Vietnam: Big challenge for cashew industry: when partners become rivals
Tue Dec 06 2016
At a speech delivered at an international conference held by the Vietnam Cashew Association (Vinacas) last week in Da Nang City, a representative of the Ivory Coast Cotton & Cashew Council revealed a willingness to follow Vietnam’s model to develop its cashew industry.
Ivory Coast has recognized the high value of cashew and has decided to develop cashew as one of its key economic branches.
The country has set up a representative office in Vietnam, in charge of looking for Vietnamese partners and buying technologies. This was why Vinacas requested the government to take action to prevent export of cashew nut processing technology.
Ivory Coast has also applied policies to encourage domestic and foreign businesses to set up cashew nut processing factories in the country.
Vu Thai Son, director of Long Son Cashew Nut Export Company, said the government of Ivory Coast gives financial support to exporters. Foreign invested enterprises are allowed to collect materials directly from farmers while there is no need to do this through intermediaries.
Meanwhile, some African countries offer $120 for every ton of cashew nut exported. Some Vietnamese companies have set up their offices in Ivory Coast, Nigeria and Ghana to enjoy the preferences.
According to Vinacas, in the first nine months of the year, Vietnam imported 868,000 tons of raw materials, 85 percent of which was from Africa, especially Ivory Coast (41 percent), Nigeria (13 percent) and Ghana (10 percent).
Reform or die
It is estimated that every three kilo of raw materials will give one kilo of cashew nut. W320 cashew nut is offered at $10 per kilo, while the raw material import price is $2.25 per kilo. As such, Vietnamese enterprises can pocket $1-2 for every kilo of products exported.
However, the enterprises now want bigger profits and to get this, they have to sell highly processed products instead of preliminarily processed ones. Bee’s honey or wasabi coated cashew nuts are offered at $20-30 per kilo on ebay and alibaba, which is 2-3 times higher than the price of cashew nuts sold by Vietnam.
Instead of trying to prevent African countries from buying Vietnam’s technologies, Vinacas seems to have a longer-term vision. Vinacas’ chair Nguyen Duc Thanh said it would be better to change the business strategy to adapt to the new circumstances and keep African countries as partners instead of rivals.