Policy prescriptions for cashew economy

• India is a global leader in world cashew economy. At present cashew farmers are getting a below standard price for their agriculture produce due to the cashew import policy.
• Further, cashew is imported to meet the domestic needs of the country. Imported cashews are cheaper than those that are domestically produced. To make matters worse, unfortunately, the Cashew Export Promotion Council of India has decided to charge NIL import duty on cashew.
• This will drastically increase import of raw cashew and reduce the demand for domestic cashew. This is the reason for low prices this season in Indian cashew market.
• At the same time, the government should frame farmer’s centric policies such as promoting Geographical Indication of cashew, value added products like cashew apple wine, juice, candy etc.

For doubling farmer’s income by 2022, agriculture commodity-specific policies are required. One instance of this is India’s cashew sector.  India is a global leader in world cashew economy. But at present, cashew farmers are getting a below standard price for their agriculture produce due to the cashew import policy.

For the current year, cashew farmers are supposed to receive a MSP (cost of production + 50% profit) of Rs 161.70 per kg. Last year, the rate was Rs 164 per kg.  However, at present, this year (2018-19), the rate is Rs 125 per kg.  This is not a good sign for the Indian cashew industry generally and cashew farmers in particular.

Cashew Import and Export Policy

Though, India is one of largest cashew producing countries in the world, domestic raw cashew production is not sufficient to meet the demand of processing units and hence they have to import raw cashew. Import duty has been reduced from 5% to 2.5% so that units could get the raw material (raw cashew) at cheaper prices. Imported cashew price is cheaper than the domestic cashew price by Rs 27.65 per kg. Furthermore, the Cashew Export Promotion Council of India has decided to charge NIL import duty on cashew. This will drastically increase the imports of raw cashew and reduce the demand for domestic cashews. This is the reason for low prices in this season in the Indian cashew market.

India has its own brand in world cashew economy because Indian cashew has unique taste, which is not found anywhere in the world. This unique rich taste of Indian cashew brand has great demand in world market. However, using of imported raw material hampers the Indian cashew brand, as it differs in taste and at the same time, it is disturbing the rural cashew economy. Thus, there is need to relook at the cashew import policy, which will maintain the fine balance between farmers and cashew processors.

Farmer-centric policies

At the same time, the government should enact some farmer oriented policies in order to check this demand deficit. Indian cashew business is very sensitive and complicated because 50% of cashew processing units depends on imported raw material and also there is a need to protect the Indian brand of Cashew (Indian taste) and welfare of cashew farmers.

India is dictating the world cashew economy in terms of production, processing, export and import. It plays a major role in the rural economy by providing employment, uplifting socio-economic backward class and developing small and micro cashew enterprises. Cashew harvesting season just has been passed and farmers have got low prices for their produce due to cashew processing units imported raw material at large quantity from outside.  It has badly affected on livelihood of cashew farmers.

Hence farmer-centric policies are needed such as promoting Geographical Indications of cashew, value added products like cashew apple wine, juice, candy etc. At present, around 90% of cashew apple is wasted, which could provide an alternative income source to farmers if it is processed. Minimum support prices of cashew should also comprise climate change expenses, labour costs, damages done by wild animals, etc.

 

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Dr. Parashram Jakappa Patil is currently an Advisor/Consultant at APEDA. He has also served as the President of The Institute for Natural Resources, Kolhapur. He is an export policy consultant for the Ministry of Commerce and Industry. He has received many awards and accolades lately; some of which include Young Researcher Award and Best Citizen of India Award.