Cashew nut exports in Vietnam: Potential investment opportunities for organic products

The worldwide raw cashew nut market is expected to increase at a 4.27 percent annual rate between 2020 and 2025, reaching around $7 billion USD by 2025. Although labor shortages and harbor congestion due to Covid-19 significantly impacted Vietnam's cashew business, it still recorded positive growth in 2021.

Following the Covid-19 epidemic, The Conversation site reported that the global cashew sector would rise rapidly in 2022 due to the growth of macrobiotic and healthy diets, mainly in developed and emerging countries.

Current situation of cashew nut export in Vietnam

According to statistics from the Import-Export Department (Ministry of Industry and Trade), Vietnam remains the world's leading cashew nut export market, with 580 thousand tons exported in 2021, up 13% in volume and value compared to 2020. The Vietnam Cashew Association (Vinacas) sets a goal in 2022 to keep the quantity stable, increase the quality and price with export turnover striving to reach $3.8 billion, an increase of $200 million compared to 2021.

India and Vietnam are the two leading cashew nut exporting countries to the global and European markets. During the outbreak, however, due to a lack of ships and containers and expensive sea freight charges when importing commodities from Asia, many European and American importers are turning to direct imports of raw cashew nuts from neighboring locations like Africa, specifically Ivory Coast, Nigeria and Senegal. Although the amount of African imports remains far smaller than that of Vietnam, this remains an issue since African industries can boost exports to these two major markets.

However, the EVFTA and FTAs are supporting Vietnamese cashew exporters in expanding their supplies to vital and emerging markets in the EU. In the first 4 months of 2022, cashew shipments to the EU market have already reached 48.68 thousand tons, valued at $290.23 million USD, rising 21.8 percent in volume and 21.4 percent in value over the same time previous year. Particularly, EU nations such as the Netherlands, Germany, the United Kingdom, and Italy are currently among Vietnam's top ten cashew export markets.

Moreover, cashew nut exports to the United States, one of Vietnam's largest and most significant markets, continue to grow. In 2021, Vietnam exported 176,000 thousand tons of cashew nuts to the United States, worth more than $1,502 billion, and accounting for roughly 30% of total cashew exports. Vietnamese cashews currently contribute to around 90% of the cashew nut market in the United States, owing to consistent supply and assured quality.

On the other hand, Vietnam’s raw cashew imports from African countries also spiked in volume in 2021, while domestic raw cashew production currently only meets one-fifth of the processing capacity. This directly affects the ability to control quality raw materials and stabilize domestic cashew production.

According to VINACAS, Vietnam's farming land is now under pressure from various export crops such as pepper, rubber tree, coffee, and cashew. The current goal is to maintain the cashew-producing region, and increase yield through technological improvements. Along with that, the Vietnamese cashew industry is gradually shifting towards organic farming, and cooperating with neighboring countries like Cambodia to produce raw cashew nuts.

EU and American markets are favoring organic cashew products

Healthy eating and environmental concerns are becoming increasingly popular in Western countries, driving up demand for organic grain products. Notably, the organic market in the United States and the European Union has a significantly high value, reaching $57.5 billion (in 2021) and $54.5 billion (in 2020), respectively.

Due to large-scale manufacturing and mechanical processing technologies, Vietnamese enterprises benefit from comparatively inexpensive cashew nut pricing. However, in order to market organic cashews in the United States and Europe, exporters must follow stringent agricultural, processing, and testing procedures.

In addition to regulations on food safety and hygiene, organic farms need to be inspected for each consignment entering the EU by a competent authority (e.g., the Narturland association for organic farming in Germany) to use the EU organic symbol on its products, as well as the symbol of the standard owner. According to the European Commission regulations, The European Union organic label will not be issued to: 

• products containing less than 95% organic components
• products not covered by organic laws, such as cosmetics 
• hunting and fishing products 
• products in the 'conversion' stage (where organic methods have only been introduced and there may still be non-organic substances in the soil or animal chain)

Viet Organic - Connecting foreign investors with local OEMs

Vietnam's agriculture model and manufacturing capabilities are still limited. To boost productivity and product quality, agricultural enterprises in Vietnam require investment capital, improve organic farming practices, and quality control. In addition, with several FTAs, Vietnamese businesses must strengthen their capability in international trade, particularly in exporting products to European countries. 

On March 8, VINACAS announced that some Vietnamese enterprises had difficulty in paying, when 6 Vietnamese export companies sold 100 containers of cashew nuts to a group of 5 Italian importers, they lost control of 35 sets of original documents (equivalent to 35 containers), with an estimated value of about 162 billion VND. Although all 35 containers were successfully retrieved, Vietnamese enterprises must add extra investigative processes to the operation, such as calling the purchaser directly, or validating the address registered in the contracts.

To meet the strict regulations of Vietnam's major export markets, the country needs to have agricultural businesses and projects toward organic and environmentally friendly direction. From that, Vietnam's agriculture will be transformed from low productivity, using only traditional methods, to modern agriculture with high competitiveness compared to other countries in the region and the world.

Viet Organic is a producer and distributor of organic cashew nuts, cinnamon, anise, copra, and other major agricultural products certified by the EU and USDA organic standards. With experienced personnel in the field of organic farming and several factories as member companies across the country, the project is developed with the orientation of an organic agricultural business model, treasure natural values ​​, and towards healthy world goals. Furthermore, Viet Organic's products are produced utilizing sustainable practices from farm to production and across the supply chain, meet EU and USDA organic certifications requirements.

Recognizing that Vietnamese agriculture's potential is being underutilized, Viet Organic works with OEMs to build organic production models and farms and close interactions between partners and customers. The strength of this project is its global network of consulting partners who can help local OEM partners enhance their capacity and reduce capacity gaps to meet expected standards.

With the National Assembly's resolutions on building new countryside, Viet Organic will radically transform farmers' understanding and habits to do modern agriculture, focusing on quality and productivity to create higher-value products, to optimize farmers' income and living standards.

Conclusion

In general, cashew exports from Vietnam will continue to have a large market in the United States and Europe if they can adjust to the market's need for organic products. Currently, Viet Organic is a potential developed project under Viettonkin that specializes in manufacturing, distributing, and exporting Vietnamese organic agricultural goods.

If you are looking to invest in exporting Vietnamese organic cashews, contact Viettonkin for the most up-to-date and reliable information. Viettonkin and our team of specialists have over 12 years of expertise in the sectors of investment and business consulting. Contact us now.