Cashew imports burst Palasa's Diwali hopes

The import of cashew nuts has severely upset the Palasa cashew manufacturing market, the biggest cashew-processing centre in the state, particularly during the just concluded Diwali season.

Normally before the Diwali festival, cashew kernel prices go up between Rs 10 and Rs 20 per kg in the Palasa market, but during this Diwali the situation was reversed, and prices fell to Rs 5 per kg.

"This was mainly due to the imported cashew nuts. Owing to shortage of nuts in the local market, this year some big cashew processing operators imported more than 10,000 tonnes of cashew nuts from other countries at about Rs 3,200-3,300 a bag (each bag contains 80 kg nuts). Whereas, many of our small and medium operators purchased the nuts in the local market at Rs 4,200 a bag before the Diwali season," B Narayana Rao, former president of Palasa Cashew Manufacturing Association, told Business Standard.

The operators who imported nuts from other countries gained as the kernel prices did not increase as expected by the cashew operators. Thus, the operators who purchased the nuts in the local market by paying higher prices lost heavily.

"This dismal situation resulted in about 30-35 operators closing their units before Diwali," B Murali Krishna, secretary of Palasa Cashew Manufacturing Association, told Business Standard.

"When we purchase the kernels at Rs 4,200 per bag, we have to sell the kernels on an average price of Rs 240 a kg to recover our costs. However, some operators, who bought the imported kernels, sold the kernels at rates below Rs 220 per kg. This hit the entire market this Diwali," he said.

"Generally on the eve of the Diwali season, the kernel prices increase by Rs 10-20 a kg. However, this season the prices stagnated in the Palasa market and kernel prices were quoting at Rs 5 or lower," Krishna stated.

In addition to this, Kerala cashew traders also did not buy any cashew kernel from the Palasa market. This was another important reason for the fall in prices. Many of the cashew processing operators in Kerala imported nuts from other countries at lower prices, Rao pointed out.

A majority of the unit owners stopped the purchase of cashew nuts a fortnight ago due to this reason and the nut prices slipped by Rs 400 per bag.

"Before the Diwali season, we purchased the nut at Rs 4,200 per bag but due to the lack of demand nuts are now available at Rs 3,800 a bag," Krishna said.