Cashew sector earns low profits in global value chain

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Chairman of Vietnam Cashew Association (Vinacas) Nguyen Duc Thanh says last year, Vietnam still maintained its market share and gained more than 50% of the global export value with US$5.5 billion to retain its top place in cashew nut processing and export.

Cashew exports are estimated at 25,000 tons valued at US$256 million in January, up nearly 40% in volume and 56.5% in value against the same period last year.

Mr Thanh has attributed the achievement to the great efforts of businesses market diversification, and the consistent government policies of encouraging and facilitating the sector’s operations.

Last year, Vietnam shipped cashew products to 92 markets and secured good market shares in the US, Netherlands and China, especially with the emergence of new high-growth markets among ASEAN countries such as Thailand with a growth rate of more than 40% and over 20% for Singapore.

The government's incentive policies have creating favourable conditions for cashew exports, exporters of processed cashew nuts and importers of raw nuts. As a result, 95% of the processed cashew nuts are exported and just between 5-6% are sold in the domestic market.

However, Mr Thanh says, only a small number of Vietnamese businesses are benefited from the global value chain. Cashew growers enjoy a mere 18% of profits in the value chain while processors and exporters reap approximately 10% and the rest go to foreign retailers and supermarkets.

In sum, the total profits that Vietnamese cashew growers, processors and exporters get from the value chain are about 40% although they have poured huge investment, sources and capital into the business. Meanwhile the remaining 60% of profits go to foreign processors and supermarket owners.

To improve the situation, Vinacas has launched a program to stimulate domestic consumption and encourage businesses to process instant products. Over the last two years, a large amount of salty and honey coasted and wasabi cashew nuts have been exported to China. They are also much sought after by Australian and Japanese customers.