Vietnam’s cashew industry, a cornerstone of the nation’s agricultural exports, is confronting a looming trade deficit, a situation that could undermine its longstanding global leadership. Despite a notable 22.9% increase in export volume and a 21.8% rise in turnover year-on-year, the sector is grappling with escalating raw material costs that threaten its profitability and sustainability.
In 2023, Vietnam’s cashew export turnover reached $3.64 billion, while raw material imports stood at $3.1 billion, resulting in a trade surplus of $500 million. However, by the first eight months of 2024, the industry had already expended approximately $2.7 billion on raw material imports, nearly matching the total import value of the previous year. This narrowing gap between export value and import turnover signals a potential shift towards a trade deficit.
Vietnam’s domestic cashew production has been on a decline, with the cultivation area decreasing from 440,000 hectares in 2007 to about 305,000 hectares in 2024, yielding an estimated 370,000 tonnes of raw cashew nuts. This output satisfies only 10-12% of the processing industry’s demand, necessitating substantial imports, primarily from African nations and Cambodia. The situation is exacerbated by climate-induced supply shortages and export restrictions in these source countries, leading to a 40-50% surge in raw cashew prices.
Industry experts, including Vũ Thái Sơn, Chairman of the Bình Phước Cashew Association, express concerns over the industry’s diminishing profitability. The disparity between soaring raw material costs and stagnant export prices has resulted in significant financial losses for many enterprises. Small and medium-sized enterprises (SMEs) are particularly vulnerable, facing intense competition from larger firms, including foreign direct investment (FDI) entities, in securing raw cashew supplies. This competitive pressure risks pushing SMEs towards insolvency, potentially leading to market consolidation under larger corporations.
To mitigate these challenges, the Vietnam Cashew Association (VINACAS) emphasizes the necessity for strategic interventions. Recommendations include revitalizing domestic cashew cultivation to reduce dependency on imports, implementing supportive policies for SMEs, and enhancing value-added processing to improve export margins. Without such measures, Vietnam’s position as a global leader in the cashew industry may be at risk, with significant implications for the national economy and the livelihoods of those dependent on this sector.
