Cashew Project Report

CASHEW We are…… Ganesh Kumar Nikhil Sheth Dipayan Das

ITM Business School Global Leadership Centre Masters In International Business

04/Dec./2006

Navi Mumbai

1

History   

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The Portuguese introduced cashew into India Second half of the 16th century Its commercial value was only realized in the twentieth century. The world market for cashew is relatively new. Cashew started appearing on global markets towards the middle of the 1920s Trade was dominated by two countries: India, United States.

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Cont.. 

The cashew tree, native to Brazil, was introduced to Mozambique and then India.

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As a means of controlling coastal erosion.

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Some background 

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India is a major player on the cashew world stage. While cashew cultivation originated in Brazil. Today cashew is cultivated in Asia, Africa and Latin America. In the year 2000, the total global area under cashew cultivation 4,000,000 ha. Average productivity was around 510 kg per ha. Total raw nut production was 1.8 million tones.

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Cont.. 

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India is the 2ND largest country in the world cashew economy for area as well as production of raw cashew nuts. Brazil is first. Today cashew is cultivated on around 720,000 ha in India. Yielding an output of 450,000 MT Average productivity of 710 kg/ha.

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Cont.. 

Cashew processing, using manual techniques, was started in India in the first half of the twentieth century.

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It was exported from there to the wealthy western markets, particularly the United States. In the 1960s.

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Cont.. 

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The cashew industry ranks third in the world production of edible nuts. world production in 2000 at about 2 million tones of nuts-in-shell and an estimated value in excess of US$2 billion. India and Brazil are the major cashew exporters, with 60 percent and 31 percent respectively of world market share. The major importers are the United States Netherlands, Germany, Japan, United Kingdom. 04/Dec./2006

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Cashew 

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Three main cashew products are traded on the international market: Raw nuts Cashew kernels Cashew nut shell liquid (CNSL). A fourth product The cashew apple is generally processed and consumed locally.

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Cont.. 

One major factor that affects the consumption of cashew kernels in world markets is competition from other tree nuts.

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The major importers in developed countries contract their requirement for the whole year based on the sales from previous years

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Cashew nut shell liquid 

Cashew nut processing allows for the development of an important by-product, which can increase its added value.

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The liquid inside the shell (CNSL) represents 15 percent of the gross weight and has some attractive possible medicinal and industrial uses.

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Main Markets are United state, European Union, Japan.

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Cont.. 

Cashew is a good crop for smallholder farmers. In Mozambique cashew is considered by smallholder farmers to be one of their most lucrative crops.

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Thus cashew has the potential to increase the incomes of poor producers, to create employment opportunities during harvesting and processing and to increase exports.

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Quality First quality

Second quality

W210, W240, W320, W450, WB, WS, LWP, SWP LBW210, LBW240, LBW320, LBW, SW210, SW2440, SW320, SW, SB, SS, LP, SP

Third quality

DW320, DW350, DW

Fourth quality

DW2, DW3

Fifth quality

SW2, SW3, DW, DWT

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Sixth quality

CS, SK, SK2, TPN, TPN2,12 TPB, DW4

Grading 

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Cashew Kernels are graded into white/scorched wholes, pieces, splits, butts etc.. depending on the shape, size & color of the kernel.  The Govt.of India  Act prescribes 33 different grades of cashew kernels. Only 26 grades are commercially available and exported.  W - 180, is the ' King of Cashew ' - They are larger in size and very expensive. 04/Dec./2006

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Cont.. 

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W - 210, are popularly known as ' Jumbo ' nuts. W - 240, it is an attractive grade which is reasonably priced. W - 320, are the most popular among cashew kernels and highest in terms of availability, worldwide. W - 450, are the smallest and cheapest white whole kernels and hence the favorite among low priced whole grades.  

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Product description Designation

W - 240

Trade Name

White Wholes

Color/ characteristics

White/pale ivory/light ash, Characteristic shapes

Count/454 gms 220 - 240 size description Max Moisture % 5 Broken Max %

5

NLSG NLG max %

5 (NLSG & SW together)

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Product description Grade Designation

W - 320

Trade Name

White Wholes

Colour/ characteristics

White/pale ivory /light ash, Characteristic shapes

Count/454 gms 300 - 320 size description Max Moisture %

5

Broken Max %

5

04/Dec./2006 NLSG NLG max %

5 (NLSG & SW together)

16

Product description Grade Designation

W - 450

Trade Name

White Wholes

Colour/ characteristics

White/pale ivory/light ash, Characteristic shapes

Count/454 gms size description

400 - 450

Max Moisture %

5

Broken Max %

5

NLSG NLG max % 04/Dec./2006

5 (NLSG & SW together)

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Product description Grade Designation

SW - 320

Trade Name

Scorched Wholes

Colour/ characteristics

Kernels may be scorched/ slightly darkened due to over - heating while roasting or drying in drier/borma.

Count/454 gms size description

300 - 320

Max Moisture %

5

Broken Max %

5

NLSG NLG max % 04/Dec./2006

7.5 (NLSG & SSW together)

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Product description Grade Designation

SW - 450

Trade Name

Scorched Wholes

Colour/ characteristics

Kernels may be scorched/ slightly darkened due to over - heating while roasting or drying in drier/borma.

Count/454 gms size description

400 - 450

Max Moisture %

5

Broken Max %

5

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NLSG NLG max %

7.5 (NLSG & SSW together)

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Product description Designation

SSW

Trade Name

Scorched Wholes Seconds

Colour/ characteristics

Kernels may be over - scorched, immature, shrivelled (Pirival), speckled (Karaniram), discoloured and light blue.

Count/454 gms size description

N.A

Max Moisture %

5

Broken Max %

5

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NLSG NLG max %

7.5

20

(DW)

Product description Designation

FS

Trade Name

Fancy Splits

Colour/ characteristics

White ivory or light ash. Kernels split naturally lengthwise

Count/454 gms size description

N.A

Max Moisture %

5

Broken Max %

5

NLSG NLG max % 04/Dec./2006

5 (SS)

21

Product description Designation

FB

Trade Name

Fancy Butts

Colour/ characteristics

White/pale ivory or light ash. Kernels broken cross - wise (evenly or unevenly) naturally attached.

Count/454 gms N.A size description Max Moisture %

5

Broken Max %

5

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5

NLSG NLG max %

22

(SB)

Product description Designation

BB

Trade Name

Baby Bits

Colour/ characteristics

White/ Pale ivory or light ash

Count/454 gms size description

Plemules and broken kernels smaller than those described as SWP but not passing through a 10 mesh 24 SWG Sieve / 1.70 mm I.S. Sieve.

Max Moisture %

5

Broken Max %

N.A

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NLSG NLG max %

1%

23

(Cashew powder)

Labor Required   

Women Semi skilled labor. The industry is dominated by smallscale, single-owner or family-owned businesses.

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Cont.. 

Traditionally the various processing operations were performed manually by experienced semi-skilled workers. This is still the case in India, which is the world' s largest producer of cashew kernels

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Processing step

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Cont..

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Govt. Scheme

[as per 10th plan period] 

CEPC would provide one time subsidies to cashew exporters for procurement of equipment required for export of cashew in consumer pack(max. Rs 8 lakhs)

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CEPC would provide one time subsidies to cashew exporters on identified items of equipments (Max. Rs 8 lakhs)

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Cont.. 

CEPC provide subsidy to cashew exporter for adopting flexi-pouch vacuum packing systems either in indigenously or through import. (Max. Rs 5 lakhs)

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CEPC would provide one time subsidy to cashew exporter to improve facilities in the factories & get certification like ISO,HACCP, etc.( Max. Rs 5 lakhs for one system & Rs 8 lakhs for more then one system)

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Raw nut production

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Cont..

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Cont..

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GLOBAL TRADE 

Among 28 countries in the world involved in cashew production, 26 countries are actually engaged in production of cashew either for export or for their own consumption or for both export and domestic consumption.

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The share of the Indian crop vis-à-vis world production for the year 2001 was 32% at 375,000 tons.

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The Brazil crop constituted 15% of the world crop at 1,178,000 tons.

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INDIAN CASHEW INDUSTRY IN A NUTSHELL 

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India started its exports in the early part of 20th century with a small quantity of 50 MT which has increased almost to the level of 0.1 million MT by the end of the same century. Simultaneously the export earnings almost tripled during the last decade of the 20th century. Cashew forms an important component of the basket of agricultural products exported from India.

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Employment 

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This industry provides employment to rural poor as under: In cashew processing factories : 0.3 million In cashew farms : 0.3 million Of which: Women workers : 95% ie., 0.57 million Economically backward communities : 50% ie., 0.3 million

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INNOVATION 

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Indian researcher have developed a cashew nut Sheller at IIT kharagpur in 2005 for use in a processing plant with cashew shelling capacity of 100kg per hour. It is based on centrifugal forces. This forces exerted by an impeller with a diameter of 26.5cm. RPM have been standardized to 3000 RPM for better shelling & prevent vibrations in the machine.

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Cont. 

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The CEPC has set up a Quality Upgradation Laboratory & Technical Consultancy Centre at Quilon,the nerve centre of the Indian cashew industry. The Quality Upgradation Laboratory has the most modern state – of- the art equipments procured from india and abroad

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Cont.. 

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A new planting method, which set the trees directly in the ground, eliminating the need for costly and hard-to-find plastic bags. (Mozambique) Organic Cashew

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Why process in india     

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Better technology Inexpensive & semi- skilled labor High capacity to process Leader since beginning in processing India's cashew industry was the first to use quality control for improvement of performance India also has a long tradition and good reputation as a high quality processor of cashew.

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Cont.. 

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Lack of financing raw materials in Mozambique Lack of buyers in Mozambique

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The ISO 6477 standard was introduced in 1988 in India

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No national export brand Marketing constraint High rate of taxation in Mozambique

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The domestic market 

It appears that almost 50% of the kernels produced in India are being sold on the domestic market.

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But this market’s dynamics and major players are as yet unexplored, as are the linkages between domestic and international markets.

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Export from India Countrie s U.S.A Netherlan ds

2003-2004 Qty Value (M.T)

(Rs.Crs)

2004-2005 Qty Value (M.T)

(Rs.Crs)

2005-2006 Qty Value (M.T)

(Rs.Crs)

48504

881.55

61546

1288.49

43149

958.33

12237

215.03

15693

345.67

18736

408.82

U.A.E

6239

102.42

6690

148.23

8274

184.41

U.K

5392

95.61

7108

158.34

6238

140.88

Japan

5522

101.95

5047

111.21

4685

110.2

France Saudi Arabia

2444

43.61

3329

66.49

3470

75.79

2011

32.95

2998

61.55

2827

59.61

Spain

2198

41.11

2870

64.8

2648

61.09

Belgium

1769

33.88

2497

53.18

2378

54.48

Germany

1574

26.11

1966

42.39

1991

42.21

Russia

1413

22.09

2331

43.41

1990

38.77

830

15.57

1511

33.74

1859

42.61

1354

22.72

1540

31.39

1558

33.14

986

17.74

1119

23.72

1236

25.2

Greece C anada Italy 04/Dec./2006

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Cont.. Australia

275

4.38

873

18.36

1114

25.29

Norway

890

15.9

1318

29.15

873

19.89

Kuwait Hong Kong

847

15.34

574

12.78

863

19.76

477

10.25

719

17.71

788

17.28

Israel

508

9.71

964

23.26

752

17.4

Singapore

513

9.24

510

11.6

694

13.61

Lebanon

561

11.28

655

14.95

470

9.61

Bahrain Korea Rep. New Zealand

439

6.82

362

7.08

393

7.8

311

5.83

213

5.22

255

5.85

332

5.58

201

4.46

204

4.62

Malaysia

40

0.69

62

1.39

191

4.05

3162

57.13

3973

90.68

6505

134.17

100828

1804.43

126667

2709.24

114143

2514.86

Others Total 04/Dec./2006

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Production Location in India

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Cashew fruit

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Current news 

In June 2005 Mozambique Govt. unveiled a newly branded cashew nut “ZAMBIQUE” for its first export sale to a US buyer , Suntree.

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India Market share in cashew industry has declined due to entry of Vietnam

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International PLC 

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Mozambique Angola Benim Cote d. ivoire Guineabissau Kenya Madagascar Nigeria Tanzania

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Introduction Phase(1961-1977)  Production locations

China India Malaysia Sri lanka Thailand Vietnam Brazil Dominican Republic El Savador

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International PLC 

• • • • •

Introduction Phase(1961-1977)  Market locations

United States over 50 % Netherlands (10%) Germany (7%) Japan (5%) United Kingdom (5%) 04/Dec./2006

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International PLC Introduction Phase(1961-1977)  Competitive factors Skilled ,semi-skilled & cheap labor Availability of raw nuts Processing facilities & techniques 

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International PLC Introduction Phase(1961-1977)  Production Technology No Technology was involved in this stage Manually done 

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International PLC 

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Mozambique Angola Benim Cote d. ivoire Guineabissau Kenya Madagascar Nigeria Tanzania Indonesia Mexico

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Growth Phase(1977-1999)  Production locations China India Malaysia Sri lanka Thailand Vietnam Brazil Dominican Republic El Savador

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International PLC 

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Growth Phase(1977-1999)  Market locations

USA EUROPE CHINA JAPAN AUSTRALIA RUSSIA SOUTH AFRICA

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International PLC 

Growth Phase(1977-1999)

Competitive factors Skilled and cheap labors Production costs Working capital rate Quality & reputation Processing Techniques 

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International PLC 

Growth Phase(1977-1999)

Technical factors Roasting & shelling was done mechanically Mechanical technique were also involved during separation, pre-grading & drying 

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International PLC 

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Prolonged Phase(2000 onwards)  Production locations

Mozambique Angola Benim Cote d. ivoire Guineabissau Kenya Madagascar Nigeria

Tanzania  Indonesia  Mexico  Dominican Republic faso  04/Dec./2006 Honduras  Peru 

India Malaysia Sri lanka Thailand Vietnam Brazil Dominican Republic El Salvador Togo Senegal Ghana Burkina 75

International PLC 

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Prolonged Phase (2000 onwards)  Market locations

USA CHINA JAPAN AUSTRALIA NETHERLANDS FRANCE RUSSIA SOUTH AFRICA AND OTHERS

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International PLC 

Prolonged Phase (2000 onwards)

Competitive factors Modern Lab facilities Govt. schemes Working capital (Investment) Quality Brand Skilled & semi-skilled labors 

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International PLC 

Prolonged Phase (2000 onwards)

Technical factors State-of- the-art laboratories (India) to determine the nutrition content of cashew & quality upgradation Sheller developed by IIT-ans for better shelling capacity 

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