The Hindu Business Line : Policy changes hit cashew industry

NON-PAYMENT of Central grant-in-aid to the cashew industry even after completion of projects under the Ninth Plan schemes for modernising the processing units, coupled with certain revised guidelines on market development assistance (MDA) and orders relating to import of raw nuts, seems to be creating problems for the industry.

During the Ninth-Plan period, the Cashew Export Promotion Council of India (CEPC) had disbursed Rs 3.26 crore to cashew processor-exporters for implementing the plan schemes such as modernisation of cashew factories; adoption of ISO 9000/HACCP quality control schemes; and acquiring the latest packaging systems.

For implementing these projects, the processor-exporters were paid grant-in-aid by the Centre.

They had completed these projects, though started in the previous Plan, in the Tenth Plan. But, now, the Centre would be paying them grants only as per the Tenth Plan schemes, which is much lesser than what was committed to the processor exporter in the previous plan, Mr Sasi Varma, Secretary, CEPC, told Business Line. The issue has been taken up with the Union Government, he said.

The CEPC, he said, had also submitted the proposals for the Tenth Plan schemes, which were yet to be approved. "The allocation for this five-year period is only Rs 3 crore, which would be grossly insufficient," he said. He said competitors in Vietnam were equipped with modern technology and approximately 85 per cent of their processing facilities were set up after 2000.

Where as, "more than 40 per cent of our factories are from the 1950s and only 10 per cent of the factories are from 1990s. Unless these factories are upgraded they would not be able to withstand the competition in the international markets, he pointed out. The CEPC had sought financial assistance to the tune of Rs 20 crore for implementing the plan proposals.

The Centre is understood to have reduced the grant-in-aid to 25 per cent from 33.33 per cent in the Ninth Plan besides bringing down the upper ceiling to Rs 8 lakh per exporter as against Rs 25 lakh.

Add to this, under the revised guidelines on MDA would not be available for exporters with export turnover of over Rs 4 crore per annum; more than three participations in a particular fair/exhibition; and unless the CEPC official is accompanied by at least five exporters, he said. Consequently, the Council had not been able to take up increased promotional efforts.

As cashew is a high value commodity and given the crisis situation in the industry, he said, conditions for availing MDA had to be suitably relaxed.

On the other hand, the notification issued by the Union Ministry of Agriculture, making it mandatory for importers to obtain import permits from the plant protection authorities, since June 1,2001, was posing hardships to importers of raw cashew nuts he said.

The raw nut availability in the country is at around 45 to 60 per cent of the requirement of the cashew industry, which has an installed processing capacity of 10 lakh tonnes. Thus, its dependence on imported raw nuts is almost perpetual.

According to him, besides the procedural difficulties often the processors had to incur considerable financial losses by way of demurrage etc., in addition to exorbitant plant quarantine inspection fees, i.e., Rs 10,000 for a consignment of 100.025 tonnes.

He said that raw cashew nuts were already subjected to phyto-sanitary certification and moreover, during the processing it was subjected to high temperature, thus effectively eliminating the insect or microbial contamination. The raw nut exporters in Africa and South East Asia were consequently more inclined to deal with importers in Vietnam and Brazil. "Thus our traditional sources for raw cashew nuts are getting eroded", he claimed.

At the current prevailing price for raw cashew nuts, the parity price for cashew kernels works out to about $2 per lb. Whereas, the Indian exporters was able to realise only about $1.75 to $1.80 per lb, he added.