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Cashew Enterprises Struggle Due to Record-High Raw Material Prices

In the context of a complex market, the Vietnam Cashew Association advises cashew processing enterprises to make maximum efforts to ensure processing activities and timely deliveries according to signed contracts. In case of insufficient raw materials, they should negotiate and communicate with buyers to inform them of the situation and seek support for shared difficulties.

(News Portal – Dong Nai) - Immediately following the 2024 cashew harvest, the prices of both domestic and imported raw cashews have surged shockingly, reaching unprecedented levels. The rise in cashew prices is attributed to a significant decrease in supply, as the area of cashew cultivation continues to shrink.  

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Processing cashews for export at a facility in Dinh Quan District 

With the sudden spike in raw material prices, cashew-producing enterprises face numerous difficulties, operating merely to sustain or even temporarily halting production due to the high input costs, while the consumption market remains sluggish due to the general economic challenges.

Shockingly High Cashew Prices

Currently, raw cashews sold by traders to factories and processing facilities range from 50,000 to 55,000 VND per kilogram, an increase of about 10,000 VND per kilogram compared to early June. This price has more than doubled from what farmers received during the harvest. It is forecasted that this product's price will continue its upward trend in the coming time.

Despite the high cashew prices, cashew farmers do not benefit. During the 2024 cashew harvest, farmers experienced poor yields and low prices, with the highest selling price at the beginning of the season only around 25,000 VND per kilogram, dropping to about 20,000 VND per kilogram at peak harvest. However, right after the harvest ended, raw cashew prices increased daily, now setting a record high. Not only domestic cashews but also imported raw cashew prices are continuously climbing. Currently, production facilities and enterprises are purchasing imported raw cashews at over 50,000 VND per kilogram, with no signs of price stabilization.

According to the Vietnam Cashew Association, the reason for the high prices of imported raw cashews is that some suppliers cite poor harvests to delay deliveries or demand price increases. Previously, the International Nut and Dried Fruit Council announced that raw cashew production in Africa decreased by about 7% due to adverse weather conditions.

Domestic raw cashew supply has also significantly decreased. In Dong Nai alone, cashew was once a key industrial crop with an area exceeding 50,000 hectares. However, by the end of 2023, the province only had over 27,000 hectares. This crop has low economic efficiency, so many farmers are hesitant to invest and care for it, leading to a sharp decline in productivity. Moreover, in recent years, climate change has also greatly affected this weather-sensitive crop.

Processing Enterprises Face Difficulties

The Vietnam Cashew Association also stated that domestic raw cashews currently meet only about 10% of the material needs for processing, with the remaining 90% dependent on imports. Therefore, if the situation of broken contracts and price manipulation persists, the risk of raw material shortages will be evident in the latter half of Q3, Q4 of 2024, and will affect Q1 of 2025.

Mrs. Pham Thi Hong Van, owner of Phuong Han Cashew Facility in Thanh Son Commune, Tan Phu District, compared that last year, the facility purchased about 100 tons of raw cashews from local growing areas, but this year, they have bought less than 30 tons. Imported cashew prices are continuously fluctuating, with prices changing from morning to afternoon. Recently, Mrs. Van's facility has been operating minimally to fulfill orders already placed by customers. The facility's profit is almost nonexistent, and for some orders, she even incurs losses because the raw cashew prices surged unexpectedly after quoting lower prices to customers.

According to some cashew processing enterprises in the province, every year from the beginning of the year, most cashew processing enterprises in the province have signed contracts for Q3 and even Q4. However, currently, there are almost no orders for the last months of the year. Production facilities are hesitant to take new orders because of the volatile raw cashew prices. Additionally, in both domestic and export markets, customers are reluctant to place new orders due to the high cashew prices, as the consumption market is slower due to the general economic difficulties.​

Author: Song Le

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