Cashew nut prices zoom due to shortage in Palasa

The Palasa cashew manufacturing centre, the state's largest cashew kernel production centre, is experiencing a shortfall of cashew nuts in the current season. The short supply of nuts have ensured that prices in the state have skyrocketed.

The main reason for the shortage is attributed to the large scale purchases of cashew nuts by Kerala-based traders from farmers in Andhra Pradesh. The shortage is estimated to be in the region of one lakh bags (80 kg per bag).

Andhra Pradesh, the country's second largest producer of cashew nut, after Maharashtra, has seen a slight drop in production this season.

This is indicated by the fact that the cashew nut arrivals which usually begin from 1 April, has been delayed by 20-25 days in the 2003-04 season.

Palasa manufactures source cashew nuts from the East Godavari and Srikakulam districts in the state, while some quantities are also sourced from Orissa and Madhya Pradesh.

Speaking to Business Standard , M Nooka Raju, president of Palasa Cashew Manufacturers Association, said: "Due to a fall in the availability of nuts Palasa cashew manufacturers have had to pay 30-40 per cent more at the finishing stage of the current cashew season."

In addition to a drop in cashew nut production in the state, major quantities of nuts were transported to Kerala traders from the state resulting in a shortfall of nearly one lakh bags of nuts for the Palasa cashew industry, he added.

"In the initial period of the current cashew season, cashew manufacturers were paid Rs 1,800-2,000 per bag of nuts. It later went up to Rs 2,500-2,700 and now we are purchasing nuts at Rs 3,500-3,600 per bag," Raju said, adding, "Even though we are ready to pay a high price, the supply of nuts does not meet our requirements."

Ironically for the first time in its history, the acute shortage of nuts has forced Palasa cashew processing unit owners to buy cashew nuts from the Kerala market this season.

"Palasa cashew processing unit owners have purchased nearly 2,000 bags of nuts from the Kerala market this season, even though these nuts are not as good as ours," Raju said. This season, Palasa cashew processing units could process only three lakh bags of cashew nuts, as against about 4.5 lakh bags last season.

Cashew kernel prices too have increased by Rs 10-20 per kg depending on the grades in the Palasa market.

"Keeping this problem in mind, we have been requesting the state government for many years now to ban the sale of cashew nuts to other states. If this is implemented local cashew processing plants will not suffer due to shortage of raw material," he observed.

"The new crop will enter the marker from the beginning of April," Raju said, adding, "In the new season, the industry is expecting a hefty arrival of nuts because of good crop yields."