Cashew nut prices not going up despite higher Diwali demand

Cashew prices had fallen below Rs 600 per kg a few months ago, with largescale import of raw nuts, mainly from Africa into India, for processing into kernels.

Surplus availability has kept prices of nuts and dry fruits under check as consumption spikes with the onset of festival season in India.

Medium-range cashew nuts are selling in the Rs 630-680 per kg range.

Cashew prices had fallen below Rs 600 per kg a few months ago, with largescale import of raw nuts, mainly from Africa into India, for processing into kernels.

Usually, Diwali marks the peak period of consumption of tree nuts and dry fruits, which are widely used in confectioneries. They are also now increasingly being favoured over traditional sweets for corporate gifting on festive occasions.

Cashew and almonds are the largest consumed tree nuts in the country while other nuts and dry fruits, such as walnuts, pistachios, apricots, dates and raisins, have also become more popular in the last couple of years with the stress on healthy snacking after the outbreak of COVID.

India is the second-highest cashew producer in the world but its cultivation of other nuts and dry fruits is limited. Hence, the country has been relying more on the import of almonds, walnuts and other dry fruits to meet the rising consumption.

‘25% higher supply this year’

"There has been increased production of cashews and almonds in the world, leading to around 25 percent higher supply this year," said Rajmohan Pillai, chairman of Beta Group, a major manufacturer and marketer of packaged foods, including nuts and dry fruits.

However, processors and distributors are not gaining much as supply has outstripped demand. "There are more outlets and sales but prices have not gone up. This is because demand has risen by about 10 percent in the face of higher production," he said.

"People are consuming more nuts these days and we are seeing a 25 percent rise in sales this year. Cashew nuts, walnuts, and almonds are all much in demand," said Vijay Bhuta, president of Mumbai Dry Fruits & Dates Merchants Association.

Removal of tariffs another factor

Another factor which could raise the supply of nuts is the removal of additional tariffs on walnuts and almonds imported from the US in September this year. These were imposed in 2019 in response to the US decision to raise tariffs on steel and aluminum items from India. The US is the largest almond producer.

The economic cooperation trade agreement made with Australia last year could also pave the way for increased import of nuts to India from that country in the coming years as it proposes to gradually reduce duties on a string of items, including nuts.

Steady prices have added momentum to the sales. "The prices are reasonable and almost at the same level as in last year. Gifting of dry fruits has gone up both among the corporates and others," said Mukesh Dattani, a dry fruit merchant.

Where do prices stand?

India eats more cashew nuts than any other country in the world with annual consumption touching around 4 lakh tonnes.

"Unlike last year, when there was demand only for cheaper cashews, this time all varieties, including the premium segment, are witnessing good sales. As a result of the high demand, there is a dearth of premium cashews in the range of Rs 725 – 850 per kg and above," said K Prakash Rao, managing partner, Kalbavi Cashews.

Medium-range cashew nuts are selling in the Rs 630-680 per kg range. Cashew prices had fallen below Rs 600 per kg a few months ago, with largescale import of raw nuts, mainly from Africa into India, for processing into kernels.

The import of raw nuts, which used to be around 9-10 lakh tonnes, surged to 1.3 million tonnes in 2022-23 because of rising consumption in the domestic market. Domestic cashew production was 7.82 lakh tonnes for the year, according to official figures.

Shift from export to domestic sales

There has been a marked shift in the focus of Indian cashew processors from export to domestic sales, with the former showing a consistent decline in the last few years as Vietnam gained the upper hand in the global trade of cashew, with lower production cost and prices.

Cashew kernel export from India plunged by over 20 percent to 59,575 tonnes in 2022-23, as per the figures of Agricultural and Processed Food Products Export Development Authority (Apeda).

"Our cashew-processing capacity has increased to about 2 million tonnes, with units spread over most of the states. The surplus generated from the massive import of raw nuts is now getting absorbed into the market," Rao said.

According to Pillai, the Indian consumption of dry fruits and nuts is going up by 10 -12 percent per annum. Reports by health experts on the benefit of eating dry fruits and nuts have played a role in raising their consumption in India.

"Medical journals have been recommending intake of nuts to increase the amount of good cholesterol in the body. In social media diet plans, nuts have a significant presence for providing adequate nutrients and protein," said Prakash Nair, Vice President of Vijayalakshmi Cashews, a major processor and exporter of the nut. Besides, many international companies view India as a booming consumer market, he added.