Page 47 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes reinvestments in the state-owned processing plants and many of the trees became diseased
and too old to be productive. By the 21 century, Mozambique was no longer a major
st
player in the industry.
Although the Africans’ inability to compete, granted a reprieve to the Indian industry, it put
it on notice, that it was vulnerable to supply cut-offs. The Indian Council for Agricultural
Research, the International Society for Horticultural Sciences, and the Indian Society
for Plantation Crops, expanded their efforts to increase India’s production of raw nuts.
Concomitantly, three different companies developed mechanical equipment to replace
hand processing. They sold equipment to East African countries and Brazil in the 1970s.
These countries reduced their exports of raw nuts to India to maintain supplies for their
own processing.

Three factors have kept India’s hand-processing industry afloat:
1. The machinery breaks many cashew nuts, so Indian processors have had an
advan tage in the sale of higher-grade nuts. At any time, however, newer machinery
might solve the breakage problem, again threatening the approximately 200 Indian
proces sors and their 300,000 employees. Moreover, there is an increased competition
for the lower-grade output.
2. Indian processors have been able to obtain increased supplies of raw nuts, partially as
a result of the increased Indian production. Pesticide technology now makes cashew
tree plantations feasible, increasing the number of trees per acre. Nevertheless,
about 97 per cent of nuts come from trees in the wild. Indian experimentation in
hybridization, vegetative propagation and grafting and budding techniques, promises
to increase the output per tree to five times what it was in the wild. Further, India has
been increasing its imports of raw nuts substantially, primarily from Tanzania.
3. India uses fewer fertilizers than Brazil, the biggest export competitor and the lack of
fertilizer apparently gives, Indian nuts, a better flavour.

Because its exports consist of a higher portion of higher-grade nuts and because of the flavour
differences, Indian exports sell for a premium in comparison with those of competitors, for
example, about 15 percent more than nuts from Brazil. However, yields are usually higher
in Brazil, and Brazilian processors pay only between 30 and 36 percent of the price, the
Indian processors pay for raw nuts. Further, because of differences in domestic demand,
India typically exports about 50 percent of the raw kernels that it processes, whereas, Brazil
exports about 85 percent. In the mid-1990s, Brazil suffered crop problems, which enabled
India to gain an increase in the global export share of processed cashew kernels.
During the 1990s, India depended heavily on imported raw nuts from Vietnam. However,
Vietnam has since, become a competitor by processing its own nuts and by importing
nuts to process from other countries. The Vietnamese government is spending heavily to
introduce high-tech strains into production in order to improve both quantity and quality.
Vietnamese exports are of high quality and so the country’s exporters are not only targeting
India’s largest export market, the United States, but also emerging markets such as China,
Saudi Arabia and Russia. If Vietnam’s growth in exports continues at the same rate, it will
surpass India as the largest exporter by 2010.
There is potential for an excess supply of cashew nuts, which might result from plantation
techniques and improved technology in India and elsewhere. To find outlets for a possible
nut glut, the All-India Coordinated Spices and Cashew Nut Improvement Project has
focused its efforts on increasing nut sales in small markets and on finding new markets for
products from the cashew tree. For example, experimentation is going on to harvest both
the fruit and the nut. The fruit is also being studied for commercial use in candy, jams,
chutney, juice, carbonated beverages, syrup, wine and vinegar. Another area of research
Contd...

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