The reason why the partner ‘turned the deal’ on hundreds of thousands of tons of raw cashew nuts with Vietnamese enterprises

Vietnamese cashew processing enterprises only receive 50% of raw cashew output according to purchasing contracts from African partners when prices skyrocket. Why?

According to the Vietnam Cashew Association (Vinacas), raw cashew exporters in Africa do not deliver according to contracts or seek to increase selling prices by 40–50%, pushing many domestic raw cashew importers into difficulty and danger. chance of heavy loss.

Analyzing with VTC News about the domestic cashew market, Mr. Bach Khanh Nhut, Vice President of Vinacas, said that the domestic cashew supply only ensures 10–12% of the total cashew production and processing output of the business. Karma.

Therefore, cashew processing factories in Vietnam need imported supplies. Each year, businesses import more than 2.5 million tons of raw cashew nuts, of which about 1.7 million tons are from Africa, mainly West Africa.
Mr. Nhut said that every year, businesses sign import contracts with partner businesses from Ivory Coast.

However, in 2024, the government of this country has issued a priority policy for domestic enterprises to purchase raw materials first to stabilize the market, then the remaining raw cashew output will be available for free export. . This has reduced the source of raw material supply for Vietnam.

“This year, in African countries, including Ivory Coast, there has been an extremely harmful El Nino situation, greatly affecting the output of cashew trees, leading to low output, scarce goods, and increased raw cashew prices.,” Mr. Nhut said.

However, it is worth mentioning that many previous contracts signed with Vietnamese businesses were at low prices. Meanwhile, many export enterprises in West Africa have pushed up the price of raw cashew nuts by more than 40–50% compared to February and March, to 1,500–1,700 USD/ton.

“If they package and deliver goods to Vietnamese businesses at this time according to the signed contract, for each ton of raw cashews they will lose 200–500 USD, while cashews are not only sold by tons but by tens of thousands of tons.

Thus, with this number, they believe that there will be a huge loss of profit, so many partner businesses do not need to keep their brand or reputation but only need to keep their profits, and they have “dispossessed” the business. Vietnam,” Mr. Nhut said.

Also, according to Mr. Nhut, these businesses have offered many conditions for delivery according to the signed contract.

In particular, Vietnamese import enterprises are required to subsidize prices by dividing the increased price in half, meaning Vietnamese enterprises have to pay an additional 200–300 USD per ton.

Or they will pack poor-quality goods to offset the quality so as not to be disadvantaged by the price difference. “For example, if we sign a contract for 50 lbs (cashew quality score), they will only deliver 44–45 lbs,” Mr. Nhut explained.

Besides, another situation of “flipping” is also happening: orders that are traveling at sea to be delivered to Vietnamese businesses have their documents changed right on the ship. Instead of delivering it to the Vietnamese business, they sold it to another partner, so the Vietnamese business did not receive the goods according to the contract.

“According to reports from Vinacas members, as of the morning of June 1, more than 50% of the quantity and value of cashew import contracts signed by Vietnamese businesses fell into these situations, thereby generating a chain of crises in domestic cashew production, processing, and export,” Mr. Nhut said.

Vietnamese businesses cannot manage in time.
Mr. Nhut said that Vietnamese businesses are passive and cannot manage in time when partners intentionally overturn the deal.

Vietnamese businesses also cannot buy raw cashew nuts from other partner countries at this time because Vietnam’s cashew nuts have now been harvested, while Cambodia’s cashew nuts have also been harvested, and Vietnamese businesses have finished harvesting them. buy it all.

“Now we rely mainly on goods from Africa, including Ivory Coast, while other countries are not yet in season. Thus, Vietnamese businesses are very passive and worried about when this supply chain will return to normal,” Mr. Nhut expressed.

Faced with this reality, Mr. Nhut said, Vinacas has sent a written request to the Ivory Coast Cashew Exporters Association to remind members to properly implement the signed contract.

At the same time, we will send a petition to the government and relevant ministries to remove difficulties for the cashew industry, including influencing African countries to lift the ban on raw cashew exports.

The Association also proposed that the Ministry of Agriculture and Rural Development develop raw material areas and seed quality. This will help cashew processors become less dependent on imports.

On average each year, Vietnam imports about 2.5 million tons of cashew nuts, of which about 800,000 tons are from Ivory Coast and 700,000 tons are from Cambodia. The remaining quantity is imported from Tanzania, East Africa, and other countries.

PHAM DUY
Source: VNEconomy