CHAPTER - V

EXPORT OF CASHEW KERNELS

India's was the first country in the world to develop

cashew as a commercial crop and to set up factories for

processing the raw cashewnuts. India was also the first country

to export cashew kernels and cashewnut shell liquid to many

destinations. Now more than 20 countries are engaged in

cashew cultivation, processing and export. However, India

continues to be the largest producer, processor, exporter and

consumer of cashew kernels and allied products in the world.

In India, unfortunately, cashew has been a neglected

crop. The production of cashewnuts packed at 5,20,000 tonnes

in 1999-2000 but feel to 4,50,000' tonnes in 2000-2001.

Exports are of the view that instead of asking the government

to change land ceiling laws to have large scale plantations of

cashew, it would be better to grow cashew on wastelands.

Export earnings of cashew kernels multiplied more

than five times from Rs.4470 million in 1990-91 to Rs.25,0002

185

million in 1999-2000. But in the subsequent two years, there

was a fall in export earnings instead of an improvement.

Surely, there is an urgent need to bring large tracts of land

under cashew cultivation.

India exports cashew kernels to more than 60

countries. The major markets being the USA, East European

Countries, Canada, Japan, Australia and countries in the middle

east. About 40 per cent of India's export is to USA and

another 40 per cent to East European Countries. Indian

Cashew is also acclaimed for its quality taste and appearance.

The share of different zones in export of cashew

kernels from India for the year 1991-92 was American zone

30.90%, East Europe zone 9.90%, West Europe zone 30.80%,

West Asia zone 5.10%, South East & Far East Asia 17.70%

and Australian zone 5.60% were shown in Figure 5.1.

9.90%

American Zone30.90%

pe

West Ask5.10%

West3C

Fig. 5.1

Export of Cashew Kernels from India

Export for the Year 1991-1992 Share ofdifferent Zone

AustralianSouth East & ZoneFar East Asia 5.60%

186

187

5.1 WORLD EXPORTS OF CASHEW

Though India gets the 3' d place in the production of

raw cashewnuts, it stands first in the industry and export of

cashew kernels. The quantity of kernels exported registered

an up-trend during the post-war period as is evident from

Table 5.1.

India could export as much as 22424 tonnes of

kernels in 1950. From then onwards significant growth of

exports was witnessed almost every year. However, all is not

well with our market share in the total annual world exports.

In 1950 India could account for 99.8 per cent of the total

world exports of cashew kernels. It gradually declined and

reached the rock bottom in 1981 when India could make only

42.1 per cent of the total world exports. However, remarkable

changes came about in 1986 when the total share of India's

world exports stood at 56 per cent. In 1987 it increased to 64

per cent. Once again in 1988 India emerged as the most

prominent exporter of cashew kernels, accounting for 88 per

cent of the world exports were shown in Figure 5.2.

188

Table 5.1

INDIA'S MARKET SHARE IN THE WORLD EXPORTS OF CASHEWKERNELS FROM 1950-1988

Year India's Exports World Exports India's Share(in, tonnes) (in tonnes) (per cent)

1950 22,424 22,458 99.81951 23,907 24,185 98.91952 26,499 26,854 98.61953 28,121 27,256 92.91954 31,652 32,604 97.91955 31,452 32,406 96.81956 32,490 33,519 96.91957 34,577 35,804 96.51958 39,673 40,901 97.01959 38,172 39,302 97.11960 39,436 41,578 94.81961 41,191 42,920 95.91962 46,436 49,080 94.61963 53,395 57,326 93.11964 52,645 57,504 91.51965 53,793 58,830 91.41966 48,616 56,976 89.91967 52,256 53,485 82.31968 60,491 75,749 79.91969 62,678 82,610 75.91970 54,074 78,336 69.01971 59,985 88,710 67.61972 64,542 101,909 63.31973 57,062 96,538 59.111974 57,976 94,072 61.61975 59,174 95,961 61.71976 55,940 94,118 59.41977 40,051 70,653 56.71978 23,820 63,357 37.61979 37,287 95,000 49.71980 36,858 76,000 48.51981 29,449 70,000 42.11982 31,789 N.A. N.A.1983 35,729 N.A. N.A.1984 31,142 55,498 56.01985 31,608 90,596 45.01986 37,395 67,192 56.01987 37,367 58,731 64.01988 31,892 36,206 88.0

Source: Kannan K.P., op.cit., p.21 & 22 (upto 1981) MarketFocus-VI, op.cit., p.10 (from 1982 to 1988).

Fig. 5.2

India's Market Share in the World Exports ofCashew Kernels from 1950-1988

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190

5.2. EXPORT OF CASHEW KERNELS

The export of cashew kernel and import of raw nut

was also increased over the years. Import of raw nut increased

over the years was due to requirement of raw material for

processing into cashew kernels. India's shares around 60 per

cent followed by Brazil with 30 per cent and Vietnam in export

of cashew to the worked market. Refer the Table 5.2. During

the year 1999-2000 cashew export was estimated to be Rs.2451

crores. The export growth rate has increased by 25 per cent.

Export of cashew kernels by major producing countries

presented in Table 5.3.

Table 5.2

WORLD CASHEW EXPORTS (MT)

Countries 1999 2000 2001

India 91,124 89,100 1011200

Brazil 23,386 32,582 29,700

Vietnam 21,890 36,740 33,000

E.Africa 4,400 4,400 4,400

Others 2,200 2,200 2,200

Total 11,432000 11,652022 1,703,500

Source: International Tree Nut Council

191

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In India, cashew trade is the third highest foreign

exchange earner among agri-based export crops. It is evident

from the Table 4.4 that export of cashew kernel increased from

49,000 MT (1990-91) to 92,461 MT (1999-2000) and growth

rate was positive (6.38%). The export value of cashew kernel

also increased significantly over the years from 1990-91 to

1990-00 and growth rate was 17.30 per cent per annum. This

was due to increase in demand for cashew kernel as well as

increase in the international prices of kernel.

5.3. IMPORT OF RAW CASHEWNUT

In order to bridge the gap between supply and

demand, the cashew industry in India has been relaying heavily

on the imported raw nuts from East African countries. The

quantity in import of raw nut increased from 1991-92 to

1995-96 and it declined during 1996-97 and again increased in

the two consecutive years and it decreased in 1999-2000. The

growth rate of import of raw nut in terms of quantity was

14.03 per cent and CGR in terms of value was 25.74 per cent

were significant and shows increasing trend over the years were

also presented in Table 5.4.

193

Table 5.4

EXPORT OF CASHEW KERNEL AND IMPORT OF RAW NUT

IN INDIA

Year Quantity Value Quantity Value(Mt) (Rs. in Lakh) NO (Rs. in Lakh)

1990-91 49000 38840 82639 44224

1991-92 47738 24370 102080 66909

1992-93 53436 74549 135985 37633

1993-94 69884 104602 191322 48370

1994-95 77000 124602 228109 69194

1995-96 70334 124050 223819 76008

1996-97 68757 158104 192285 64190

1994-98 80625 156000 247181 74060

1998-99 75026 160990 241161 95600

1999-00 92461 245150 226396 105390

2000-01 6.38* 17.30 14.03* 25.74*

Source: Directorate of Cashew Development, Cochin, Kerala.

5.4. TREND IN EXPORT OF CASHEW KERNELS

The commercial export of cashew kernel in the world

first started from India with a shipment of about 45 tonnes of

Kerala in the year 1925 to the U.S.A. By 1930, exports

increased to about 2,300 tonnes and by 1989 to 32,500 tonnes.

194

During the war year exports remained at a low ebb. Thus it is

evident that from the beginning of the cashew trade, India has

been enjoying a virtual monopoly over the processing of raw

nuts as well as export of kernels to the world markets (See

Figure 5.3).

However, keeping in view the world demand, the

supply capacity of the competitors and the processing capacity

in the country. India has launched World Bank known as

Multi State Cashew Project' (This Project is under

implementation in the State of Kerala, Karnataka, Andrapradesh

and Orissa).

Fig. 5.3

Trend in Export of Cashew Kernelsfrom India (1981-82 to 1991-92)

195

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196

5.5 DIRECTION OF EXPORT OF CASHEW KERNELS

Statistics reveal that India has established a very

good market for cashew kernels in the countries all over the

world. But the size of markets in other countries underwent

considerable changes in 1999-2000.

As it could be seen from Table 1.7 in 1999-2000

the U.S.A. imported 47190 tonnes in the same year from

India. But countries like UK, Japan, UAE, France which were

considered to be the bulk consumers of India Cashew kernels

could occupy only the 2nd, 3rd, 4th and 5th places respectively

with regard to import of cashew kernels from India in

1999-2000.

Thus it is apparent that the growth of international

market is noted for its changes in volume and direction year

after year. The country-wise export of cashew kernels in metric

tonnes from India during 1996-97 to 2000-01 is shown in

Table 5.5 and cashewnut shell liquid in Table 5.6.

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5.6. EXPORT THROUGH DIFFERENT PORTS

There are regular shipping facilities from India to all

ports of the world. Major shipments from India take place

through Cochin Port is shown in Figure 5.4. Other ports are

Tuticorin, Madras, Bombay, Murmagoa, Nhava Shiva and

Vishakapatnam. Regular service of container ships are available

from Indian ports on India - USA, India - UK, India - Australia,

India - Japan, India - Middle East and India - Singapore routes.

Export of cashew kernels through there ports in India from the

year 1991-92 to 1995-96 shown with quantity and value in

Table 5.7 and Figure 5.4.

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5.7. EXPORT PROBLEMS

Among the Agro-based export commodities, cashew

has a supreme position. In the near future also, it is likely to

increase, as the Indian Kernels are rated the best in the world

market. Even then exporters have to face some problems.

1. Entry of new competitors in the international market.

2. Decreasing availability of raw cashewnuts.

3. Competition from other tree nuts.

4. Low demand due to high price of Indian Kernels.

5. Fluctuations in the price of kernels.

6. Frequent withdrawal from market by some countries.

7. Presence of middlemen.

8. Non-fulfilment of agreement by importers.

9. Quality control in packing.

10. Counter-trade and rupee clearance.

11. Heavy tax charged by EIA.

12. Complicated export formalities.

As cashew kernels constituted one of the major

export oriented agricultural commodities, the Government of

India had been keenly interested in the development of the

industry. For this purpose, the Government had created various

203

institutional agencies and also had formulated suitable

development policies. Among them, formation of the Cashew

Export Promotion Council, establishment of the Directorate of

Cashewnut Development and the policies laid on canalization of

the import, draws relatively more attention. An attempt has

also been, therefore, made under this chapter to assess the role

of the various agencies for the development of the cashew

industry.

5.8 THE CASHEW EXPORT PROMOTION COUNCIL OF INDIA

The Cashew Export Promotion Council of India

(CEPC) was established by the Government of India on 171

August 1955, with the objective of promoting exports of cashew

kernels and cashewnut shell liquid in foreign market. Following

are the major objectives of the council.

1. Undertaking market studies and surveys in overseas

countries on cashew kernels and C.N.S.L.

2. Sending trade missions to overseas countries.

3. Participating in international trade fairs and exhibitips.

4. Maintaining public relations and conducting publicity to

popularise cashew and to sustain and expand export markets.

204

5. Collecting and disseminating market intelligence on cashew

for the benefit of growers, processors and traders.

6. Assisting in the amicable settlement of trade disputes

between Indian exporters and overseas importers.

7. Giving recommendations to the Government of India and

other public bodies with regard to matters considered to

be in the interest of the cashew industry.

The council functions under the directions of the

Ministry of Commerce. It is an agency sponsored by the

cashew kernel and C.N.S.L. exporters; and the major sources of

funds are from its members and the Ministry of Commerce.

During the initial stages of its functioning about 60 per cent of

the fund requirements were met by the Government of India.

Subsequently, the Central Government had reduced its

contribution. Presently, the council finds a major portion of its

resources from its members. The council has its office at

Cochin and its Chairman is elected from the members and the

Secretary, who is an experienced executive in foreign trade.

From a view of the working of the council, the

following inferences were drawn.

205

1. Though the council is supposed to undertake periodical

studies on market potentialities, it was unable to carry

out such studies due to the constraints in manpower and

financial resources.

2. The council could however, collect, collate the data /

information on exports of kernels and C.N.S.L. and make

them available to all the members. Such information

data would serve as broad guidelines for taking decisions

on the trade.

3. The council also had an updated list of importers of

kernels and C.N.S.L. and also made them available to its

members.

4. To the business enquiries from foreign countries, the

council could supply the list of exporters; and they are

expected to choose the suppliers and negotiate between

them about the quantity, quality, price and other market

arrangements. The council in principle did not favour any

particular member or group of members. The available

information were disseminated to all the members.

The council also could send trade delegations to

various potential market areas and also to the established

Indian cashew importing countries to sustain / develop the trade

relations. The outcome of such trade delegations also were

brought out in small booklets and distributed to all the members.

206

These booklets are priced publications and therefore, they were

also made available to the public. From 1988-89 the council

had sent trade delegations to a number of countries. The

number of delegations the council had sent since 1988-89 to

1991-92 and 2000-01 countries covered and purposes of the

delegations are given in Table 5.8.

The delegations were mainly aimed at increasing the

kernel trade or for the purchase of the raw cashewnuts. The

impact of these delegations with regard to increasing kernel

trade and increased import of the raw cashewnuts is yet to be

quantified. On enquiries, it was gathered from the council that

it is yet to carry out any study to quantify the impacts.

However, it is presumed in the cashew trading community that

there is a positive impact of the trade delegations especially in

developing business contacts and further strengthening the

existing relations. A critical assessment of the impact of these

delegations will be interesting for detailed research studies.

207

Table 5.8

YEAR-WISE DETAILS OF THE DELEGATIONS SEND BY THE CASHEW

EXPORT PROMOTION COUNCIL

Year No. of Countries covered PurposeDelegations

1988-89 4 1. U.K., F.R.G. and Promotion ofNetherlands Kernel Trade

2. Japan, Rep. of Koreaand Hong Kong

3. Canada and USA

4. Vietnam, Thailand, Raw CashewnutIndonesia, Philippiness Buyingand Singapore

1989-90 3 1. USA and Canada Promotion ofKernel Trade

2. Australia, New Zealandand Singapore

3. Kuwait, Saudi Arabia, a

Bahrain, Qatar, Omanand U.A.E.

1990-91 3 1. Japan, Hong Kong,Taiwan and SouthKorea

2. USA and Canada

3. Benin, Ivory Coast, a

Senegal, Nigeria,Guinea, Bissau and Togo

1991-92 1 1. Indonesia, Vietnam, Raw CashewPhilippiness and BuyingSingapore

2000-01 6 1. Brazil, Sharjah & Sapin Promotion ofKernel Trade

Source: Office of the Cashew Export Promotion Council, Cochin,Kerala.

208

In addition to the above trade delegations the

council also sponsors Individual Sales Terms to the selected

markets abroad for business negotiations and finalising export

orders. The council also undertakes publicity abroad with a

view to project the qualities of the Indian cashew. For this

purpose the council also participates in International food fairs /

exhibitions and general fairs abroad through the Trade Fair

Authority of India, the centralised authority for organising Indian

participation in fairs / exhibitions abroad. In such fairs the

council exhibits the products received from all its members.

The enquiries received are circulated amongst the members for

further business negotiations.

5.8.1. Council Publications

The council has two regular publications, viz. Cashew

Bulletin which is monthly and Indian Cashew Journal which is

quarterly. The Cashew Bulletin contains market news, country

profiles, Government's notifications and circulars, export and

import statistics, commodity prices, news and notes on cashew,

etc. The monthly bulletin is circulated among the cashew

processors, traders and people having interest in the subject.

The Indian Cashew Journal is mainly meant for improving the

cashew trade; and therefore, it is circulated more among the

209

kernel purchasing countries. Apart from this, the council also

publishes statistical reports, directory of exporters and importers,

information on cashew shell liquid, etc.

The council also provides necessary information and

liaison for bringing together the foreign importers and the kernel/

C.N.S.L. exporters. It also often involves itself in settling

complaints in the matter of exports either on account of quality

and or variations caused, if any, in fulfillment of the contracts.

The council in general had played a satisfactory role

for the development of the cashew trade in the country. With

increased fund position, it can deploy more specialised personnel

in finding suitable markets for the kernels and C.N.S.L. and

also to procure raw cashewnuts from foreign countries. The

council has so far not played any role in developing suitable

markets for cashew feni4 a very potential and valuable

commodity for exporting. Similarly, the scope of the kernels

and C.N.S.L. in making value-added products are also not

exploited. The council can play a major role in these directions

in the near future.

210

5.8.2. Laboratory Division

The Cashew Export Promotion Council of India (CEPC)

has set up Laboratory and Technical Division of international

standard. The services of the Laboratory and Technical Division

will not only be available to cashew industries in India, but

also to the entire food processing industry in India and Abroad.

The worldwide concern for food safety, customer

satisfaction an environmental protection has brought quality into

sharp focus.

Quality has emerged as the key factor deciding

whether a product gets into the mainstream global market or

falls by the wayside. Moreover, the regulator agencies in

different countries including India, now have stringent parameter

on food quality and safety. There was a time when price was

a sure-fire sale bait, but now business perspectives have shifted

from price advantage to product safety, reliability, shelf-life and

consumer acceptance. Only with long-term commitment to quality

can exporters survive and grow in today's intensely competitive

environment. Every food product has to have quality built into

it at all stages of its evolution, production, harvesting, post

211

harvest operations, transport, processing, packaging, storage

distribution and export.

The present system of pre-shipment inspection comes

in only at the point of export. The liberalisation policy for

trade and exports has dispensed with the earlier practice of

compulsory pre-shipment inspection and quality control. Today,

the responsibility for maintaining quality devolves on the

processor exporter himself.

For the past few years, all-round quality upgradation

has ranked high on the operational agenda of Cashew Export

Promotion Council of India and the establishment of the CEPC

Laboratory & Technical Division in 1997 marks a major break

through in this crucial area.

The laboratory represents a unique concept in the

Indian context. It offers testing and certification services to the

cashew industry as well as to organisations processing a wide

range of foods, drinks and drugs. Many of the well-equipped

laboratories in India confine themselves to research and

development work. Their services and facilities are thus limited

in scope and content. The few test laboratories that exist are

212

not adequately equipped to handle certain country specific and

product specific tests.

5.9. DIRECTORATE OF CASHEWNUT DEVELOPMENT

The Government of India had established, the Indian

Central Spices and Cashewnut Committee in 1962 to look after

the development of spices and cashewnuts. The committee also

dealt with basic research for the development of better seeds/

clones and in improving the crop productivity and quality of the

produce. The committees contributions in achieving the above

objectives were felt inadequate; and therefore, it was abolished.

The Government of India subsequently set up the "Directorate of

Cashewnut & Cocoa Development 1966 under the Ministry of

Agriculture at Cochin to look into the development of cashewnuts

and its by-products. The basic research related to the development

of the crop, was entrusted to the Indian Council of Agricultural

Research. Following are the chief functions of the directorate.

1. To formulate suitable development policies and to

implement various policies initiated by the State and the

Central Government.

2. To co-ordinate the developmental efforts under the sector

to achieve the targeted production programmes.

213

3. To help the kernel marketing and to help the cashew

producers to get remunerative prices.

4. To suggest measures for accelerating the tempo of

developmental programmes.

5. To undertake any other function assigned for the

development of the industry by the Central Government.

The directorate from its inception, has been working

for the above objectives. For developing the cashew industry the

directorate had recognised the importance of raw cashewnut

production within the country and to achieve this objective it

had taken a number of developmental measures for extensive

and intensive cultivation.

The intensive programme included demonstration of

improved agro techniques for increasing productivity and adoption

of intensive pest control measures to prevent loss in yield.

These programmes were taken up mainly in the coastal regions.

Kerala, Karnataka, Goa and Maharashtra were the States that

participated from West Coast and Tamil Nadu, Andhra Pradesh,

Orissa, West Bengal and Tripura were the States which had

benefited out of the programme from East Coast region.

214

To achieve the country's long standing goal of

reaching the raw cashewnut production target of 6 lakh M.T.

per annum, the Government of India had fixed a modest target

of achieving production level at 4.24 lakh M.T. during the end

of the Eighth Five Year Plan period. To reach this target the

directorate had chalked out the following specific programmes.

1. New planting with clones conforming to export quality

varieties over an area of 40,000 ha.

2. Replanting of old and uneconomical cashew gardens with

clones of improved varieties over an area of 20,000 ha.

3. Intensive adoption of crop production technology like

adoption of proper nutrition and plant protection measuresin an area of 40,000 ha.

4. Adoption of plant protection measures in plantations

against pests attacking cashew over an area of 1,45,000 ha.

Establishment of regional nurseries to generate clones of

high yielding varieties to cater to Area ExpansionProgrammes, etc.

With concerted efforts, if the directorate can implement

the above programmes, the country's dependence on raw

cashewnut import can be reduced to a large extent.

215

In 1985 the Central Government had further relaxed

the import policies. Under the new policy' along with the C.C.I.

all the processors, export houses and trading houses were

allowed to import raw cashewnuts, subject to the contract that

50 per cent of the import should be canalized through the

C.C.I. This condition was removed when the availability of raw

cashewnuts from the traditional raw nut suppliers like Tanzania,

Mozambique and Kenya declined as a result of the initiation of

processing industries in those countries. The increasing non-

availability of raw cashewnuts from traditional sources made the

import scheme unattractive to the big processors and therefore,

they started looking for new sources of supply. The present

policy of the Government of India on imports is liberal and any

processing unit or trader having import licence can import the

raw nuts for trading / processing purposes.

References

1. 'Facts for you' Magazine - Market Survey, August 2002,

p.16.

2. Ibid.

3. 'The Cashew' Journal, January-March 2002 by Directorate

of Cashew & Cocoa Development, Cochin, Kerala.

4. Mathew, T.J. The urgent need for a Cashew Board, The

Cashew No.24-26 January-March 1987, p.24.

216

5. Cashew Canserie; Vol.VIII, No.3, July-September 86.