Indians are munching more cashew nuts than ever before, compelling manufacturers and processors to shift their focus to the domestic market from shrinking exports.
India has been the biggest consumer of cashew in the last few years, but consumption had taken a beating when COVID-19 hit the world in 2020. As lockdowns were lifted and the economy stabilized, people turned more to health foods, which included nuts as well, to develop immunity.
The booming domestic market has galvanized the cashew processing industry, hitherto confined to southern states, to expand to other parts of the country.
Consumption in India is over 300,000 tonnes a year, said Pankaj M Sampat, director of Mumbai-based Samson Traders. It had been hovering around 200,000 tonnes before the pandemic.
Raw nut imports
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As India’s cashew production has not increased in tandem with rising demand, the country has been importing more raw nuts from Africa to bridge the widening gap. Over 60% of its raw nut requirement is met through imports.
According to provisional figures of the Directorate of Cashewnut and Cocoa Development (DCCD), India produced 750,000 tonnes of cashew in 2021-22. Import of raw cashew touched 939,000 tonnes during the year.
“But the way consumption has been going up, the imports will touch 1 million tonnes this year. India’s cashew processing capacity has gone up to 1.8 million tonnes from 1.5 million tonnes earlier,’’ said K Prakash Rao, managing partner at Kalbavi Cashews.
One distinct trend that has emerged after the outbreak of the pandemic is the dwindling market for premium cashews.
“The market has become price-sensitive, probably because people are spending less after COVID-19. While there is a huge demand for cheaper cashews, we are finding it difficult to sell premium ones,” Rao said.
As a result, the prices of premium nuts have dropped from Rs 950-1,200 per kg to Rs 700-850 per kg. Cashews in the range of Rs 550-650 per kg have become a big draw.
Satheesh Nair, CEO of India Food Exports which sells the Delinut brand of cashews, said sales had increased by 30-40% from the previous year.
“Our brand sales have increased. We have tie-ups with Indigo, Go Air, Tata Starbucks, Tata Trent, Barista etc. Our bulk cashew sales are also doing well,’’ he said.
Manufacturers are hoping that local prices will move up in the second half of the year when the festival season begins.
Declining cashew exports
Indian cashew exports started declining before the outbreak of the pandemic as Vietnam gained a competitive edge over India and other countries. From around 100,000 tonnes eight years ago, exports plunged by half. In 2021-22, India exported 51,908 tonnes, according to DCCD data.
Vietnam’s local cashew consumption is low and by containing the production cost through widespread mechanization, the country has risen to the position of top exporter of cashew nuts in the world.
“Vietnam probably exports in a month what we are exporting in a year,’’ Nair said.
Processor-exporters stand to make more money if they sell what they are exporting in the local market.
“A 20ft containers may have 15 tonnes of cashew. By selling that quantity in the domestic market we can earn Rs 5-8 lakh more,’’ said P Somarajan, MD of Kailas Cashew Exports.
Imposition of a 10% duty on raw cashew imports and reduction in the export incentive from 6% to 2.15 % have discouraged exports, making Indian cashew uncompetitive in the global market, he pointed out.
As raw nuts have been purchased at high prices of $1,400 to $1,600 per tonne for processing, exporters are unable to sell cashew kernels at lower prices even though Indian prices are above those of Vietnam in the global market.
“Our prices are at $3.50 per pound compared to $2.8 to 3 per pound of Vietnam. Our prices have not increased further as raw nut shipments that have been held up in the ports have started arriving,’’ said Sampat.
The increase in cashew nut consumption is not limited to India. Market intelligence and advisory firm Mordor Intelligence says the global cashew market is projected to register a compound annual growth rate of 4.6% in the next five years.
There is a global trend that looks favourably at vegan and plant-based diets. People who embrace a plant-based vegan diet prioritize alternative sources of protein, instead of those derived from animals, resulting in soaring demand for nuts and nut-infused foods.Moreover, nowadays, cashews are used in muesli, energy bars, cookies, chocolates, and ice cream