Cashew manufacturing assn stalls operations at Palasa

With some unscrupulous middlemen putting pressure on traders to sell their stocks at low prices, the Palasa Cashew Manufacturing Association (PCMA), in a bid to stabilise the market, has stalled the processing operations at the Palasa market from August 1.

"Due to some middlemen, nut prices have not been increased for the last three months. This has led to heavy losses to majority of the processing operators at the Palasa market, the biggest cashew centre in Andhra Pradesh. To avoid further losses, we have decided to stall the cashew processing operations till August 15," Malla Nooka Raju, president of PCMA, told Business Standard.

According to M Bhaskara Rao, treasurer, PCMA, imported nuts have been invading the Palasa market for the last few days.

"The imported nuts are available at Rs 2,800-Rs 3,100 per bag (each bag contains 80 kg of nuts). But the Palasa cashew processing operators have been purchasing nuts at Rs 3,600-Rs 3,800 per bag for the last three months. Running our processing operations is not viable if we sell cashew kernels below Rs 230-Rs 240 per kg (No 1 grade quality). But the processors who have been importing nuts at Rs 2,800-Rs 3,100 are selling the kernels at Rs 195-Rs 200 per kg due to low procurement costs," he said.

"Keeping this in mind, middlemen are putting pressure on us to sell our stocks at low prices. The traders, however, are not interested in disposing of their stocks at low prices. Palasa traders currently stocked 35,000-40,000 kernel tins (each tin contains 10 kg of kernels) worth close to Rs 8 crore at their godowns," he said.

"If we sell our kernel stocks at Rs 200 per kg, traders will suffer a loss of about Rs 400 on each tin of kernels. To avoid this, traders have decided not to add further stocks by processing nuts," Nooka Raju said.

Traders are expecting the market to stabilise in another 10-15 days. If the market does not improve, the association will stall the processing operations for few more days, he added.

Raju said that about 30-35 per cent of Palasa's cashew kernels were purchased by Kerala traders annually. But this year, due to the influx of imported nuts at cheaper rates, Kerala traders have not entered the Palasa market so far. This was one of the reasons for not increasing the kernel prices, he said.

"Locally, nut prices have declined in the last few days due to imported cashew nuts. We purchased cashew nuts from local producers at Rs 3,600-Rs 3,800 per bag some 15 days back. After the arrival of imported cashew nuts, the local prices came down to Rs 2,900-Rs 3,200 per bag," traders said.