Making news

Cashew businesses lack capital, materials

In the first half of this year, 600-700 small cashew processing factories have closed due to a lack of raw materials and capital for production, causing a headache for the sector to achieve the export goal of 3.5 billion USD set for this year.

Nearly 500 cashew businesses in southern Binh Phuoc province, one of the largest cashew growing localities in the country, halted their operation after the local cashew season finished.

Hoang Quoc Dung, Director of Hai Hung company, Binh Phuoc province said: "This year, cashew had a bad harvest, so we could not have enough raw materials for our production. Other companies have dealt with the same situation.”

This is the second year locally-grown cashew has coped with a poor harvest when it covers up to 30 percent of businesses’ raw material needs.

As such, they are seeking to borrow 800 million USD from banks to buy 500,000 tonnes of raw materials abroad for processing and exports from now until the end of the year.

However, almost all banks have gone quiet, with no word as to whether they support the loans.

Phan Dinh Tue, Vice Director General of Saigon Thuong Tin Commercial Joint Stock Bank told reporters: "Many businesses have been operating inefficiently and met with a lot of difficulties.  If they borrow money from banks, their situation will affect the banks.”

Up to 90 percent of cashew processing factories are micro and small-sized ones. Their operation is seasonal. When the local cashew season is bad, raw material import will skyrocket by 25 percent, sparking a crisis for the sector.

Factories operated with total capacity of 1.6 million tonnes of raw materials a year, creating jobs for hundreds of thousands locals in southern Binh Phuoc, Long An and Dong Nai provinces.

Cashew processing businesses should work with each other to cope with changes in the market.

In 2017, the cashew sector surpassing rice, coffee and rubber to make revenue of 3.6 billion USD.