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The cashew industry overcomes challenges to take advantage of EVFTA

After nearly 30 years of participating in exporting, Vietnam’s cashew industry has gradually growing, being one of our country’s main agricultural export products. However, toward sustainable development, the industry still needs to put more effort to breakthrough.

Great potential

Cashew Anacardium Occidentale L belongs to Anacardiaceae family, in the Order Rutales. Cashew trees is grown well and cultivated extensively in equatorial countries, because of its warm and humid climate. In Vietnam, the plant can be seen from Quang Tri to southern provinces of the country. According to the Agency of Foreign Trade(Ministry of Industry and Trade), the Vietnam’s total cultivation area of cashew in2020 was about 34,000 hectares. Binh Phuoc is the most abundant cashew nut producing area in Vietnam with137,68 hectares of cashew trees. In the crop year 2019, the province had produced140,688 tons of cashew nuts. According to data provided by the Ministry of Agriculture and Rural Development, within the first 2 months of 2020, Vietnam’s export volume reached 46,000 tons, with an export turnover of322 million USD.

The cashew industry in Vietnam is a productive industry that promises vast opportunities due to the rising demand of customers for cashew nuts. The Government and the Ministry of Agriculture and Rural Development have particularly shown interest in the recovery and sustainable development of cashew production.New varieties of cashews with high yielding potential and high quality has been released, planted by high yield intensive farming techniques, which results in high crop yield of 3-5 tons/ha. As the promising results were verified by several farmers in Binh Phuoc and Dong Nai, the varieties will bep romoted and replicated in production.

The Ministry of Agriculture and Rural Development has established the Cashew Research and Development Center under the Institute of Agricultural Science for Southern Viet Nam, which is focusing one valuating and selecting good cashews lines/varieties as well as researching on cultivation techniques in order to create high-yield farms with production of3 tons – 5 tons/ha; good quality, suitable for each ecological region of the South.Cashew varieties with high quality are selected and distributed to agro-ecological zones in Southern region based on suitability.

Cashew processing industrial establishments have the capacity to process 100% of the domestic production and annually import hundred thousands tons of cashew to use up their designed capacity. The results of researches on improving of technology and equipment innovation capability has allowed mechanization and automation be made more available to manufacturers with lower investment cost than importing equipment, thus enabling them the opportunity to access the global market.

Having high competitiveness and low production cost while maintaining high production quality, Vietnam’sraw cashew nutsexport has an excellentreputation inproviding high quality cashews tothe world market. Once the processing designs and quality of cashew plants are improved to meetinternational quality management standards, it will help enhancing the competitiveness of Vietnam cashew-nut in the international market.

Lessons learned from 30 years of development of cashew industry, especially science and technology and technical progress, will be widely applied in production, processing cashew, and at the same time with awareness and understanding of cashew, will be the key factor for firmer drivers of sustainable growth.

Products processed from cashew: cashew kernels and cashew nut shell oil of Vietnam are identified as export products with a high competitive advantage when Vietnam enters the world economy, so the State, the business prioritizes more comprehensive investment.

With many favorable factors, Vietnam’s export cashew have a great opportunity when we go to the world if we can ensure the source of quality materials and focus on sustainable development.

The problem of product quality

There are many potential, but industry cashew faces three major challenges: raw materials, processing, and market access.

First: The challenge of input materials

It is found on the most difficult of current cashew is dependent on 70% raw materials from outside; next to is the current productivity cashew is low compare to another tree; Besides, the country has more than 480 processing factories, but only 20% of factories have the depth of chain processing; Besides, do not make full use of another scrap from cashew.

Besides, due to climate – weather has been and will be complicated, pests and diseases cause cashew damage, reducing productivity is always a constant difficulty for the cashew industry. Also, the area currently planted to cashew will be narrowed down due to the conversion to the construction of industrial zones, urban areas, rural residential land, and other specialized lands; On the other hand, some basalt soil or cashew growing gray soil with layers ≥ 1 m thick, low groundwater level, slope <15o will be converted to other farming systems with higher efficiency cashew (rubber, specialty fruit trees, pepper, …). Therefore, the area planted to cashew is at risk of shrinking.

The cashew is that perennial trees (1 year of new planting, 2 years of KTCB and business period ≥ 20 years, even if there are 50 years old trees still give high yield), cutting old quality gardens to plant new high yield, pairing with farming is a big obstacle that cannot happen on a large surface and takes 10-15 years.

Second: Technical challenges

To meet export standards, it is essential to change technology and technology. Although cashew yield in our country is high, cashew nuts are small. To implement cashew restructuring, we need to be planted with new varieties with higher yield and resistance to pests and diseases than previous varieties. Specifically, the productivity of cashew must increase by a half or double compared with now. The production process is done in organic cleanliness and organic, adapting to key sub-regions such as the Southeast, the Central Highlands, and the South Central.

Along with the development of new quality cashew varieties, the cashew industry also focuses on deeper processing, enhancing the value of cashew products.

Third: Challenges in human and financial resources

A major challenge of the cashew industry is that most of our country’s cashew businesses are small and medium-sized in the form of cooperatives. Access to capital investment in production still faces many difficulties or lacks a sustainable mechanism to provide funding, making it difficult for the competition.

In addition, the cashew processing industry is the abuse of live labor, while the labor market is tending to shift to high and stable income industries. The labor scarcity in cashew processing enterprises in provinces with concentrated industrial zones and developed services is huge. Some cashew processing facilities may have to close or relocate due to difficulty hiring labor and high labor costs, resulting in cashew processing with little or no economic benefit for the business.

Opportunities for sustainable development

The EVFTA Agreement not only opens up opportunities for growth in exports of Vietnam’s agricultural, forestry, and aquatic products to the European market, including the cashew industry. This is an opportunity for the cashew industry to reproduce towards sustainable development. Since then, improving quality, especially helping Vietnam cashew nuts closer to the European market’s strict standards. In particular, the real value received is the high selling price and strong export turnover thanks to the quality of the product, not depending entirely on the output as in many traditional markets today.

To do so, Vietnam needs to increase the application of eco-equity technologies and practices in the cashew industry’s SMEs and cooperatives (MSMEs for short); Promote the development and diversification of eco-fair products.

Promote sustainable consumption; Enhance the capacity of intermediaries to promote sustainable production, sales and consumption through an electronic platform; Increasing the market share of eco-fair and technology-based products in Europe and Asia;

Enhancing access to green finance for MSMEs; Create an enabling environment for sustainable production and consumption by calling for sustainable production and consumption policies and eco-equity policy dialogue.

Besides, it is necessary to improve management capacity, labor quality, and professional skills of workers in cashew processing establishments; carry out product diversification from cashew and cashew; Applying cleaner production and energy saving will significantly reduce the cost of cashew processing.

Currently, in Binh Phuoc, many businesses set up cooperatives to grow clean, organic cashew for export. This is also a direction to strongly develop the cashew industry. With this approach, businesses can carry out traceability from farm to table, cleaner production and deeper processing, and develop the stronger domestic market.