(Representative image)The cashew industry is moving from crisis to crisis. We must not make the mistake of evaluating traditional businesses comparing them with new-generation businesses. The cashew industry is part of the culture of Kollam and therefore, the industry should not be evaluated within the strict parameters of profit and loss.
The industry sustains three lakh workers and about 15 lakh dependents of these workers. In the sector, the cashew development board is the biggest organisation that is under government control. While the board and Capex, a cooperative in which the government has significant control, are languishing, private entities are growing on their strengths.
The crux with the problem is not issues with the industry, but how the industry is being managed. While crores that are being provided to the Cashew Development Board, the government needs to ensure that these crores do not fall into the wrong hands.
The industry is not able to meet even half of the domestic requirements and depends on imports from Africa. Exports are also dependent on raw cashew that is imported. Production at home has dropped to such levels that they can no longer meet increasing domestic demand. On the other hand, sourcing raw material from Africa is fraught with risks because the material takes 40 to 60 days to reach India from Africa. While in transit, the raw material could deteriorate or market forces could drag or push up prices. In addition, Vietnam has been able to provide cashew at lower costs than India and some Indian companies have started establishing processing units in Vietnam. Surging import prices could also soon prompt Indian companies to establish processing units in Africa.
In the domestic front, when raw cashew from Kannur and Kasargode- which are considered to be the best in the world in terms of quality- reaches Kollam, freight charges spiral to about Rs 15,000 per load. This increases processing costs considering that 60 per cent of the domestic production is catered to by northern districts.
While in 1990s, Kerala was the leading producer of cashew in India, Maharashtra is the now the leader in terms of production. Kerala has also lost ground to Odisha, Karnataka and Andhra in terms of production. Farmers are moving farms outside Kerala because of land ceiling restrictions as well as taxes imposed by the government.
Many solutions have been proposed to revive the industry, one being increasing domestic production in the state. Other solutions are improving technology and taking care of the needs of employees in the sector. The public sector needs to be restructured, modernised and revamped. Further, value-added products have to be developed. Marketing efforts to identify new markets and cutting down on norms and practices that harm the interests of workers would also help.
(The author is the chairman of the central warehousing corporation, and chairman of the UN Expert Committee on Housing. He is also a former chairman of Capex.)
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