Cashew industry plans to form all India federation

The highly-fragmented Indian cashew industry, with 1,300 cashew manufacturers and processors spread across the country, is seeking to form a national federation to address issues concerning the industry. This was evident at the India Cashew Convention 2005 that concluded at Panaji on Sunday.

The Karnataka Cashew Manufacturers Association (KCMA) has taken the lead in this. The fragmented industry must make its presence felt at the local, state and national levels, according to G Giridhar Prabhu, co-ordinator, national steering committee on cashew of the Union ministry of agriculture and former president of KCMA.

It is only an apex industry body that can plan market development, he said.

"General trade associations cannot address the problems faced by a specific commodity. A body is needed at the national level to ensure that the issues affecting it are raised and solved," he told Business Standard from Panaji.

The industry faces the twin problem of a raw material shortage and excess capacity. If the shortage persists, the industry fears that it may lose its status as the number one exporter and play second fiddle to Vietnam, which is fast catching up. India still leads in cashew exports but its share is down from as high as 99 per cent till 1974 to around 40 per cent.

As per the 2005 estimates (October-September), India exported 1.24 lakh tonnes, Vietnam 1 lakh tonnes, Brazil 40,000 tonnes and Mozambique 10,000 tonnes.

India's total installed capacity is over 1.1 million tonnes of throughput but only around 8 lakh tonne capacity is utilised. "The crucial issue to be addressed is whether we can improve production and productivity in existing units so that we can postpone the additional capacity creation. New capacity can be added only in cases where existing units cannot address specific issues of quality, specialisation and productivity," Prabhu said.

He also points out that the industry is "subjugated at both the state and national level".

In Kerala, the state has intervened by going in for monopoly procurement, taking over factories and supporting the distorted labour practices. "This has hurt the industry and has hit investment in technology," he said.

These issues affect cost levels in different states at a time when the domestic and international markets are being integrated, depriving producers of advantage they could have earlier got from the domestic market.

This industry has not had any direct or indirect assistance from state, Prabhu complained. Other crops like coconut, spices, coir, coffee and seafood have all received help from the Centre. In case of cashew, though farmers have been provided resources under the Plan programmes, there has been no direct support to industry, Prabhu added.