whole has imported well over half of its annual requirements for raw nuts from foreign markets, principally from the African continent.

Last year, Mr Thanh said, official statistics show the industry imported some 800,000 metric tons of raw nuts.

The African cashew industry is also, he observed, notoriously dogged by issues related to quality.

Aflatoxins contamination, he noted, particularly as it relates to imports from Africa, is a trade issue that needs to be tackled with urgency, as it takes a heavy toll, imposing enormous industry-wide costs.

“Since the beginning of the year, our company has been plagued by contaminated shipments of product from Africa,” said Ta Quang Huyen, director of the Hoang Son I Limited Company.

At US$100-150 per metric ton, one contaminated shipment can be financially devastating and several can send a company spiralling into bankruptcy.

Bach Khanh Nhat from Vinacontrol in turn pointed out that aflatoxins are difficult to detect without the use of complex technology, which most domestic businesses don’t have access to.

Currently, available diagnostic technologies – including rapid diagnostic strips and ultraviolet absorption assessments – are not only expensive but are not portable enough to be used in the field.

What’s needed, said Mr Nhat, is the newer technologies like infrared spectroscopy, an ‘electronic nose’ that can predict and semi-quantify aflatoxin levels using an application available on a mobile phone.

In addition, as it now stands, stakeholders have little recourse against African companies who sell contaminated product— as there really are no practical legal remedies to get monetary refunds for the damages.

The simple fact is that most African countries do not have policies, standards, or regulations to control aflatoxins, and those that do have them, lack adequate enforcement mechanisms.

Currently, it is estimated that contamination damages from loses due to aflatoxin contamination costs the Vietnam industry in the hundreds of millions of US dollars annually.

One possible alternative to developing a reliable source of raw product from Africa is for more Vietnamese investors that possess the financial wherewithal to take the bold move and invest in the cashew segment of the African economy, said the Chairman of Vinacas.

Africa has a great need for high capacity cashew processing plants, warehousing facilities and technical assistance he said, and Vietnam is well equipped to fill that need with highly qualified entrepreneurial talent.

The situation is ripe for the taking as there are many challenging, tremendous opportunities for enterprising Vietnamese business men and women to investigate and capitalize upon.

Investment in the African cashew industry, he said, would bolster its sustainability, help diversify Vietnam agriculture, synergize trade efficiency between the two economies and boost incomes for farmers and other industry stakeholders.