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by Chandani Dias Abeyagunawardena

Cashew is a valuable agricultural commodity that has been traded in Sri Lanka for many decades. A considerable volume of cashew has been exported since 1974, earning foreign exchange to the country.

Successive crop failures coupled with increasing demand in the domestic market have contributed to a gradual decline in the export revenue. Many measures have been initiated to overcome this situation, but removal of restrictions on import of raw cashew can be identified as the most important and effective.

The new procedure enforced by the government from December 1, 2001 enables Sri Lankan exporters to import the requirement of raw cashew to service the export orders. The exporter community has positively responded to this step by commencing imports. The government also allowed import of cashew-grafted plants (Anacardium occidentale) recently. Sri Lankan entrepreneurs are allowed to obtain approvals under the Plant Protection Ordinance if they wish to import high yielding varieties for planting. Several entrepreneurs in the meantime are getting ready to invest in large-scale plantations of cashew in different areas in the country.

At present over 80% of 25,000 hectares of cashew land in bearing, is in the hands of smallholders. The present structure of land holding is expected to change with large-scale cultivation.

Cashew is one of the crops that can be successfully grown along the coastal belt and in areas where other food crops, important for food security purposes, could not be grown.

Investment decisions for land utilisation for cashew in a small island such as Sri Lanka have to be made by taking into consideration socio-cultural and environmental issues apart from economic feasibility.

In addition, one has to always take into account critical issues such as scarcity of labour encountered by the tea, rubber, and coconut sectors over the years.

New developments

New developments that are taking place indicate that the industry is geared to take off with a new plan of action. Learning from the experience gained by the leaders in the world cashew industry at this juncture is vital.

Fortunately, Sri Lankan entrepreneurs and policy makers need not go far, as Indian experience is rich enough to offer all the lessons if there is a will to learn.

Cashew export sector is an important foreign exchange earner for India. Its contribution to the total agriculture exports is 16.3%. The Indian Cashew Industry is also one of the largest employers especially of women folk from weaker sections of the society.

Rich traditions in cashew cultivation and processing have enabled India to emerge as the largest cashew producer, processor, and exporter in the world.

The annual national production of raw nuts is around 235,000 MT from about 685,000 Hectares of land. Small holders own around 95% of the total area under cashew. Over thousand processing units are scattered mostly around Southern part of the country. These units are operated predominantly by small and medium scale entrepreneurs. India not only produces but also imports almost an equivalent amount of raw nuts (250,000 MT) every year from more than twenty countries in the West / East Africa and the Far East. This has made India the world's largest raw cashew nut importer.

Indian achievements

Indian achievements in the cashew industry by far have not come easily.

Even though not much is known of the origins of the industry, it has been recorded that cashew processing on a commercial scale was first started in mid 1920's by Roch Victoria, a Sri Lankan who migrated to Quilon (Kollam).

He was assisted by Swaminadhan from Madras. First exports have been made by W.T. Anderson who set up a business under the name Indian Nut Company in Quilon. A cottage industry flourished at that time across the Quilon town. Cashew nuts were fried in pans and kernel extracted, blanched, graded, and packed in wooden tea chests lined with newspaper before being shipped to the USA.

Later on, metal tin containers replaced tea chests.

Tin containers were vacuumed using hand operated vacuum pumps and were sealed. It was only in 1954 that 'Vita pack' machines were used to infuse tin containers with carbon dioxide gas.

Export of cashew kernels from India began to grow and many of the small time processors supplying cashew kernels to 'India Nut Company' ventured out and became exporters on their own account. The pattern of business that evolved comprised exporter, broker/agent, importer/ buyer and end-user. Agents/brokers promoted individual exporters on an exclusive basis. Import of raw cashew from Africa was introduced to cater to the growing demand for kernel as the international market share began to grow from 45 tons in 1923 to 1350 tons in 1939.

Import volumes expanded further during 1940 to 1941 to cater to the ever-rising demand that came from the exporter-processors.

The industry began to grow further with the expansion of capacities and ever increasing n umber of processing units. This made importers to take a speculative position on the commodity. To overcome obstacles suffered at the hands of the importers, industry leaders formed a 'Cashew Syndicate'.

Using resources pooled by the processors involved, the Syndicate began to purchase Indian raw nuts on pre-determined prices for distribution on the basis of the previous years performance.

Though it was a success at the beginning, the syndicate did not survive for long as it was not formed with a requisite legal framework.

It was 1955, the Cashew Export Promotion Council (CEPC) was formed under the purview of the Ministry of Commerce with the mandate to guide the industry in promoting exports of cashew kernel and allied products.

To date the Council works closely and in consultation with the leaders of the Cashew Industry.

Major activities

Export development activities of the CEPC are numerous. Major activities are trade fair participation, product and packaging development in collaboration with universities and research institutions, sponsoring trade delegations to buying countries for fostering of business ties and to producer countries for exploration of supply sources.

The CEPC also coordinates with central and state governmental departments to facilitate resolution of problems of the exporter community. To service the cashew industry, the CEPC operates a laboratory and technical division of international standard. The laboratory offers a complete package of services including evaluation and certification of raw cashew nuts, cashew kernels, cashew nut shell liquid, and other by-products.

During the period from 1956 to 1960, India diversified into new markets such as German Democratic Republic, Federal Republic of Germany, Switzerland, Hong Kong, Japan, and Singapore.

The USSR improved purchases and by 1969 became the number one importer driving the USA to the second position.

However the current position is that the USA has emerged as the premium market for India and the Netherlands has become the second largest market making itself the gateway to the entire European region.

New supplies

Buyers from the USA started actively buying from new suppliers such as Brazil. This enabled Brazil to expand its extent under cashew and also reach a production target of 70,000 MT per year by late 1970's.

New suppliers such as Mozambique, Tanzania, and Kenya too began to develop processing and exporting to the USA but Brazil remains as the main supplier due to its strategic location and competitive terms of business.

Indian processors began to experience severe competition by this time due to scarecity of raw nuts and unfavorable price fluctuations in the kernel market.

Many regulatory measures brought in thereafter by the Indian Government to stabilize the raw nut prices and to secure minimum wages to the workers were not favourable to develop the industry. However, liberalisation of imports in 1981 after ten years of regulated imports through Cashew Corporation of India paid dividends. By 1989-90 imports of raw nuts reached 53,000 MT. Indian processors of raw nuts too expanded from Keral into East and West Godawari Districts and Palasa of Andra Pradesh, Orissa, Karnataka, Goa, Tamil Nadu, Maharashtra, West Bengal and Assam. In 1966, the Government of India established the Cashew Nut Development Council under the Ministry of Agriculture with a mandate to co-ordinate and develop the cashew production throughout the country.

Its efforts contributed immensely to reach an annual domestic production target of 350,000 MT of today.

India has installed a production capacity far in excess of the Indian production, making the need to import an absolute necessity, specially in view of the employment potential of the industry. In recognition of this fact India has always permitted duty and licence free import of raw cashew.

Time to time there are calls for self sufficiency in raw cashew through increased domestic production, however at the last congress meeting held in Cochin Indian industry leaders reassured the supplying countries that Indian imports will continue. The assurance given would pave way for more investments into production.

While these commitments are made by the industry leaders, Indian Research and Development Organisations are working hard to remove the dependency on imports. In fact, they have observed that import quantities of raw cashew remain static during the last few years and the domestic production has increased.

The production program was started in India in 1950 with low yielding seedlings. These seedlings are now being replaced with clones of high yielding varieties. As a result, the yield per hectare has increased from the level of 200 kg. per hectare in 1976-1977 to 900 kg. per hectare in 1999-2000.

It is also learnt that varieties have been developed to give 2000 kg. per hectare. The predictions made on higher yields will soon become a reality as India already has 40 high yielding varieties that have been developed through 20 years of research.

High yielding varieties

Regional specific high yielding varieties, a uniform and easy multiplication technique, regionalised nutritional management, effective crop protection methods and standardised harvesting and post harvesting handling are some of the noteworthy achievements of the research program launched for cashew production.

The transfer of technology to farmers has been given the maximum priority. India is also moving away from the traditional system of planting 150-200 trees per hectare to high-density system where 625 plants are accommodated per hectare. As a result of the new technology developed and adapted Indian production has recorded a growth of 10% per annum.

India has given much importance to the development of by-products of the cashew industry. Cashew Nut Shell Liquid (CNSL) is one of the important products exported in big volumes.

The liquid is extracted from the shells and is used for production of CNSL resins polymetric products and industrial chemicals. CNSL is an important raw material in paints, chemicals, brake linings, clutch placing, plastic, and wood industries. Cashew apple is used for production of "Feni" in Goa, South India. Juice extracted from the cashew apple is fermented and distilled for preparation of "Feni" for the last four centuries or more, in addition, other preparations such as cashew apple syrup, jam, candy and chutney are being made.

The Kerala Agricultural University has already developed methods for producing four grades of wine. It has been found that cashew apple residue could be used for cattle feed.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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