Processed Indian cashew nuts are in high demand in international market. It ranks fourth in agricultural exports from our country. According to the data of Directorate of Cashew and Cocoa Development (DCCD) under the Central Agriculture Ministry, the foreign exchange earned through export of cashew kernels in the last year was Rs 5,500 crore. But there is enough scope to scale up exports and earn foreign exchange revenue worth about Rs 15,000 crore annually. Kerala cashew is one of the most sought-after dry fruit items in European and US markets.
Out of the 834 registered cashew factories, around 700 of them shut down rendering lakhs of women jobless. Due to scarcity of raw cashew nuts in the domestic market — more than 50% of the raw cashew had to be imported — there has been a three-fold price hike in raw cashew in the international market.
Kerala’s first cashew factory was established in Kollam district in 1925. Since then, Kollam is considered to be the World Capital of Cashew Industry until Vietnam took over the lead position in 2010.
There is a big sociological importance for the cashew industry. This 100-year old industry has been a source of livelihood for women in the downtrodden sections of the society. More than 3.5 lakh women labourers work in this sector. This industry contributes in a big way to the rural employment and women empowerment in southern districts. On an average, around Rs. 3 lakh would be disbursed every weekend as remuneration to the workers in each factory. Thus the industry was disbursing around Rs. 80 to 85 crore as wages to its workers per month who hail from the backward classes of the society from rural areas.
The cashew sector plunged into a huge crisis in Kerala in the previous decade. Out of the 834 registered cashew factories, around 700 of them shut down rendering lakhs of women jobless. Due to scarcity of raw cashew nuts in the domestic market — more than 50% of the raw cashew had to be imported — there has been a three-fold price hike in raw cashew in the international market. Coupled with this, lack of technological upgradation, stiff competition from Vietnam and the failure to fetch proportionate price for the processed cashew kernels led to closure of several units.
Besides, some business groups and big-time traders import processed cashew kernels by misrepresenting it as cattle feed from Vietnam evading import duties. These traders further mix the substandard products with the kernels processed here and re-export the same as Indian kernels. In the process, they not only deceive the government by claiming incentives for such exports but also spoil the reputation of our product. It is, however, heartening that the Central government has discovered this fraud and has imposed heavy import duty on such imports in the current Budget to put an end to such malpractices. As a cumulative result of all these adverse factors, the accounts of more than 200 entrepreneurs have turned non-performing assets (NPAs) while another 100 accounts have been notified as “stressed assets”. In recent times, three cashew entrepreneurs in Kollam committed suicide and a few other suicide attempts were also reported.
Unfortunately, the Cashew Export Promotion Council of India (CEPCI) is controlled by corporates who form only 10% the total processors. The remaining 90% are small and medium enterprises (SMEs) exporting cashew kernels are kept outside the CEPCI. All incentives and subsidies offered by the Central government are pocketed by these 10% of the elite processor, which is against the MSME policy of the Modi government. It is high time that the Central government work out a reconstruction plan for the crisis-stricken units.
Providing fresh working capital with subsidized interest rate at least for a period of four years, with one-year moratorium on repayment with the existing collaterals will be helpful. Also, suspending all the recovery measures by banks and financial institutions could help the revival of the industry. More steps are to be taken by the Central government to encourage cashew farming, Highway landscaping with Cashew trees, and incentive package and technological support are major steps to reclaim the position as ‘world capital of cashew industry’.