Vietnamese cashew processors have increasingly imported raw cashew from Africa en masse over the last few years, despite their poor quality.
Raw cashew imports from the African countries are considered ‘cashew waste’ as they are always of poor quality and mixed with contaminants.
Local cashew processors, however, imported nearly 60,000 tons of raw cashews in the first two months of this year, and the full-year figure is expected to be some 400,000 tons.
The contaminants usually found the raw cashew shipments from the Africa include cashew skins, rotten branches, and cashew sprouts, according to the director of a cashew processing company in the southern province of Đồng Nai.
“The imports look like a pile of garbage,” he said.
“Without a timely restriction on African raw cashew imports, the country will continue to discard the rubbish for Africa,” he warned.
Meanwhile, Nguyễn Đức Thành, director of Tanimexco, said he has recently incurred a VND4 billion loss as his 1,500 ton raw cashew imports from an African partner were found with poor quality.
It is however not simple to stop sourcing raw cashew from the Africa, insiders admit.
Việt Nam is currently capable of processing more than 800,000 tons of cashews a year, while the local suppliers can account for less than a half of the capacity.
“Vietnamese cashews are of higher quality but businesses still have to import as supply falls short of demand,” said Phạm Văn Công, deputy chairman of the Việt Nam Cashew Association (Vinacas).
Another crucial reason is that local raw cashews fetch much higher than their imported counterparts, Thành of Tanimexco said.
With the sourcing price of VND29,000 a kg for local raw cashews, a processor will incur a $330 loss per every ton of exported product, Thành said.
“Meanwhile, if using imported raw material, the processor will enjoy a $180 a ton profit,” he added.
Many African nations do have high quality raw cashews, but these good materials are exported to India, and the waste products are heading to Việt Nam, an expert with knowledge on the matter said.
With such raw materials, the quality of the Vietnamese exported processed cashew products has also been on decline, he added.
In a longer term, this will also affect the top position of Việt Nam in the world’s processed cashew exporting market, warned Vinacas former chairman Hồ Ngọc Cẩm.
Some African countries are switching from a raw material exporting nations to processing cashew on their home soil, and thus may become competitors to Việt Nam in the near future, he added.
Local cashew growers, meanwhile, are chopping down the trees to switch to other plants which they said will yield higher profits.