How will cashew exports be like in 2024?

Processing cashew kernels for export at Long Son Company. Photo: N.H

Exports increased but were ineffective

According to statistics from the General Department of Customs, in the first eleven months of 2023, Vietnam's cashew exports reached 2.66 million tons, worth US $ 3.07 billion. Compared to the same period last year, cashew exports recorded a growth of 46.5% in volume but in value only increased by 19.2%.

The above data shows a very sharp decline in cashew export prices.

Mr. Vu Thai Son, Chairman of Binh Phuoc Cashew Association, Chairman of the Board of Directors and General Director of Long Son Group - Vietnam's leading enterprise in processing and exporting cashews, shared that everyone thinks that after Covid-19, everything will change. Things would have gone smoothly, but in reality it didn't happen that way. Because during the Covid period, countries bought a lot of cashews due to concerns about supply disruption. When Covid ended, consumption began to decline, combined with the Russia-Ukraine war, causing purchasing power in the US and Europe to decline. Low purchasing power has pulled prices down, making 2023 an ineffective business year for most cashew businesses.

“Long Son's export market share to Europe decreased because buyers paid too low prices, a decrease of up to 10% compared to the previous year. While the price of raw materials purchased at the beginning of the season is high, combined with increased interest costs, most businesses are operating inefficiently this year. Particularly in Long Son, interest costs in 2023 are twice as high as last year, because the USD loan interest rate in 2022 is only 3-3.5%, but this year the interest rate is up to 5.5-6%, even sometimes it even exceeds 6%" - Mr. Vu Thai Son said.

Analyzing this further, Mr. Son said that most Vietnamese cashew businesses had to borrow from banks to buy raw materials to reserve at the beginning of the year. High raw cashew prices combined with bank interest rates create significant financial pressure. Therefore, after production, cashew kernels will be forced to sell to collect money to repay bank debt. Meanwhile, businesses do not have warehouses to store cashew kernels. This is one of the factors influencing the price of cashew kernels to go down. “Due to the pressure to sell cashew nuts quickly to collect money, businesses have to lower their selling prices, even lower them many times, accepting selling at a loss to sell the goods. When prices are low, customers buy again. Therefore, export volume is increasing, while the price chart is always going down" - Mr. Son said. Specifically, at Long Son Company, the selling price of W320 cashew nuts is US $2.6 /lbs (0.45kg) in 2022 but this year it is down to only 2.33-2.35 USD/lbs.

2024 is expected to be brighter

Looking back at developments in 2023, it can be seen that consumption was quite difficult in the first months of the year, but towards the end of the year, the situation became brighter, showing that consumption in countries is gradually improving. Particularly in Asian countries, purchasing power is good. From that reality, businesses predict that the consumption situation in 2024 will be better than 2023.

However, according to Mr. Vu Thai Son, to achieve success in 2024, Vietnamese cashew businesses need to unite together to buy raw materials at low prices. "If there is no solidarity, no matter how favorable the market is, the price of input materials is too high and it will be ineffective" - Mr. Son said. Specifically, Vietnamese cashew businesses need to agree to reduce factory capacity to put pressure on raw cashew suppliers to lower selling prices. Because currently, factories want to run at full capacity, causing the demand for raw cashew nuts to always be high, pushing up raw material prices.

Regarding the prospects of markets in 2024, analysts assess that Asia will be a key market for the cashew industry because it is less affected by wars. The US market is also forecast to be good. Some customers of the Vietnamese cashew industry in the US said purchasing power has begun to improve and inventories are decreasing, showing that the US economy has shown signs of recovery. The European market in particular is forecast to continue to face difficulties due to high inflation and people's purchasing power is weak.

Japan and Korea are two new markets that the Vietnamese cashew industry has only recently penetrated since the Covid-19 pandemic. Previously, buyers in these two markets bought cashew nuts from India, but the fact that Indian factories stopped production during the pandemic has created opportunities for Vietnamese businesses. Currently, customers here highly appreciate Vietnamese cashew nuts in both price and quality, so the potential in the future is huge.

Overcoming limit ations and take advantage of market opportunities, cashew industry enterprises are making efforts to invest in machinery, equipment, and automation to reduce production costs, and at the same time make efforts to convert to meet the requirements of the market. new market demand. As at Long Son Group, printing information with ink on cashew boxes had to be replaced by laser engraving to not affect the environment. In addition, Long Son also invested in a rooftop solar power system to demonstrate to customers how to reduce the use of electricity from fossil energy...

In addition to the above autonomy, businesses also want to have more open loan support policies and flexible mechanisms in collecting foreign currency when exporting, specifically selling to any market to collect foreign currency that market.