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Market Insider EDIBLE NUTS CASHEWS Second quarter 2015
Market Insider
EDIBLE NUTS
CASHEWS
Second quarter 2015
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Foreword
Cashew production and trade figures may change considerably from one reporting period to another. The reason is that production and trade data provided at the beginning of campaigns are estimations and projections that can only be confirmed by the end of the season, or the following year. In addition, production, consumption and trade of raw cashews and cashew kernels are difficult to estimate, in particular when the products are consumed locally; producers and traders do not always report on volumes, raw nuts are smuggled to neighbouring countries, and reporting of statistical data is many times delayed or unreliable. Moreover, figures provided by official and business sources are often mismatching. Consequently, they are regularly revised and updated. The largest producers of raw cashews are located in the Northern hemisphere. They cover around 80% of the global cashew production (82% this season). Cashew harvesting and marketing campaigns in the Northern hemisphere are generally closed by end June. Processors and traders are further waiting for the arrival of the crop from the Southern hemisphere, which reaches the market between September and December. Therefore, the bulk of world annual cashew production and export supply availabilities is concentrated during the first half of the year. The second and third cashew quarterly bulletins are therefore reporting on the key periods covering the major annual developments in the cashew market.
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Contents
Foreword iii
1. Global Cashew Market 1
1.1. Cashew production 1
1.2. Processing 3
1.3. Demand/consumption 8
1.4. Prices 11
1.4.1. Raw cashews 11
1.4.2. Cashew kernels 14
2. Mycotoxins and microbiological contamination issues 16
3. Food Safety Modernisation Act 19
4. Currency outlook 20
Table 1. Cashew harvest calendar and 2015/16 crop forecasts 1 Table 2. Cashew harvested areas, yields and output in the main producing countries, 2013 2 Table 3. Average cashew kernel prices FOB India (range depending on grades, quality,
processors and shipment periods) 14 Table 4. Maximum levels for aflatoxin B and total aflatoxins in ready-to-eat tree nuts
including cashews 17
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Market Insider
1. Global Cashew Market
1.1. Cashew production
Harvesting calendar and estimation of global raw cashew output
Cashew harvesting and marketing campaigns in producing countries of the Northern hemisphere are generally closed by end June. Processors and traders are further waiting for the arrival of the crop from the Southern hemisphere, which reaches the market between September and December.
Table 1. Cashew harvest calendar and 2015/16 crop forecasts
Hemisphere, country
2015/16* output ,
1000 tons Jan Feb Mar. April May June July Aug Sep Oct Nov Dec
No
rth
ern
he
mis
ph
ere
India 550
Côte d'Ivoire 620
Vietnam 450
Guinea Bissau 190
Nigeria 150
Benin 125
Cambodia 60
Ghana 95
Senegal 50
Burkina Faso 80
Gambia 10
Mali 40
Togo 30
Guinea 40
So
uth
he
mis
ph
. Brazil 220
Tanzania 170
Indonesia 30
Mozambique 85
Kenya 30
Harvesting season, with possible variations of several weeks depending on weather conditions
Peak harvest period Source: ITC
Up to mid-March this year the cashew season promised a positive outlook. Then, various sources reported adverse weather condition, harvest delays and possible lower yields in India, Vietnam and most West African producing countries. Shipments started being delayed and the market reacted rapidly: from mid-
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March to mid-May, that is during the peak harvesting period, raw cashew prices went up by 250-300 US$/ton without a confirmation of a real crop shortage situation.
By end-May, however, the International Nut and Dried Fruit Council reported that the possibility that the global raw cashew production could exceed by 3% the previous year output.
According to expert forecasts made in June based on the assumption that no adverse developments would occur related to East African, Indonesian and Brazilian crops, the global raw cashew output this season was projected at 3.05 million tons (equivalent to 610,000 tons of cashew kernels at a conversion rate of 20%).
About 47% of the 2015/16 crop is expected to be harvested in West Africa, 36% in Asia, 9% in East Africa and 7% in South America.
The five leading cashew producing countries, namely Côte d’Ivoire, India, Vietnam, Brazil and Guinea Bissau, could cover two thirds of the world output (Cote d’Ivoire 20%, India 18%, Vietnam 15%, Brazil 7% and Guinea Bissau 6%). Source: ITC
FAO provided the following figures for areas harvested, yields and productions of raw cashews in the major producing countries in 2013. Nigeria and Vietnam appeared to have had the smallest areas under cashews, but the highest yields.
Table 2. Cashew harvested areas, yields and output in the main producing countries, 2013
Country Harvested area
(1000 ha) Yield
(Kg/ha) Production (1000 tons)
Source of data
Côte d'Ivoire 900 500 450 FAO estimation and calculated
India 992 759 753 Official and calculated
Vietnam 301 1340 403 Official and calculated
Brazil 695 158 110 Official and calculated
Guinea Bissau 248 558 138 FAO estimation and calculated
Tanzania 411 312 128 Official and calculated
Nigeria 380 2500 950 FAO estimation and calculated
Benin 485 371 180 FAO estimation and calculated
Raw cashew cultivation in India, Vietnam and Brazil is limited by land competition with more profitable crops; in Viet Nam, cashew acreage is being allotted to rubber cultivation, while in India increasing surfaces are used for the cultivation of oilseeds. This justifies the growing interest of Asian and Brazilian processors and investors in installing cashew plantations and processing facilities in West Africa.
West Africa
Although weather vagaries delayed harvests this year in most West African producing countries, the combined raw cashew production of the sub region is estimated at 1.43 million tons, only 0.7 % below the 2014/15 output.
Côte d'Ivoire 20%
Guinea Bissau 6%
Nigeria 5% Benin 4%
Ghana 3% Senegal 2% Burkina
Faso 3%
Gambia...
Mali 1%
Togo 1%
Guinea 1%
Tanzania 6%
Mozam. 3%
Kenya 1%
India 18%
Vietnam 15%
Cambodia 2%
Indonesia 1%
Brazil 7%
Others 1%
Main raw cashew producers in 2015/16 (World output 3.05 million tons)
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Cashew sector stakeholders maintained their keen interest and investments into cashew cultivation, because of good prices fetched for the crop over the past years, compared to revenues from other annual crops such as cereals, groundnuts or cotton. In addition, cashew cultivation requires relatively less labour and raw cashew marketing is comparatively easier, given the strong import demand of Asian processors.
About 1.5 million West African cashew smallholders produced 38% of the world cashew output this season. The majority of these farmers are earning as little as 150 USD/year from cashew production. In addition to the dependence on climate variations, their low cashew income is a result of several factors including aging and low yielding plantations, inadequate agricultural inputs, insufficient financial support - and consequently low yields the poor quality of nuts (this year, cashew kernel outturn ratios were lower than usual). Nevertheless, the sustained demand and consumption of raw cashews and cashew kernels over the past 15 years, their high prices over the past three seasons and possibly in 2015/16, are expected to prompt West African farmers to continue up keeping the orchards and cultivating cashews.
With a production of 625,000 tons of raw cashews this season (18% of the world output), Côte d’Ivoire is maintaining its position as largest West African cashew grower and exporter, followed by Guinea Bissau and Benin. Guinea-Bissau is now world’s largest per capita producer of cashew nuts, with an average
annual production in the range of 200,000 tons over the past two years.
The two largest West African producers of cashews, Côte d’Ivoire and Nigeria, may move steps forward towards increasing their output in the near future. The new high yielding cashew varieties developed by the National Agricultural Research Centre of Côte d’Ivoire, the Polytechnic Institute in Yamoussoukro and the Ivorian Cotton and Cashew Board should enable the country to shift from extensive to intensive cashew cultivation.
The Ivorian government stated its plan to become the world leading cashews producer. To this end, cashew stakeholders are meeting to discuss and prepare a roadmap for the establishment of representative and consensual regional Cashew Inter professional Organizations. In Nigeria, cashew sector stakeholders called for the establishment of a Cashew Board and appealed to the Federal Government to assist farmers and processors in boosting cashew production and processing through the provision of a special support Fund.
Sources: http://pmepmimagazine.info/agro-alimentaire-industrie/cote-divoire-des-varietes-ameliorees-danacardier-pour-booster-les-rendements-de-la-filiere/, http://www.intracen.org/itc/blogs/market-insider/Nigeria-rundown-on-cashew-situation/
1.2. Processing
Cashew processing industries are of considerable importance to many Asian and African developing countries, both as source of higher export revenues and as catalyst for their industrial development. Domestic processing adds value to the product and contributes to creation of employment and the diversification of the economy.
Vietnam and India are the two largest raw cashew processing and cashew kernels exporting countries. Both of them continue to invest heavily in the development of domestic processing, in particular in mechanisation, the rise of their price competitiveness and the improvement of product quality. The development of their cashew processing sectors is however hampered by the imbalance between the growth rate of domestic raw cashews supplies averaging 5%/year, and the raw cashew requirements for processing which vary between 8% and 10%/year.
The situation of cashew processing industries in Vietnam and India and its short and medium term developments impact directly on their raw cashew import demand and the evolution of African exports.
Vietnam
According to Vietnam Trade Promotion Agency VIETRADE, the domestic cashew processing capacity exceeds 1.2 million tons/year.
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The biggest problem facing the expansion of Vietnamese cashew kernel exports is that the limitation of area under cashews, which does not exceed 300,000 ha and is unlikely to be extended significantly in the future. With the current productivity of cashew trees averaging 0.8 tons/ha, the domestic raw cashew supply matches only 35% of the processing demand. The Vietnamese government foresees a rise in the domestic production to 450,000 tonnes by 2020, based mainly on the increase of yields. However, even this level of output will not cover more than 50% of the local processing demand.
The some 500 large and medium scale processing plants and 500 small scale units in operation produce branded and not branded, conventional and certified cashew kernels (raw or roasted, salted and honey or chocolate-coated) which are mainly exported. Many of the large scale processing units are fully automatized and certified GMP, ISO and HACCP.
Cashew processing costs in Vietnam are lower, and workers are more productive than in India.
The sector benefits of governmental support. A draft law on reforms and administrative measures to improve the business environment and enhance national competitiveness is currently under discussion. The law is scheduled to be submitted to the National Assembly for approval in October, and take effect on July 1st, 2016. Provisions in the new law tackle smuggling and trade fraud issues, as well as protection measures for domestic production and export facilitation - in particular of goods with high added value. Cashew processing stakeholders are supportive of the new regulations on anti-dumping, anti-subsidy and safeguard duties to protect domestic industry. They are also satisfied with the new provision on tariff exemptions on imports of raw materials and equipment for the production of export goods, as they import high volumes of raw cashews and export cashew kernels.
Two essential shortcomings are hampering the development of cashew processing and the export of cashew kernels: the unavoidable dependence on raw cashew imports, and the difficulties to meet the international food quality and safety standards and regulations for kernels.
This season, many small and medium scale processors had to idle their plants because of difficulties to break even. The causes are two: the imbalance between the high raw cashews prices and the international cashew kernel prices, and the hiking labour costs. In addition, faced with raw cashew shortages, they should wait for the new Indonesian and Tanzanian crops anticipated to reach the market between November 2015 and January 2016 in order to cover their additional import needs.
Vietnamese exports of cashew kernels are often downgraded or straightforwardly rejected because of non-compliance with quality standards and regulations in import markets.
It is noteworthy that FDA Food Safety Modernization Act became mandatory for all exporters of food to US, including cashew kernel exporters. In addition, the new Voluntary Qualified Importer Program currently under consideration mandates FDA to require hazard analysis and risk-based preventive controls at foreign and domestic facilities that manufacture, process, pack, and hold regulated foods including cashews. Cashew processors are required to maintain and implement a written preventive control plan.
Exporters of cashew kernels to USA should comply with the proposed “Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Foods” from 17 September 2015 onwards. Noncompliance with these food safety regulations and the quality standards will result in downgrading and rejection of shipments.
Similar strict food safety laws and controls are applied in EU, Canada, India and several other processed cashew importing countries.
Sources: Trade, ITC, http://www.fda.gov/Food/GuidanceRegulation/FSMA/default.htm, http://www.fda.gov/downloads/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/UCM448558.pdf, http://www.ift.org/public-policy-and-regulations/fsma/fsma-rules.aspx
India
Although the Indian cashew processing sector is developing, the major difficulties it encounters led to its overtaking by Vietnam.
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The constraints impeding the development of cashew processing include the heavy dependence on raw cashew imports (about 60% of the raw cashew needs to keep processing units running have to be imported, mainly from Africa); the unpreparedness of many processors to deal with the changing needs and constraints of the market; the steady increase in labour costs and the subsequent increase in processing costs; and the lowering price competitiveness of Indian kernels in the international market. The steadily hiking cost of labour required in the Indian labour-intensive manual processing and the costly access to raw cashews forced some processors to divert investments and shift their base to Vietnam and several African countries.
Business sources estimate that the current rate of manual to automatic and semi-automatic processing in India is 40:60. This rate of mechanisation suits nevertheless the specificity of Indian cashew consumption and market requirements, which are different from the rest of the world. In other parts of the world, cashew kernels are mostly consumed as snack - wherefrom the demand and higher pricing of Whole kernel grades. In India, cashews are largely used as cooking ingredient, hence the high domestic cooking usage (around 50%) and the good prices of Broken grades fetched on the domestic market.
The large and growing local demand for Brokens explains the viability of Indian manual processing, despite its higher costs compared to mechanical processing. The manual processing cost in India is considered about 40% higher than the mechanical processing cost in Vietnam. However, this higher cost is compensated by the specific Indian market structure: the larger quantities of high quality Whole kernel grades obtained through manual processing meet a steadily growing international demand and fetch very good export prices, while the Broken grades find a ready and very lucrative local market, often offering better priced than the international one. Conversely, mechanical processing of cashews, such as practiced in Brazil and Vietnam, yields larger quantities of Brokens than the manual processing in India. But unlike India, most of these Brokens have no significant domestic market and must be traded at very low prices on the international market.
The soaring raw cashew prices, the steady rise in labour costs and the labour unrest affected very negatively the Indian cashew processing performance during the past two seasons. Imports of raw cashews decreased significantly because of their very high prices, creating a squeeze in the availability raw material for processing, and many processors could not recover their processing costs.
Kerala State is hardly hit by these constraints: a quarter of the processing units were reported closed during the April-June period this year, and the remaining ones were only partially functioning, with a significant fall in the output and exports of kernels. Lacking working capital, the Kerala State Cashew Development Corporation was reduced to purchase domestic raw cashews on credit, at prices higher than the imported nuts (domestic raw cashews were traded at around 100 Rupees/kg, while imported raw nuts were purchased at around 70 Rupees/kg). Meanwhile, the Corporation was constrained to sell the kernels on advance payments from buyers at lower prices. This, coupled with high processing costs, has forced the closure of its 30 factories.
Source: ITC, http://www.thehindubusinessline.com/economy/agri-business/cashew-corporation-closes-down-30-factories/article7167218.ece, http://www.thehindubusinessline.com/economy/agri-business/cashew-corporation-closes-down-30-factories/article7167218.ece.
Africa and West Africa
Although Africa is the second largest raw cashew producing region in the world, benefitting of large availabilities of fertile land, favourable conditions for cashew cultivation and relatively cheap labour, it remains at a competitive disadvantage to Asian processors. Notwithstanding the importance of African raw cashew supply, the crop is exported unprocessed, letting the opportunities for job creation, local value addition and poverty reduction largely untapped.
Relatively recent foreign and local investments contributed however to the rapid increase of processing in the region. It is estimated that 6% to 8% of the West African raw cashew output is processed to kernels, mostly for the export market, and the expectations are to increase the quantities processed to 25% by 2020.
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Côte d’Ivoire is the major West African cashew kernel producing country, followed by Ghana, Burkina Faso, Benin, Nigeria and Togo.
West African processing competitiveness is fiddly: the main comparative advantage of processors is the local availability of raw cashews at lower costs than in Asia or Brazil. However, the profitability of their businesses is adversely affected by high depreciation costs of equipment, high financial costs, relatively low labour productivity and the non-utilization of by-products. Other hindering factors include high electricity costs and intermittent power cuts; transport and storage deficiencies leading to crop wastage and costly and inefficient distribution; poor financial services and access to credit; high variability in interest and exchange rates; shortfalls of installed capacities in some countries and the low profitability of the existing ones; as well as the lack of knowhow and poor management of equipment; limited domestic and regional markets for kernels, and the absence of efficient mechanisms to ensure a sustainable sector development.
Two critical problems led to the sharp drop in kernels production and the idling of processing units over the past two seasons. One of them is the undersupply of domestic processors with raw cashews, mainly because of insufficient funding, coupled with farmers’ preference to deal with foreign buyers and sell on spot payments at good prices, instead of dealing with local processors which delay payments. The other one is the very high price of raw cashews rendering local processing hardly profitable. The increase in raw cashew prices has been exacerbated by the devaluation of West African currencies; the positive effect of the depreciation is that it enabled farmers to fetch prices hardly achieved in the past.
Raw cashew inventories for processing must be ensured for more than 10 months. This season, processors needed to have higher financial provisions than usual in order to be able to cope with the very high raw cashew prices. Given the difficulties encountered in accessing credits or financial support, the majority of processors found more profitable to export raw cashews than to process them; they preferred to sell the inventories and idled their plants. This happened in particular in Nigeria, Ghana, Burkina Faso, Guinea, Guinea-Bissau and The Gambia.
According to Rongead estimations, only 44,000 tons of raw cashews have been processed in West Africa in 2015, which is 15% less than the previous year, although the number of processors and their installed capacities increased. In fact, the production of cashew kernels slumped down in all countries with the exception of Côte d’Ivoire, where it could increase slightly thanks to the significant investments of Olam group. The share of Côte d’Ivoire in the total volume of West African raw cashew processed rose from 52% in 2014 to 74% in 2015. The shares of Ghana and Burkina Faso dropped drastically over the same period, from 14% to 4% and from 12% to 4% respectively.
The decline in West African processing profitability and in cashew kernel production and exports are expected to accelerate until the end of this year, as the raw nuts processed from January to May came from the 2014 crop stocks at more affordable prices; the 2015 crop should be higher priced. The cashew processing outlook for the next year is not encouraging either, given the persistent competition between the international and local demand for raw cashews, their prices foreseen to remain high, and the devaluation of the West African currencies which is expected to continue.
Under these circumstances, some processors are already considering to abandon their activities, unless governments adopt adequate measures to protect the industry. Some countries like Mozambique have brought up policies to protect local processors by granting preferential raw cashew procurement conditions. Other countries like Tanzania have been encouraging processing by implementing levies on raw cashew exports. A radical ban on raw cashew exports in order to protect the local processing, such as applied by Kenya in 2009 could prove very efficient: the part of raw cashew processed in Kenya increased from 30% in 2009, to 80% in 2012.
Sources:http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf,
http://www.etgworld.com/operations/agricultural-processing/
Nigeria
The Public Relations Secretary of the National Cashew Association of Nigeria informed that the raw cashew output this season attained 150,000 tons. The combined installed capacity of the seven existing
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processing plants which amounts to 48,000 tons has been utilised less than 30%. The causes stated include the too high prices of domestic raw cashews, varying between 850 and 925 US$/ton by the end of June, and the loss of processing profitability at these price levels. For comparison, at the same period of time cashew farm gate prices averaged 680 US$/ton in Côte d’Ivoire.
The Nigerian processors requested without result a governmental subvention of 260 US$ per ton of raw cashews, to bring the average raw cashew prices down between 590 to 665 US$/ton (at Côte d’Ivoire level), arguing that the governments of Mozambique and India are subsidising raw cashew for processing with respectively 126 and 83 US$/ton.
Source:http://agrinigeria.com/cashew-processors-seek-govts-intervention,
http://www.outofnigeria.net/tag/nigeria/
Ghana
Ghana relies on imports of raw cashews from Cote d’Ivoire and other West African countries to match the local processing needs. The country is estimated to have produced 75,000 tons of nuts in 2014 and 85,000 tons this year. The domestic installed processing capacity thought to average 30,000 tons/year. The average utilisation rate of the total capacity over the past five years was 15%.
Despite the very good crop this year, almost all major cashew processing plants have idled their operations; the reasons include lack of raw nuts, skyrocketing cost of raw cashews, difficult access to credit and high interest rates, inefficient processing technology and power crises. Of the 12 processing companies localised in Brong Ahafo Region - the country’s cashew hub, only one, Mim Cashew Nuts Limited, remains in operation.
Many cashew farmers are refusing to sell the crop to processing factories, preferring to get ready cash from foreign buyers without delays in payment and fetch higher prices on the ready market. Processors asked therefore the government to place a very high tax, or a ban, on raw cashew exports to solve the issue, but the request was opposed by farmers and traders, who saw in it a processors’ manoeuvre to control prices and not align with their international levels.
Source:https://www.cma-cgm.com/static/AfricaWatch/Attachments/com-watch-49.pdf, http://www.myjoyonline.com/business/2015/july-13th/ghanas-cashew-potential-estimated-at-56-million-annually.php, http://www.freshplaza.com/article/142927/Ghana-Cashew-nuts-processing-companies-out-of-job
Guinea Bissau
According to trade and to a statement of an Energy and Industry Ministry source, the country is expected to produce well over 200,000 tons of raw cashews this year.
The single medium scale plant and more than 40 small- and medium scale cashew processing units currently registered, with a total installed capacity of about 1,500 tons of raw cashews per year, are currently used for about 33%. The major reason is the same as in the other West African countries: processing costs made prohibitive by the high raw cashew prices recorded over the past 2 seasons. In these conditions, it is more lucrative to export raw cashews than to process domestically.
In order to secure the availability of raw cashews for local processing, companies intending to export must by law guarantee that 30% of the product has been previously processed in the country. Exporters must make a cash deposit in the State Treasury amounting to 30% of the value of cashews to be exported. The sum should be returned only when a transformation unit confirms that the nuts were actually processed.
Sources:
Trade, http://www.freshplaza.com/article/145204/Guinea-Bissau-government-looks-to-cashew-production
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Côte d’Ivoire
According to information published by Rongead, the 15 large scale cashew processing units currently operating have a total installed capacity of about 75,000 tons of raw cashews/year used on average between 3% and 5% only.
Cashew output in 2015 is foreseen at 650,000 tons. The quantities of raw cashews processed, thanks mainly to Olam group investments, amounted to 28,000 tons in 2014 and are projected to increase to 30,000 tons in 2015 - i.e. 5% of the foreseen output. According to the Ivorian Cotton and Cashew Council, the local processing is usually limited at separating broken nuts from whole nuts and packaging them in sacks for exports.
In April 2015, the Ministry of Agriculture informed that the Ivorian government aims at processing a half of the total cashew output by 2015 and all of it by 2020. The 2015 target is definitely not attained. The Ivorian Cotton and Cashew Council informed also that it is struggling to meet its own target of increasing the local processing ratio to 35% by 2016; this seems also improbable. Although the 2014/15 cashew crop was excellent, the majority of processing plants are either not operating at full capacity, or are idled for the season; the main reason is that the high cost of raw cashews renders the processing unprofitable. The domestic processing may decline even further without governmental fiscal incentives and strategic measures to boost processing cost competitiveness. These may include the facilitation of access to credit at lower interest rates, the reinforcement of processing capacity, marketing support and the improvement of nuts quality.
Sources:
http://www.howwemadeitinafrica.com/cashing-in-on-the-cashew-nuts-boom
https://secure.ecobank.com/upload/20150826010705543948KP7wxHUPpF.pdf http://www.bloomberg.com/news/articles/2013-04-18/ivory-coast-to-guarantee-cashew-floor-price-boost-processing, http://www.rongead.org/IMG/pdf/Guide_RONGEAD___Le_Marche_International_de_l_Anacarde.pdf, http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf,
1.3. Demand/consumption
Cashew demand is growing steadily, sustained by the rapid increase in the Indian and Chinese consumptions, the effectiveness of research on varietal improvement and increase of productivity, and the promotional campaigns related to health benefits of nuts consumption targeting mostly consumers in developed countries. Moreover, the development of a larger middle class with higher purchasing power stimulates the growth of cashew consumption in Middle East, North Africa, Russia and Eastern European countries.
Price elasticity of demand for cashew is high. Increases in kernel prices are passed on to consumers, who can shift rather easily to other types of edible nuts.
Cashew price volatility constitutes a serious threat to demand; slowdowns in consumption between 2008 and 2011 were caused by the high volatility in kernels prices. In addition, cashew packers and retailers find it difficult to adapt to volatile prices, especially when private label packing is involved.
The global cashew consumption attained 561,000 tons kernel equivalent in 2012 and neared 675,350 tons in 2013, according to estimations of the International Cashew Council and the Foretell Business Solutions Pvt Ltd. In October 2015, Rongead assessed world cashew consumption this year at 650,000 tons kernel equivalent, of which 31% in India, 23% in USA, 17% in the EU, 8% in China, 2.5% in Australia and the United Arab Emirates respectively and the remaining 16% elsewhere.
A moderate increase in consumption is foreseen over the next few years, as India, China, other South East Asian countries and the Middle East region, fuelled by population increase, rapid urbanisation and raise in disposable incomes.
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Sources:
http://www.cashewinfo.com/,
https://www.nutfruit.org/201415-global-statistical-review/
http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf,http://www.rongead.org/IMG/pdf/african_cashew_market_review_rongead_ica_2015.pdf
Over the past 3 seasons, cashew consumption has been additionally supported by its use as substitute to almonds, hazelnuts and pistachios in short supply, therefore more expensive. The situation is likely to repeat during 2015/16.
This season, cashew demand/consumption is marked by:
The compression of consumption in Russia following the steep depreciation of the Rouble and trade embargoes;
The slightly lower consumption in the Middle East following lower crude oil prices and the related decrease of purchasing power;
A marginal decrease in the Chinese consumption due to country’s economic slowdown;
The rising demand of raw cashews in Vietnam and India, where domestic supplies cannot match the needs of processing industries;
The drop in consumption of raw cashews for local processing in most African countries because of their very high price;
The yet another decrease foreseen in the production and export availabilities of Californian almonds and pistachios after four years of drought and over-reliance on highly salty groundwater. This should continue to prompt the switching in edible nuts demand from more expensive almonds and pistachios to cheaper cashew nuts;
The maintained growth of cashew kernels consumption in India, USA and Europe, although at very different rates;
The increasing awareness of the nutritional value of cashews in new markets such as South Korea, Latin American countries, Turkey and Scandinavian countries;
The reinforced safety and quality standards imposed by import markets
The current economic downturn is expected to start affecting the major cashew consuming countries. However, supposing that cashew kernel prices remain more affordable than the substituting edible nuts, cashew demand should be maintained during the second half of 2015/16 and the beginning of 2016/17.
If no major incidents occur, the world demand for cashews, the strong development of Asian processing industries and the likely low level of global stocks at the end of this season augur high prices for the next campaign.
Source:
http://www.intracen.org/uploadedFiles/intracenorg/Blogs/Cashew_Nuts_-_Main/Gambia%20Cashew%20Market%20Bulletin%207th%20issue,%2031%20May%202015.pdf, http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf
Cashews are very well suited to organic cultivation and processing, and therefore ideal products for Gourmet and Fair-trade marketing. Demand for sustainably-produced, Fair-trade and organic cashew, which has taken well off in Western Europe, is expected to develop.
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The worldwide growing awareness and concern about food safety and food-related health issues are certainly going to sustain the demand for traceable cashew supplies. This will induce structural modifications in cashew supply chains, which badly lack of transparency at present.
India
India has emerged as the largest cashew consuming market, with demand increasing steadily over the past decade. According to the Indian Cashew Export Promotion Council, India took over USA and Europe, with a healthy compounded growth rate of cashew consumption of 15%/year over the past 5 seasons.
The current average consumption is estimated at 250,000 tons/year, compared to 130,000 tons in US and 80,000 tons in Europe. The sharp increase in demand is the result of the rise in disposable income, as well as the year-round steady consumption of kernels, in particular Broken grades (about a half of the domestic consumption). This peculiarity of the Indian market is leading to the narrowing difference between Whole and Broken cashew grades: Wholes are priced at par with the international market, whereas the strong domestic demand for Brokens (used mainly in cooking) makes their local commercialisation more profitable than the export.
Source:
http://epaperbeta.timesofindia.com/Article.aspx?eid=31815&articlexml=LOCAL-DEMAND-INCREASING-15-ANNUALLY-Domestic-Cashew-Market-09042015019035, http://samsons.co.in/
USA and Europe
The US and European markets contribute to the stability of cashew consumption given their size, despite the fact that consumption growth rates are lower than in many developing countries.
European and US consumptions capped as a result of the too high and volatile prices in 2011 and 2012, but has resumed since. Kernels consumption in the US reached a high peak of 138,000 tons in 2014, according to International Cashew Council estimates. Considering the evolution of imports during the first half of 2015, the consumption is likely to hit a new record exceeding 145,000 tons by the end of the year.
The same source estimated cashew consumption in the European Union at 82-83,000 tons in 2014/15, remaining confined within the past 5 years average regardless of Euro devaluation against the US$.
Given the relative strength of kernel prices, most European importers are now were covering just a couple of months ahead, waiting for a further price decrease. Their expectations are based on the positive news about the satisfactory raw cashew output in West Africa.
Some experts are quite optimistic about the prospects of the market until the end of this year because current inventories in North America and Europe are reported to be relatively low.
Sources: Trade, http://www.cashewinfo.com/, https://www.nutfruit.org/201415-global-statistical-review/
China
The consumption of tree nuts including cashews is growing, as living standards and disposable incomes are rising and the population increases and urbanizes. Nuts are a popular snack prized by Chinese consumers both for their health benefits and as symbol of high-class, occidental type choice of snacks.
Cashew imports augmented so fast over the past three seasons, that the Ministry of Finance halved the import tariff for cashews of US origin to 10% from the beginning of January 2015.
The Chinese consumption of cashew kernels in 2014 is estimated at 54,000 tons, supplied for about 95% by Vietnam. This year, consumption is expected to be curbed by the slowdown in the country’s economic growth.
Source: http://www.ers.usda.gov/media/1811357/fts358sa.pdf,
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Middle East
The GDP of major oil producers in the Middle East is maintained by the crude oil prices and so does the disposable income which is a key factor in the creation of cashew demand. The Middle East countries together are estimated to consume about 30,000 tons of cashew kernels.
Oil prices increased during the second quarter of 2015, as reflected by the evolution of OPEC monthly basket prices, which attained 80.21 US$/barrel by mid-June.
A fall of crude oil prices anticipated during the coming months below $60/barrel may have significant negative impact on cashew kernel consumption, resulting in a possible decline in imports.
Source: http://www.opec.org/opec_web/en/923.htm
Vietnam
Although a major producer and processor of cashews, Vietnam is only a marginal consumer of kernels. The current domestic demand may not exceed 8,000 tons/year; the almost entire Vietnamese production is exported.
However, the domestic consumption of kernels is expected to increase, partly as a result of their increased availability following the current processing problems created by the high cost of imported raw material. The sustained high prices of imported raw cashews for processing are increasing significantly the Vietnamese processing costs, while international prices of kernels remain relatively low and do not reflect the high cost of raw cashew inputs.
Sources :
http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf, http://www.gambiatradeinfo.org/sites/default/files/Global%20Cashew%20Market%20Overview.pdf, http://www.intracen.org/uploadedFiles/intracenorg/Blogs/Cashew_Nuts_-_Main/Gambia%20Cashew%20Market%20Bulletin%206th%20issue%2022%20May%202015%281%29.pdf, https://www.facebook.com/NarinBys/posts/900748806632953
http://www.vietrade.gov.vn/en/index.php?option=com_content&view=article&id=2237:prediction-for-vietnam-cashew-nut-exports-in-2014&catid=270:vietnam-industry-news&Itemid=363
1.4. Prices
1.4.1. Raw cashews
Raw cashew prices reflect the balance between supply and demand, and are directly correlated with the kernel prices.
An additional factor influencing the raw cashew prices paid by processors is the need to dispose of regular supplies/sufficient inventories of raw material the year round. Processors may be forced to purchase raw cashews at higher prices during the off-season period, i.e. during the period June to September, after the end of the marketing season in West Africa and before the start of crop supplies from the Sothern hemisphere.
44
54
64
74
84
01-Mar 01-Apr 01-May 01-Jun 01-Jul
Average OPEC Reference Basket US$/b
CASHEW QUARTERLBULLETIN
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800
900
1000
1100
1200
1300
1400
1500
1600
w 6 w 9 w10
w14
w15
w17
w18
w22
w23
w26
w27
Average prices raw cashew C&F India, February to end June 2015, US$/ton
Indonesia2014
Indonesia2015
Tanzania2014
Tanzania2015
Mozambique 2014
Mozambique 2015
Côted'Ivoire2014
Raw cashews harvested in the Southern hemisphere account for less than a fifth of the world output, but have the advantage of a timely arrival, after the end of harvesting and marketing seasons in West Africa, India and Vietnam. Furthermore, the Southern Hemisphere crop arrival on the market coincides with the highest annual peaks of demand for kernels: the autumn Diwali festival and the wedding season in India (from September through January), the New Year festivals in China (January-February), and the Christmas and New Year periods in USA, Europe and elsewhere. This explains partly why East Africa – Tanzania in particular (largest crop supplier of the sub region), is a raw cashew price setter since many years.
The 2015/16 cashew crop harvesting and marketing cycle is launched in Indonesia, closely followed by Tanzania and Brazil. The Indonesian crop averaging annually 60,000 to 70,000 tons reaches the market usually in July/August. The situation is similar for Brazil (where the domestic processing sector captures the domestic raw cashew supplies averaging 200,000 to 250,000 tons/year), Mozambique and Kenya (with crops averaging 80-100,000 tons/year and 30,000 tons/year respectively). Supplies from these origins are by far inferior to the high raw cashew import demand of Vietnam and India. This gives the most important advantage to Tanzania, where the marketing season starts in August/September. Tanzanian raw cashew production averaging 160,000 to 170,000 tons/year is generally of high quality, allowing the country to command relatively better prices than any other East African origin and be a price settler for the season.
This is not the case with West African countries: when their trade seasons start, the market is already well supplied with cashews, in particular in the years when the Indian and Vietnamese crops are abundant. This puts a downward pressure on prices, West African farmers fetching generally lower prices for their raw cashews.
With the exception of the past three seasons, raw cashews of Benin and Guinea Bissau origins commanded higher prices at a pro-rata level to quality. Cashews of other origins are often lower-priced even if their production is considerable, because their quality is not even and consistent.
Several factors are causing the present nervousness and highly speculative market situation and the firmness of raw cashew prices in the Northern hemisphere, although the outlook for the Southern hemisphere crop is better than last year (some concern about the Indonesian output, but higher crop expected in Brazil).
The supply factors responsible for the situation include the relatively lower quality of nuts, the lower raw cashew yields, and the rumours about a lower than anticipated cashew output in most producing countries. Moreover, the Indian crop is delayed, the Vietnamese crop is lower than expected and delayed. In addition, a larger than usual number of speculators is active in West African markets, cashew shipping is often delayed and exporters are repeatedly defaulting contracts that they cannot honour at the initially negotiated (lower) prices. The demand factors comprise delays in European cashew kernel imports caused by the depreciation of the Euro against the U$ dollar and the tightness of the market provoked by increased Chinese, US and Indian consumptions, which maintain kernel prices at a relatively high level.
By the end of March, raw cashews of Indonesian, Indian, Vietnamese, Tanzanian and Mozambican origins were traded at respectively 1275 US$/ton; 1450 US$/ton; 1500 US$/ton; 1425 US$/ton and 1400 US$/ton.
During the second quarter of 2015, West African raw cashews were traded between 900 and 1550 US$/ton CIF India, depending on origin, quality, contracting and shipment period, and payment terms.
Nigerian cashews exports recorded the lowest C&F prices to India (average 1140 US$/ton over the
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season), followed by Côte d’Ivoire and Ghana (average 1260 US$/ton each during the campaign), and Benin (average 1280 US$/ton over the season).
Exports from Guinea Bissau, followed by Senegal, Tanzania and Mozambique were the highest priced. Cashews from Guinea Bissau started the season at 1525 US$/ton (beginning of May) and peaked at 1575 US$/ton during June. Gambian and Senegalese prices of cashews with average KOR 49-50 lbs. /bag were quoted at 1350 US$/ton Asia in April/May, and 1550 US$/ton by end June.
As cashews are likely to remain cheaper than almonds and pistachios and the global cashews consumption is expected to progress, it is unlikely that raw cashew prices would fall over the next 6 month. They are even likely to firm up from September to December, as buyers return to the market the business picks up after the holiday period in Europe and USA, and purchases resume for the Asian Festivals and the Christmas and New Year festivities.
On the assumption that the West African cashew output will increase again in 2016, or that the cashew demand will slow down in the coming months because of a difficult global economic situation, cashew producers and traders may realise lower profits than in 2015, but processors would dispose easier of sufficient raw cashew supplies at more affordable prices.
Farm gate prices
From February to end-June 2015, raw cashew prices have been 20 to 25% higher than the previous year during the same period. The escalation of prices, amplified by the devaluation of West African currencies, was reflected in the record-high levels of farm gate prices.
In Vietnam, the farm gate cashew price has been fixed in February, at the beginning of the season, at 1.17 cents/kg, equivalent to about 688 FCFA/kg.
In May/June, at the end of the season, negotiated prices were nearly 40% higher, averaging 1.64 cents/kg, equivalent to 963 FCFA/kg. The increase was due to the good crop quality on one hand, and very strong demand of domestic processors faced with insufficient supplies of domestic cashews on the other hand.
In West Africa, the average farm gate prices of raw cashew over the past 15 years varied from 100 FCFA/kg during bad campaigns to 350 FCFA/kg through good ones.
At the start of this season (end January/mid-February), farm gate prices in Côte d’Ivoire, Burkina Faso and Ghana amounted to 235 FCFA/kg, 280 FCFA/kg and 500 FCFA/kg respectively.
Source: ITC, Rongead
After the start of the marketing campaigns, farm gate prices increased in all producing countries, reaching high peaks of 524 FCFA/kg in Ghana during the first half of April, 525 and 533 FCFA/kg in Côte d’Ivoire and Burkina Faso respectively during the first half of May, 413 and 563 FCFA/kg in Mali and Benin respectively by mid-May, 826 FCFA/kg in Gambia at the beginning of June and 675 FCFA/kg in Senegal by end-May/beginning of June.
200
300
400
500
600
700
800
900
w14
w15
w16
w17
w18
w19
w20
w21
w22
w23
w24
w25
w26
w27
Average West African raw cashew farm gate prices, April to June 2015, FCFA/kg Côte
d'IvoireBurkinaFasoMali
Benin
Ghana
Nigeria
Gambia
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Sources:
http://www.mard.gov.vn/en/Pages/news_detail.aspx?NewsId=1115, http://www.scribd.com/doc/253420297/AfricasheW450-2014-2015-Season-Market-Analysis-and-Projections#scribd, http://www.cashewinfo.com/Mar_Cashew_WCC_2015_ebook.pdf
1.4.2. Cashew kernels
Raw cashew prices in 2015 surpassed by up to 25% their already high levels of 2014. The cashew kernel prices remained, on the contrary remarkably stable; their increase above the 2014 levels has not exceeded 5%.
In the first quarter of this year, cashew stocks were comfortable and there was no pressure on prices justifying locking in supplies for forward shipments.
During April and May, raw cashew prices increased with 250-300 US$/ton, corresponding to an increase in kernel production prices by 45 to 55 cents/lb. With delays in raw cashew shipments and increase in their prices, Indian shellers started increasing kernel prices which went rapidly up by about 20-30 cents.
Table 3. Average cashew kernel prices FOB India (range depending on grades, quality, processors and shipment periods)
Grade Price, US$/lb. FOB India
End March Mid-May End-June
W 240 3.65 – 3.85 3.80 – 3.95 3.75 – 3.85
W 320 3.40 – 3.60 3.55 – 3.75 3.55 – 3.60
W 450 3.15 – 3.25 3.40 – 3.55 3.40 – 3.55
SW 320 3.25 – 3.35
Splits 2.90 – 3.10 3.15 – 3.30 3.15 – 3.30
Pieces 2.85 – 3.00 3.00 – 3.15 2.95 – 3.10
Broken grades
Tight availability,
as KORs decreased to more normal levels and Asian usage increased
Tightening availability for lower grades
Source: Trade
Meanwhile, price differentials between grades narrowed with the tightening availability of lower grades. Premiums for large Wholes and discounts for lower grades shrank. The reason was the limited international demand for large Wholes, coupled with the high demand for Splits and Pieces on the Indian domestic market, and the weakening of Rupee against the US$. By end of June, for instance, some Whole grades fetched higher prices on the Indian market than on the international market. For instance, W240 grade was traded at 4.00 - 4.02 US$/lb. and W320 grade at 3.85 - 3.90 US$/lb. FOB.
From mid- May to the end of June, the rapid increase in kernel prices was curbed by lack of support from most world markets.
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Source: Rongead and Trade
Between mid- and end May, the FOB prices of Vietnamese kernels averaged: 3.80-3.85 US$/lb. for W 240; 3.55-3.65 US$/lb. for W 320; 3.25-3.35 US$/lb. for W450 and SW320; 2.9-3.00 US$/lb. for WS/WB, and 2.70-2.80 for LWP.
Source: Public Ledger
By the end of June, Chinese purchases declined, as buyers were trying to find the way to cope with the new cashew import duty raised at 15%.
European prices of most cashew kernel grades continued their decrease in June too. Waiting for prices to drop further, buyers were purchasing small quantities only.
In expectation of a further fall in prices, US importers purchased also small volumes of cashews only during May and June, at prices averaging 3.15-3.23 US$/lb. for WS and 3.10-3.13 US$/lb. for LP grades.
For comparison, almonds of US origin delivered to Europe in June were priced higher than W 240 and W 320 cashew kernels of Indian and Vietnamese origins.
3.30
3.50
3.70
3.90
w14
w15
w16
w17
w18
w19
w20
w21
w22
w23
w24
w25
w26
w27
Cashew kernel prices, US$/lb. FOB Asia April to end June 2015
Min
Max
3.5
3.6
3.7
3.8
3.9
4
4.1
4.2
June 3rd June 10th June 17th June. 24 July. 1st
Cashew kernel prices, US$/lb., EXW UK, June 2015
India W320
India W240
India W450
VietnamW 320
VietnamW 240
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Source: Public Ledger
Sources: http://samsons.co.in/2015/04/06/cashew-market-report-april-5-2015/, http://www.aldebaran.nl/,
http://bonanza.com.vn/cashew-kernel-news/a1052175.html
Trade sources expect prices of cashew kernel W 320 to remain in the broader region of 3.30 to 4.0 US$/lb. until January 2016.
2. Mycotoxins and microbiological contamination issues
The major cashew importing countries have very strict sanitary and phytosanitary standards and regulations which many African suppliers are unable to meet. The non-compliance with these standards and regulations affects the export performance of many cashew producers/exporters, reflected at times by a decline of exports and export earnings.
Mycotoxins
The incidence of mycotoxins developing in humid weather conditions and in inadequate harvest, post-harvest, and storage conditions is smaller in cashews than in other crops, such as groundnuts or maize. Most, but not all sources agree that aflatoxin is not an issue in cashews; the phenolic compound cardol contained in nuts is reported to have antimicrobial activities, conferring resistance to Aspergillus invasion.
In any case, however, cashews have to comply with the increasingly strict legislations regarding the maximum allowed content of contaminants in imported foods applied by the main importing countries. While regulations restricting the content of aflatoxins to parts-per-billion levels are the general rule, the maximum levels allowed and the complexity of standards vary from country to country.
4.3
4.4
4.5
4.6
4.7
4.8
4.9
5
June 3rd June 10th June. 17 June. 24 July 1st
Almond prices June 2015, CIF NW Europe, US$/lb.
US ShelledStandardSheller run
US NonPareilselect23/25shelled
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Table 4. Maximum levels for aflatoxin B and total aflatoxins in ready-to-eat tree nuts including cashews
Region, country Aflatoxin B1, ppb Total aflatoxins (B1+ B2+G1+G2),
ppb
EU 5 for processing
2 for direct consumption
10 for processing 4 for direct consumption
US
20 for human consumption
Canada 15 for human consumption
Singapore
15 for direct consumption
Taiwan 10
South Korea Under 10 15
Indonesia 15 20
Australia 10
Russia 15
South Africa 15
Benin, for nuts subjected to a sorting treatment or other physical treatment, before
human consumption or use as ingredient in foodstuffs
5 10
Gambia 10
Source: VICAM’s Global Mycotoxin Regulations Tool, www.commodityregs.com, http://aflatoxinpartnership.org/uploads/ECOWAS%20Scoping%20Study%20Report.pdf
These strict trade control measures continue to pose a challenge to many cashew exporting countries. Nigeria is a case in point; its cashew industry is still dogged by issues related to quality and safety issues, caused mainly by the large proportion of smallholders lacking sufficient finance and ability to invest in improved harvest, post-harvest, storage and transport techniques. Aflatoxins contamination and the non-compliance the related international regulations and standards is a trade problem causing considerable economic losses. However, according to Nigerian Export Promotion Council, awareness of the harmful effects of Aflatoxin is rising fast and the preventive measures to address the issue are being multiplied.
The International Institute of Tropical Agriculture in collaboration with the United States Department of Agriculture addressed the issue and developed a natural, safe, and cost-effective bio control product that drastically cuts aflatoxin contamination in African food crops including cashews. The bio control product aflasafe™ uses native strains of fungus A. flavus that do not produce aflatoxins to “push out” the toxic strains, so that crops become less contaminated in a process called “competitive exclusion”. When applied before the flowering phase of plants, these native strains completely exclude the aflatoxin producers. Aflasafe™ has been tested over the past 6 years and is now mass produced at the Aflasafe manufacturing plant at IITA in Ibadan. Nigeria, Tanzania, Kenya, Mozambique, Senegal and Burkina Faso approved the unrestricted use of this type of biological aflatoxin control and are now in different stages of assessment, development or commercialization.
The strict European Union legislation on aflatoxin allowances in food products including edible nuts is set into the Commission Regulation (EC) No 1881/2006 on the Maximum levels of aflatoxins (aflatoxins B1, B2, G1, G2 and M1), and the Commission Regulation (EC) No 401/2006 Provisions for methods of sampling and analysis for the official control of mycotoxins including aflatoxins (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02006R1881-20140701). Two guidance documents have been issued to assist competent authorities on the official control of aflatoxin contamination in food products which are subject to Commission Implementing Regulation (EU) 884/2014: the Guidance on the application of Article 9(4) of the Commission Implementing Regulation (EU) No 884/2014 of 13 August 2014 (http://ec.europa.eu/food/food/chemicalsafety/contaminants/docs/guidance_art-9-4.pdf), and The
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European Union (Special Conditions Governing the Import of Certain Food from Certain Third Countries Due to Contamination Risk by Aflatoxins) Regulations 2015 of 3 July 2015 (http://health.gov.ie/wp-content/uploads/2015/07/si250.pdf).
The EU Rapid Alert System for Food and Feed (RASFF) reporting the risks to public health is providing a round-the-clock service of notifications on aflatoxin contamination, shipment rejections and bans among others (http://ec.europa.eu/food/safety/rasff/index_en.htm). The service covers the food chains of its members (EU-28 national food safety authorities, the European Food Safety Authority, Norway, Liechtenstein, Iceland and Switzerland).
USDA announced that the US Aflatoxin Regulations changed effective Jan 1, 2015, with a transition period thru Jul 1, 2015. The Aflatoxin test using the Fluorometer (Vicam-type) method, with readings of 1 ppb or more, will now require an additional HPLC test to quantify the level of Aflatoxin. This means higher cost for testing and delays in obtaining the Aflatoxin results. In addition, USDA is discussing a possible implementation of a B1 aflatoxin limit.
Sources:
http://www.aldebaran.nl/wp-content/uploads/2014/12/Aldebaran-Commodities-BV_peanut-market-report-incl.-cashews-price-list_10th-December_2014.pdf, http://vinacas.blogspot.ch/2015/08/nigeria-promoting-cashew-farmers.html
http://www.omicsonline.org/open-access/aflatoxins-in-walnut-juglans-regia-l-pecan-carya-illinoinensis-wangenh-k-koch-and-cashew-anacardium-occidentale-l-nuts-of-mexico-2153-2435.1000338.pdf), https://www.facebook.com/pages/Aflasafe/734343473318805?sk=notes,
https://www.facebook.com/media/set/?set=a.847709281982223.1073741833.734343473318805&type=3,
http://r4dreview.org/2013/07/ensuring-the-safety-of-african-food-crops/)
Microbiological contamination
The presence at very low levels of Salmonella and entero-haemorrhagic Escherichia coli (EHEC) in ready-to-eat or processed foods including cashews is an important cause of foodborne illness. Tree nut handlers should consider Salmonella and EHEC as a major public health risk in their Hazard Analysis and Critical Control Points (HACCP) plans.
The application of appropriate Good Agricultural Practices minimize the pre-harvest and harvest contamination, and appropriate access to, and use of, personal protective equipment and documented hygiene training programmes are important to prevent contamination of the final food products.
Identification and tracking back the initial source of contamination is a challenge. In many cases, months separate the initial contamination and the consumption/illness, and multiple distributors are often involved handling product from many growers. Cashew nuts are harvested directly from the orchard floor after being mechanically or hand shaken. This results in significant mixing of the nuts with soil and plant debris. Contaminants picked up at harvest may then be spread to the edible kernels before or during shelling. Moisture plays a role in amplification of contaminants; water introduced into shelling or further processing facilities has been associated with multiplication and potential persistence of some strains. Contamination of processing units may also lead to sporadic contamination. For this reason, a strict environmental monitoring programme for Salmonella should be implemented for any facility processing, handling and/or packaging cashew products.
In relation to admitted maximum levels of Salmonella in human food, there is contradiction within the U.S: FDA maintains a zero tolerance (within the detection limit of the methodology), but USDA permits levels for some meats and poultry.
According to the International Nut Council, which collects and classifies all RASFF notifications for nuts and dried fruits intended for food, in 2014 USA notified 12 cashew shipments originating from Vietnam for import border rejections because of Salmonella contamination. The same year, one RASFF notification for a rejection has been notified by EU.
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By end-October 2014, the US Company Chetak New York L.L.C. recalled about 4 tons of packed “Deep raw cashew pieces” because of its potential contamination with Salmonella. In June 2015, the company Maya Overseas Foods Inc. of Maspeth, NY, recalled about 3.6 tons of cashew splits for the same reason.
Sources:
http://www.fao.org/fileadmin/templates/agns/pdf/EMPRES_FS_SeriesNo2.pdf, http://www.iib.org.tr/files/downloads/PageFiles/%7B3acf7a5a-f759-4ee1-be5b-7b07f20d8bd5%7D/Files/INC-RASFF-2014_00001711.pdf, http://www.salmonellablog.com/salmonella-recalls/cashews-recalled-after-positive-salmonella-test-result/
3. Food Safety Modernisation Act
The FDA Food Safety Modernization Act (FSMA) is an US public food safety and security law entered into force on January 4, 2011 and further amended and supplemented since. The law (Act) aims to ensure that US food supply is safe, by shifting the focus from responding to contamination to preventing it. Its content was passed in response to the demands of a broad coalition of produce growers, food processors, retailers and consumers concerned by a series of illness outbreaks and contamination incidents involving both domestic and imported food.
The law rests on the core principle that those who produce food for the commercial market have the responsibility and capability to make it safe, in accordance with recognized best practices for preventing harmful contamination. Its broad goals are to protect consumer health, together with preserving the food system from the loss of consumer confidence, and to avoid market disruptions and high costs to industry resulting from foodborne illness.
The Act has 4 titles, namely: (I) Improving capacity to prevent food safety problems; (II) Improving capacity to detect and respond to food safety problems; (III) Improving the safety of imported food, and (IV) Miscellaneous provisions. The full text of the law is accessible at http://www.gpo.gov/fdsys/pkg/PLAW-111publ353/pdf/PLAW-111publ353.pdf.
Since January 2013, FDA has proposed seven foundational rules to implement FSMA, which are/will be finalised in 2015 and 2016, including:
Preventive Controls for Human Food , requiring that food facilities have safety plans that set forth how they will identify and minimize hazards. The final rule will be issued on Sept. 10, 2015 and compliance dates for some businesses should begin in September 2016. The rule comprises the Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food (http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm334115.htm);
Produce Safety, establishing science-based standards for growing, harvesting, packing and holding produce on domestic and foreign farms. The final rule will be issued on Sept. 10, 2015 (http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm334114.htm);
Foreign Supplier Verification Program, through which importers will be required to verify that food imported into the US, has been produced in a manner that provides the same level of public health protection as that required of U.S. food producers (http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm361902.htm). This final rule deadline is Oct. 31, 2015; $
Third Party Certification, establishing a program for the accreditation of third-party auditors to conduct food safety audits and issue certifications of foreign facilities producing food for humans or animals (http://www.gmaonline.org/issues-policy/product-safety/food-and-product-safety/food-and-product-safe/third-party-rule ). The final rule deadline is Oct. 31, 2015;
Sanitary Transportation, requiring those who transport food to use sanitary practices to ensure the safety of food (ttp://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm383763.htm ). The final rule deadline is March 31, 2016;
Intentional Adulteration, requiring domestic and foreign facilities to address vulnerable processes in their operations to prevent acts intended to cause large-scale public harm
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(http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm378628.htm). The final rule deadline is May 31, 2016
Cashew producers, importers and exporters are particularly concerned by the following FDA rules specifically affecting imports:
FSVP - Foreign Supplier Verification Programs for Importers of Food for Humans and Animals (http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm361902.htm). When finalized, the FSVP rule will require importers to assume greater responsibility to verify that the foods they import into the United States meet the same safety standards required of domestic producers;
Voluntary Qualified Importer Program
(http://www.fda.gov/downloads/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/UCM448558.pdf);
Voluntary Third-Party Certification Programs for Foods and Feeds, scheduled to become final the fall of 2015 (http://www.fda.gov/regulatoryinformation/guidances/ucm125431.htm#l)
4. Currency outlook
Currency exchange rates affect earnings from raw cashew and cashew kernels trade, namely:
Export earnings of raw cashew exporters, such as West African countries (supplying about 47% of the global exports) and East African countries (covering 9% of world export trade, i.e. Tanzania 6%, Mozambique 3% and Kenya 1%);
Cost of raw cashew imports (mainly Vietnam, India and Brazil);
Cost of cashew kernel imports (USA 30% of global imports in 2014, China 12%, EU 24%, UAE 6%, Australia 4%, Canada 3%, Russia 2%, Japan 2%, others 17%)
Export earnings of cashew kernel exporters (mainly Vietnam, India, Brazil, EU, Tanzania)
They also impact on the evolution of cashew kernel consumption via purchasing power.
The Indian Rupee continued its depreciation during the second quarter of 2015 following the slowdown in economic growth. Considering the uncertainty over crucial reforms such as GST (Goods and Sales Tax) and land reforms, as well as the deficient monsoon rains, the suspense over timing of Fed rate hike and the fragile global economic situation, the Rupee may depreciate further through the third quarter of the year.
The Dong first devaluation in January 2015, reflecting Vietnam’s slowest export expansion since 2010, was insufficient to put exporters at a relative advantage with their neighbouring Asian competitors. During the first week of May the currency has been devaluated a second time this year, in a bid to maintain export competitiveness. The State Bank of Vietnam weakened its reference rate by 1% to 21,673 Dong/US$ and the currency was allowed to trade 1% either side of the fixing. The move is expected to support both exporters and the national economic growth.
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The Brazilian real continued its sharp depreciation pushed down by the extremely weak economic fundamentals, the drastic fall in stock market and the loss of hope in a possible economic revival.
According to a report from Goldman Sachs, the Real was still over evaluated in June because of the high inflation and the erosion of key macro fundamentals. Its depreciation is therefore likely to continue during the third quarter of 2015.
The Indonesian Rupiah, the Tanzanian Shilling and the Japanese Yen followed similar depreciation trends.
The Chinese Yuan Renminbi exchange rate fluctuated widely around the trend of 6.088 Yuan Renminbi/US$.
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The Euro evaluated against the US Dollar during the second quarter of the year on the back of the unexpectedly weak US economic data and subsequent speculation in the foreign exchange market that the Fed will delay rate hikes, which coincided with the increase of the European Central Bank monetary stimulus.
The CFA Franc which is pegged to the Euro followed a similar evolution.
Sources: http://www.oanda.com/currency/historical-rates/, http://www.straitstimes.com/business/economy/vietnam-central-bank-devalues-dong-by-1, http://www.bloomberg.com/news/articles/2015-05-07/vietnam-devalues-dong-for-second-time-this-year-to-aid-exports, http://foreignpolicy.com/2015/06/01/brazils-economy-dilma-rousseff-makes-amends-with-the-markets/, http://sebgroup.com/siteassets/corporations_and_institutions/prospectuses_and_downloads/research_reports/investment_outlook/2015/2015_06_investment_outlook.pdf, http://www.bloomberg.com/news/articles/2015-07-05/stay-away-from-euro-dollar-trades-is-advice-of-top-forecaster, http://www.marketwatch.com/story/euro-narrows-losses-against-the-dollar-2015-06-30
