Honesty is quality

Business News

Business News

Vietnam's cashew industry during the Covid-19 pandemic

12/09/2021 713 Viewed

Due to the impact of the Covid-19 epidemic, raw material prices are increasing abnormally, production is difficult, freight rates are increased by 3-5 times, there is a shortage of containers, and transportation is worrying.

Evolution of the average export price of cashew nuts in the period of 2019 - 2021

According to the reflection of cashew nut processing and exporting enterprises, in the face of the complicated situation of the Covid-19 epidemic, especially localities are tightening social distance according to Directive 16 of the Government, causing them to face difficulties. with a series of difficulties in the organization of production, circulation of goods... Many businesses only operate in moderation or even stop operating.

Fomexco Jsc production during the covid-19 pandemic

(Fomexco Joint Stock Company - production during the covid-19 pandemic)

The cashew nut production industry is one of the specific industries, most large enterprises sign contracts with partners in the form of a pillow. These companies are racing against time to complete the contract signed in 2020 to perform in 2021.

Mr. Nguyen Thanh Lam - CEO of Fomexco Joint Stock Company shared: "The difficulty the company in particular and the cashew industry, in general, is facing is to ensure production activities in the context of strictly implementing "3 on the spot". According to the regulations of the State, the operation is unprecedented, causing much embarrassment for enterprises".

In addition to the difficulty in meeting the "3 on-site" production activities, the company's customers are mainly customers from Europe and the US... Currently, the problem of freight transportation is also a concern. Cashew companies are mainly located far from Cat Lai port - Ho Chi Minh. To bring goods from the company to the port, they have to go through many localities and many strict quarantine checkpoints, causing difficulties and delays. The shortage of empty containers and increasing freight rates have greatly affected the production and business activities of companies.

Workers work "3 on the spot" of enterprises in the cashew industry in Vietnam

(Workers work "3 on the spot" of enterprises in the cashew industry in Vietnam)

The container rental fee from Vietnam has increased dramatically, in some places it has increased by nearly 6 times compared to the price at the beginning of 2020, the free storage time at the port yards has also shortened from 15 days to 7 days. Many businesses have to pay additional storage costs. Many businesses have registered to pack containers, but because of a shortage of containers, shipping lines are constantly late and delayed, many shipping lines delay 4 to 5 times (equivalent to 10-15 days).

Not only large enterprises, but difficulties are also covering small and medium cashew nut processing enterprises, so it is necessary to have a policy of "untie" for cashew businesses. According to businesses, besides the efforts of Enterprises, to untie the cashew industry in general and export cashew nut production and processing enterprises in particular, the Government needs to issue policies to "untie" businesses so that businesses can make the right choice. suitable to their conditions, rather than being forced to follow an inflexible model, so that enterprises do not disrupt the labor supply chain.

Cashew companies still try to maintain production and business activities and perform well in epidemic prevention. Although it has passed 2 times of separation under Directive 16 in the southern provinces and cities of Vietnam, the possibility of the epidemic may still be prolonged and complicated developments soon.

Control the means of entering and exiting the company at an enterprise in the cashew industry

(Control the means of entering and exiting the company at an enterprise in the cashew industry)

Enterprises suggested that the Vietnamese Government should consider supporting businesses that are maintaining production activities during the quarantine period, because during this time, maintaining jobs for workers is very difficult. Fees increased a lot. In addition, it is necessary to delay debt or be partially exempt from tax and social insurance. Quickly support the source of vaccines for factories that are implementing production and implementing the "3 on-site" option.

In the long run, because most of the cashew processing companies are small and medium enterprises, there is a lack of factory conditions, and the preservation of raw materials and products incurs great costs. Equipment and production technology of companies are old, outdated, degraded, new technology is expensive and difficult to access. Therefore, in the coming time, it is necessary to have supportive policies and synchronous mechanisms from the central to local levels to create conditions for the production and development of the cashew industry.

Inside a processing and export processing factory that is temporarily shutting down

(Inside a processing and export processing factory that is temporarily shutting down)

Mr. Pham Van Cong - Chairman of the Vietnam Cashew Association - VINACAS called on businesses in the cashew industry to unite, and the Government to focus all resources to prevent the Covid-19 epidemic. Vietnam's cashew brand has affirmed its prestige with the European and American markets, ensuring supply and maintaining product quality after the covid-19 pandemic will open many opportunities for the cashew industry to continue to develop. . What needs to be done now is to work with the Government to focus all resources on preventing the Covid-19 epidemic to return to production soon under new normal conditions.

Currently, Vietnam's cashew industry accounts for over 80% of the world's export of cashew kernels, of which 1/3 is exported to the US market. Faced with the risk of disruption in the supply of cashew nuts from Vietnam, on August 4, 2021, the President of the American Food Industry Association (AFI) sent a letter to the Prime Minister of Vietnam, proposing to prioritize the distribution of cashew nuts. vaccines to the workforce, agricultural production, and food processing workers in Vietnam, especially the cashew industry. VINACAS has also sent an urgent dispatch to convey the above content to the Prime Minister. Accordingly, VINACAS proposes to the Prime Minister, the Ministry of Health and related industries to consider and allow employees of VINACAS members and cashew businesses to be given priority to vaccinate against Covid-19.

According to VINACAS, currently, Vietnam has thousands of cashew processing and exporting enterprises, so the price competition from buying to selling is very fierce. In addition to domestic competition, enterprises also compete with other exporting countries such as India and Africa. In the global cashew value chain, Vietnam mainly exports pre-processed cashew kernels at US$10/kg, while finished kernels are sold in international markets for US$30/kg. Currently, deep processing factories in Vietnam only account for 12 - 15% of the capacity of pre-processed cashew kernels. Thus, Vietnam currently accounts for only 30% of the cashew industry value chain. The remaining value belongs to distributors, international finished cashew nuts.

To improve the value chain of the cashew industry, taking advantage of current preliminary processing technology resources, Vietnam's cashew industry will continue to invest in cashew kernel processing technology, renewing equipment to enhance deep processing products. to more than 30% in order to improve the export position and bring greater value to Vietnam's cashew industry. Typically, Fomexco Joint Stock Company redirects the investment of preliminary processing technology of cashew kernels, creating a better quality of cashew kernels, building projects in areas to grow organic cashew materials, applying science and technology to production and processing, intensive organic cashew processing in Vietnam.

However, besides success, it is also necessary to recognize and re-evaluate the limitations and challenges of the industry, because most of the cashew processing factories in Vietnam have not been synchronized and have not achieved high efficiency. . For example, the labor-intensive stages such as hard shell cutting, silk peeling, and sorting have all been mechanized but have not been fully automated.

According to data from the General Department of Customs, Vietnam's cashew exports in the first six months of 2021 reached 273.54 thousand tons, worth 1.65 billion USD, up 21.8% in volume and 10.8% in value over the same period in 2020.

According to the plan of VINACAS, in 2021 and the following years, the cashew industry will continue to persistently implement the goal of "keeping quantity, increasing quality, increasing selling price" in production, business, and export. In 2021, the cashew industry strives to achieve an export turnover of 3.6 billion USD, an increase of nearly 13% compared to 2020.
 

Source: Vietnam Agriculture Newspaper