Factors Affecting Decreasing Demand of Indian Cashew Kernels with Respect to Kailas Cashew Exports, Kollam

CHAPTER 1

INTRODUCTION

1.  INTRODUCTION

Nuts in general form a large part of the fruit industry, edible industry, and the import/export industry in general. Taking this into account, I have chosen to pursue my internship on Cashew, one of the most exported nuts of South Asia. The international export/import routes and multivariate products generated from Cashew have been covered in my internship and have been laid down in this report. The majority of the work laid herein has been done in Kailas Cashew Exports, Kollam.

The industrial, marketing, managerial and executive side of the export business have been covered extensively in my study.

1.  CASHEW INDUSTRY

Cashew is a slow-spreading, evergreen, tropical tree which grows pretty big if left un-tended. A South American native, the cashew reached the Indian soil through the hands of Portuguese, four centuries ago. It found this soil more suitable to grow and flourish. Today it is cultivated all over Tropical Asia, Africa and South America. India is the largest producer and processor of cashews. Indian processed cashews dominate more than half the world cashew market. Procure it from its master exporters in India.

Raw cashew nut (Anacardium Occidentale) is the only raw material for the Cashew Industry. The cashew nut has within itself a whole kernel. This delicate kernel is covered by a membrane and a thick outer shell which effectively protects the kernel from the ravages of nature from the time of harvesting to processing. In its raw form, the cashew kernel is soft, white and meaty. When roasted, it changes color and taste. The color changes from a creamy white into a golden hue and the mellow pulp turns crisp. Salted, it appeals to the palate as the most delicious nut.

Now, nearly 80 percent of this industry in India is centered in and around Kollam in Kerala. Members of the Cashew Export Promotion Council of India, who are manufacturers and exports of cashew kernels are the major sources for cashews from India. There are regular shipping facilities from India to all ports of the world. Major shipments from India take place through Cochin port. Regular services of container ships are available from India ports on India-USA, India-UK/continent, India-Australia, India-Japan, India-Middle East and India-Singapore routes.

1.3. OBJECTIVES OF THE STUDY

• To study the factors affected demand of cashew kernels with respect to Kailas Cashew Exports.
• To analysis strength, weakness of cashew nut industry.

1.4. METHODOLOGY OF THE STUDY

The theoretical frameworks such as SWOT Analysis, PESTEL Analysis is used in the study.

SWOT ANALYSIS:

A SWOT analysis was done to analyze the strengths, weaknesses, opportunities and threats of the company. The strengths of the company would be the demand for the cashews and brand image of the company. The increased cost of production, scarcity of raw materials domestically, lack of credit access and increased import duty can be considered as weaknesses of the company. But there are certain opportunities that could be exploited by the company. The Kerala Government is likely to implement sector specific plans such as promotion of feni production, export boosting policies and as government is trying to impose 0% import duty on cashew nuts as of the 2019 global cashew buyer seller meeting organized by CEPCI . The Government is also planning on improving the credit access of cashew processing industry. The threats to company includes competition from Vietnam and other cashew processing hubs (countries). The political instability in Kerala, frequent labour strikes and fluctuating exchange rates can also be considered as threats to the company.

PESTEL ANALYSIS

India falls under the list of one of the most powerful countries in the world and the country is also the largest democracy in the world. The political environment is relatively stable, but corruption affects the growth of businesses and hinders the economic growth of the country. India has been cruising in the economic front and is now the sixth largest economy in the world. Indian rupee is devaluating which is beneficial for exports (Karun, 2019). Inflation is under control and purchasing power of people are increasing. The health-conscious customers would choose cashew over nuts as it contains zero percent cholesterol. Technologically cashew industry in India is weak and still relies on traditional labour-intensive processing techniques. The traditional cashew processing technique is impacting the environment as it paves way for global warming. This is because it releases huge amounts of carbon dioxide which causes global warming (‘Cashew nut processing: sources of environmental standards and pollution’,n.d). So, mechanised processing is the need of the hour.

1.5. LIMITATIONS TO THE STUDY

• Due to lack of time and resources the study is limited to the cashew exporters of the Kollam district only.
• Respondents were busy in their own work as they are business men.
• Collection of data from the foreign customers was not possible.

CHAPTER 2

REVIEW OF LITERATURE

A per “downtoearth” Cashew nuts are one among India’s top four agricultural exports. Its exports earned the country Rs.5213crore in 2017. But India’s cashew processing hub, Kollam, Kerala, are facing closure due to rising input costs and mounting losses.  This is due to unfavorable policies, high cost and non-availability of raw cashews.

As per Business Standard news of February 2019, government is trying to impose 0% import duty on cashew import and this will help to reduce the cost. In the “Kaju India 2019”- global cashew buyer-seller meet organized by the Cashew Export Promotion Council of India (CEPCI), govt. said that under the new National Agriculture Export Policy, the government has identified specific agriculture export zones and clusters that are well connected with ports and airports in the country.

As per International research journal, India is the largest producer of cashew nut in the world accounting for 39.47 per cent of world cashew production during 2010. It has the largest area harvested under the raw cashew nuts in the world. The area of cashew had registered a growth rate of 2.46 per cent per annum, while the production increased by 4.51 per cent per annum.

CHAPTER 3

CASHEW INDUSTRY

3.1. CASHEW INDUSTRY IN INDIA

In India, cashew was first introduced in Goa from where it spread to other parts of the country. In the beginning it was mainly used for soil binding to check erosion. Commercial cultivation began in the early 1960s and, over the years, cashew has become a crop of high economy and attained the status of an export-oriented commodity, earning considerable foreign exchange for the country.