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Cashew sector needs US$800 million in loans
The Saigon Times Daily
Monday,  Jul 9, 2018,14:21 (GMT+7)

Cashew sector needs US$800 million in loans

The Saigon Times Daily

A farmer is seen working in a cashew garden - PHOTO: TL

HCMC – The Vietnam Cashew Association (Vinacas) will likely ask the State Bank of Vietnam for help as its members need commercial bank loans of up to US$800 million to import some 500,000 tons of raw cashew, heard attendees at a seminar in HCMC late last week.

The seminar was aimed at seeking solutions to provide loans for cashew companies in the second half of this year and in 2019.

Given the fluctuations in cashew nut prices, according to local cashew producers, domestic banks are hesitant to disburse loans to them, the Vietnam News Agency reported.

Several banks now intend to reject additional loans after the maturity of existing loans, forcing companies to sell their cashew nut stocks in a bid to maintain their floating capital. This has put cashew producers in a difficult situation.

Vinacas General Secretary Dang Hoang Giang noted that many cashew producers are suspending their production activities because of the lack of floating capital and cashew raw materials.

He added that 12 out of 33 cashew enterprises are in operation in the Mekong Delta Province of Long An, while a staggering 80% of cashew-processing facilities, especially small-scale producers, have had to either shut down or suspend their operations in the southern province of Binh Phuoc.

Vinacas Chairman Nguyen Duc Thanh said some cashew companies are experiencing difficulties due to rises in cashew raw material prices and declines in cashew nut prices.

Some cashew companies have recently renegotiated the purchase prices of cashew raw materials, lowering them by US$150-300 per ton.

Last year, the outbound sales of Vietnam’s cashew products exceeded US$3.6 billion, making cashews the top agricultural product for exports.

The International Nut and Dried Fruit Council forecast that the world’s cashew nut prices will increase by an average 6% per year. In addition, the global cashew demand is on the rise, especially in the second half of the year.

Delegates at the seminar noted that cashew inventories have run out, so local cashew enterprises should, in the coming period, import raw materials for their production and export activities, thereby offsetting their price losses.

Vinacas estimated that some 500,000 tons of raw cashews are en route to Vietnam from exporting countries or are stuck in bonded warehouses.

As such, a Vinacas representative revealed, the association plans to suggest the State Bank of Vietnam ask commercial banks to offer credit packages worth up to US$800 million so that cashew producers can obtain enough raw materials for their production activities.

Vinacas will provide a list of prestigious cashew export and import enterprises for these banks to facilitate their capital access.

In addition, the association called on commercial banks to avoid deep interference in the operations of the sector, as some suggested its members were abandoning their deposits on material imports. This would affect not only those cashew producers but also the prestige and brand of the Vietnamese cashew industry.

For the year up to late June, Vietnam brought in some $1.7 billion from 176,000 tons of cashew exports, up 16.4% and 16.7%, respectively, compared with the same period last year. The export price of cashew was at an average of US$9,841 per ton, a year-on-year rise of 2.9%, according to the Ministry of Agriculture and Rural Development.

Data also show that the Southeast Asian nation spent some US$1.15 billion on purchasing 537,000 tons of cashew, down around 12% and 21%, respectively, year-on-year. As such, the sector gained a trade surplus of some US$5.5 million.

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