Vietnam cashew businesses impaired by 'cancelled' contracts

This information was presented by the executive committee of the Vietnam Cashew Association (Vinacas) at a press conference on the afternoon of May 30.

Record high raw cashew prices

According to Mr. Nguyen Minh Hoa, Vice President of Vinacas, citing poor harvests and Ivory Coast's policy to restrict raw cashew exports, many exporters in West Africa are delaying deliveries and not fulfilling signed contracts, putting Vietnamese businesses in a difficult position.

"Many exporters in West Africa have pushed up raw cashew prices by more than 40 - 50% compared to February and March, to 1,500 - 1,700 USD/ton. Additionally, in many cases, the quantity of raw cashews shipped to Vietnam by African businesses only reaches about 50% of the contract volume."

Mr. Ta Quang Huyen, General Director of Hoang Son 1 Company (Binh Phuoc Province), a leading company in the cashew export sector, stated that the price of imported raw cashews has never increased so drastically in such a short time as it has this year.

According to Mr Son, West African businesses are either raising prices or choosing to keep the raw cashews instead of exporting them as per the contract. Specifically, out of the 53,000 tons of raw cashews contracted in this market, the company has only imported about 25,000 tons according to the contract, while the rest were either subject to price increases or the contracts were "breached."

Similarly, Mr Cao Thuc Uy, Director of Cao Phat Company (Ba Ria - Vung Tau Province), said that the quantity of imported raw cashews has reached over 70% of the signed contract, and the export price of processed cashews has now increased by about 30% compared to February and March. However, this price increase does not match the rise in raw cashew prices, not to mention the significant drop in raw cashew quality this year.

Need to find solutions soon

According to Mr Cao Thuc Uy, imports are relatively stable now thanks to the raw cashews imported in previous months at stable prices. But with a demand of over 80,000 tons of raw cashews per year, it's uncertain what difficulties will be faced in the future, so they are hesitant to sign new sales contracts.

Vinacas stated that besides promptly negotiating prices with buyers and sellers and seeking government support, the association will compile a list of companies that export raw cashews without adhering to contracts to impose sanctions. Additionally, international lawsuits against these businesses may be considered.

"Vietnam has to import more than 90% of its raw cashews for processing, with West Africa alone accounting for 70 - 75% (about 2.3 million tons per year). Therefore, if this situation persists, the cashew industry will likely face significant difficulties and losses due to raw material shortages in the third and fourth quarters, possibly extending into the first quarter of 2025", Mr Hoa assessed.

With a raw cashew supply of only about 300,000 tons per year, many businesses believe that Vietnam's agricultural sector needs policies to improve the area and yield of the cashew industry, thereby reducing imports and minimizing risks.

Many businesses noted that, according to global forecasts, the global supply of cashews is expected to decrease by about 7% compared to last year due to weather impacts. However, the actual decrease may be much larger. Therefore, the raw material shortage is expected to continue.

According to the Ministry of Agriculture and Rural Development (MARD), in the first four months of 2024, cashew exports reached 216,000 tons, with a turnover of $ 1.16 billion, an increase of 32.4% in volume and 21.2% in value compared to the same period in 2023.

According to Mr. Tran Van Son, CEO of Gia Bao Group, the project to construct the agricultural and food processing plant in Ba Tu, Binh Phuoc province, involves an initial investment of $ 6.5 million. It covers an area of ​​20,000 m2 with a capacity of 400 thousand tons/year and is expected to be completed by June 2025.

The project's objective is to transform the plant into a green agricultural processing centre in the cashew capital of Binh Phuoc, thereby creating opportunities to develop the value of agricultural products in general and speciality cashew products in Binh Phuoc province and neighbouring provinces.