Cashew growers face uncertain future

by Le Hung Vong

Though Viet Nam maintained its position as the world's top cashew nut exporter after attaining exports of US$1.45 billion last year, analysts are not confident about the cashew industry's sustainable development because of its lack of competitiveness and decrease in yield.

The cashew sector must be revamped, and the technique of growing cashew trees from nuts must be jettisoned, they warned, saying saplings should be used instead.

Last year Viet Nam harvested nearly 290,000 tonnes of cashew from over 330,000 hectares, meaning a yield of 0.91 tonnes per hectare. It had been 1.07 tonnes in 2007.

As the cashew industry has to import up to 50 per cent of raw materials for processing and export of cashew products, the analysts said Viet Nam could turn into a cashew-processing country.

The area under cashew cultivation has been reduced since 2009 while the yields have been inconsistent.

The area under high-yielding varieties is only 40 per cent of the total area under cashew. In the remaining areas, the yield is only between 0.7 and 0.9 tonnes per hectare, worth about VND24 million, or just over $1,000.

As a result many cashew farmers have switched to crops that bring them a higher income.

How to reduce the import of raw cashew for processing is now among the challenges facing the country.

Recently the Ministry of Agriculture and Rural Development zoned 150,000ha for high-yield cashew in Binh Phuoc Province and another 50,000ha in Dong Nai Province, the two provinces with the highest cashew yields in the country.

Experts said farmers would not switch to other crops if the yield in these areas reaches two or three tonnes per hectare.

The Ministry also has plans to zone 200,000ha for intensive cashew cultivation with an average yield of three tonnes per hectare. The plan, if realised, could make the master plan for the development of the cashew sector more feasible.

Dr Bui Chi Buu, head of the Southern Institute for Agricultural Technology, said to achieve sustainable development, the cashew industry must be revamped with more investment in technology and better training for human resources.

Buu said planting cashew nuts must be stopped and farmers should use saplings instead. The quality is poor if nuts are used, he explained.

According to the Viet Nam Cashew Association, measures to ensure sustainable development of the cashew sector must include financial support for cashew farmers, improvement and diversification of cashew products, improvement in technologies, and building of brand names for cashew products.

In 2013 more trade barriers would be imposed by importers of farm produce including cashew, the association warned.

Many cashew firms will then remain mired in financial difficulties and be forced to cut back on production or even shut down.

Hai Phong attracts FDI

Hai Phong surpassed Ha Noi and HCM City to take over second position in the FDI (foreign direct investment) list 2012.

By the end of the year, the northern coastal city mobilised US$1.16 billion in FDI, just behind Binh Duong with US$2.53 billion, according to figures from the MPI's Foreign Investment Agency.

Meanwhile, Hai Phong Department of Planning and Investment revealed that the city attracted $1.23 billion last year.

Around 95 per cent of this sum, or some $1.2 billion, was poured into Dinh Vu-Cat Hai Economic Zone and the city-based industrial parks, according to Mai Xuan Hoa, deputy head of the Hai Phong Economic Zone Authority.

Although 2013 is forecast to be a tough year, Hai Phong City still pins high hope on FDI mobilisation, especially investment from Japanese firms.

Hai Phong is considering establishment of an industrial park for Japanese manufacturers, specialising in support industries, said Hoa.

Garment makers see orders

Although the economic turmoils have seriously hit the big markets such as European countries and the US, most local textile and garment enterprises have received orders for 2013, according to Viet Nam Textile and Apparel Association (VITAS)

At present, these enterprises have been manufacturing goods for orders made for the new year 2013.

"We have received enough orders for the first half of the year. Our subsidiaries have taken measures to raise labour productivity, in order to deliver goods to customers in due time," Vietnam Investment Review (VIR) quoted Bui The Kich, Chairman of the Management Board of Dong Nai Garment JSC (Donagamex), as saying.

To fulfill all contracts in 2013, Donagamex has a plan to recruit 1,000 new workers for its factories which have been become operational in the past few months.

Shortly after the Tet (new lunar year festival), Donagamex will put Dong Phuoc Garment factory in Binh Phuoc Province into operation and production at the new factory will be accelerated when necessary, said Kich.

In 2013, Donagamex targets turnover of VND1.35 trillion (US$64.7 million) and profits of VND75 billion ($3.5 million) in 2013. The management board of the company also wanted to increase income for their employees by 10 per cent compared with 2012.

With a total turnover of about $100 million last year, Bac Giang Garment Co. has received enough orders for the first and second quarters of 2013.

Luu Tien Chung, Deputy Director of the company, said they exported goods everyday and so the 8,500 workers at their 10 factories had to work day and night.

Chung said Bac Giang Garment Co. targeted 10 per cent growth rate for 2013.

The biggest challenge facing the company is the increasing prices of "input" materials while prices of their products remain stable, according to Chung.

However, the company has re-organised and enhanced their production systems, raised labour productivity and improved quality of their products to meet customers' demands.

Despite the economic turmoils facing their customers, Garment JSC No 10 targets total turnover of nearly VND1.69 trillion ($81 million), profits of VND40 billion ($1.9 million), and workers to earn average monthly salary of VND4.8 million ($230) this year.

"We have received many orders from our customers and they are not a problem for us at the moment," Than Duc Viet, CEO of Garment JSC No 10 told VIR.

"The most importance is how to raise labour productivity and lower production costs." — VNS