Case Study On Cashew

Parvesh Sharma

Summary
The cashew tree grows fruit, it is best known for its nuts, which account of about 20 percent of the value of nuts produced worldwide-exceeded only by the value of almonds and walnuts. U.S. imports of cashew nuts in 1997 totaled about $310 million, about 60 percent of the world market and more than three times the imports into Europe, which is the next largest market.

Cashews are composed of a fruit and a nut. The fruit was exploited earlier because it matures first, is bigger then the nut and processing the nut is more complicated. Later, the nut became more important then the fruit because of higher popularity of the Indian population. By the introduction of the cashew nut processing industry in India the nut became more popular in India. Almost 50% of the Indian cashew production was for own use, the rest of was for exportation. Anyway India was the strongest export country in cashew nuts world wide until mid of the seventies. This world leadership in producing cashew nuts is the consequence of being the world largest producer in cashews. The second reason is the high Indian demand in early days. Foreign Cashews would not be competitive due to a higher cost. Finally the workforce in India is used to this kind of work.

Processing (roasting/ steaming, shelling and peeling) operations of the cashew nut is basically manual. Modern techniques permit to process the nut automatically but efficiency is much lower then manual operation. Due to en excess of processing capacity in India they have been supplied with raw nuts from other countries to cover the processing capacity.

 INDIA

Strength
Very good trained manual workers Low wages R&D with advanced technology Potential in increase of production High nut consumption in India Experience in producing and processing Better taste then the Brazilian nut No competitors for the Indian market and high internal demand Higher output of premium nuts Potential increase in nuts production No external competitors for the Indian market Quality standards define and classify product very accurate Good education and very good qualified people Suppliers of raw nuts (Africa and far east) close to India

What trade theories help to explain where cashews tree products have been produced historically?

-Mercantile efforts -Natural absolute advantage -Acquired absolute advantage -Factor proportion theories -Product life cycle -Dependency theory -Strategic trade policies

What factors threaten India's future competitive position in cashew nut production?

-increased population bids up price of land -technology reduces production cost in area nearer large market -America's strategic trade policies -advances in India plantation production -India sells to large Indian market -India's long reputation in world markets -India is a politically stable country -India is developing new cashew related products -India's nuts have better flavor

If you were an Indian processor, what alternatives might you consider to maintain your future competitiveness?

-To move to a more mechanized process -Improve production and use technologies -Further differentiate India products, e.g., high quality -Exercise greater control on foreign distribution channels -Stimulate demand in India and nearby countries, e.g., China

CONCLUSION

India is actually the world market leader in supplies of cashew nuts. This position in the market is enforced by the high autonomy in cashew production, processing and consuming. Although during beginning of this century exportation to US markets decreased by substituting Indian nuts by Brazilian even increasing US demands during this time.

THANKS