Steep increase in raw material price and continuation of import duty up to 10 per cent are the twin factors that dampened the spirit of cashew processing units in North Andhra.
The festival season, which generally sees a heavy demand for finished cashew in the local market, has not brought cheer to the cashew processing units.
The price of raw cashew nuts has gone up this time by 40 per cent. The labour problem has further aggravated their woes as many workers are preferring wages under the National Rural Employment Guarantee Scheme.
The season generally starts in September and lasts till Sankranti.
“The finished cashew (high quality) cost has not increased much this time. It has gone up by Rs.50 or so per kg and export quality cashew is available in the market for Rs.800 to Rs.1,000,” Madhav Sure, finance and marketing head of Arle Cashew Pvt. Ltd, which owns a unit at K. Kotapadu, told The Hindu.
Raw material is not available locally in sufficient quantity forcing the processing units to import it from Tanzania, Ghana and other East and West African countries.
There also the prices have gone up abnormally. Moreover, the increase in import duty from 4.36 to 10 per cent sometime ago has dealt a deadly blow to the industry.
High operational cost
North Andhra has 750 to 800 units out of which 500 have shut down their operations due to high operational cost. Units numbering 250, which are functioning, are producing only 30 to 40 per cent of their rated capacity.
Palasa in Srikakulam is the hub of cashew processing units in North Andhra. It is estimated to have an annual turnover of Rs.100 crore. The remaining units are located in and around Visakhapatnam and Cheepurapalli in Vizianagaram.
“The situation is turning from bad to worse and unless the government comes to our rescue it will not be possible for us to operate our units,” says owner of a Palasa-based processing unit.