The government is working to export cashew nuts worth billions of dollars to the global market by increasing the capacity of the local processing industry, encouraging new investments and increasing local production.
According to the Ministry of Agriculture, the local production of cashew nuts is very low at present and so raw cashew nuts will be imported in large quantities at the initial stage and re-exported after processing. Work on exporting cashew nuts from this year is going on.
According to the Ministry of Agriculture, Department of Agricultural Extension and cashew nut processing industry insiders, the local cashew nut orchards are currently producing about 1,500 tonnes of fruits, among which 260-320 tonnes of cashew nuts are produced through processing in the country per year.
Currently, only locally produced cashew nuts are being processed in the domestic industry. Meanwhile, about 700 tonnes of processed cashew nuts are being imported by the country in a year.
According to the Ministry of Agriculture, the import of processed cashew nuts in the country has increased more than 32 times in the last four years.
Demand for cashew nuts is growing globally at the rate of 4.5%, while in Bangladesh it is increasing at 15-20%, according to industry insiders.
Current production situation
The hilly region is suitable for cashew nut cultivation, so it has started extensively in Bandarban, Khagrachhari and Rangamati. Currently more than 2,000 people are involved in cultivating cashew nuts here.
Rening Mro, a farmer in Bandarban, has planted 3,000 cashew nut trees on 5 acres of land. The Department of Agricultural Extension has provided all the trees. Last year, he sold 90 maunds of cashew fruits (also known as cashew apple) grown on these trees at Tk2,000 per maund.
He told The Business Standard, "There is not much cost once the orchard is created. After the flowers come, you just have to clean the garden. As a result of this, there is a lot of profit in cultivating cashew."
Another farmer, Nasrang Tripura, has planted cashew on 3.25 acres of land. He has been gardening for 16 years and trying to find a high yielding variety of cashew by collecting good quality seeds himself.
Agriculture officials said a cashew nut tree lives for 30-40 years and yields fruit from the age of three. They plan to increase the production of cashew from 1,500 tonnes to 10,000-12,000 tonnes by 2024. To this end, they have been distributing free saplings among the farmers. Last year they distributed 1.65 lakh saplings and this year they plan to distribute 3 lakh saplings.
A project involving Tk211 crore has been taken up for the production and development of cashew nuts in the country. The Department of Agricultural Extension (DoE) and the Bangladesh Agricultural Research Institute (Bari) are implementing the project, known as "Research, Development and Expansion of Cashew Nuts and Coffee." Bari is especially working on innovating new varieties of cashew nuts.
Under the project, work is underway to expand cashew nut and coffee cultivation in hilly areas in 66 upazilas of 19 districts in seven divisions.
The Ministry of Agriculture said at least 5 lakh hectares of land in the three hilly districts – Rangamati, Khagrachhari and Bandarban – are lying uncultivated. If cashew nut trees are planted on 2 lakh hectares of land, it is possible to earn more than $1 billion (around Tk9,000 crore) a year.
Shahidul Islam, director of the project, told TBS, "Our target is to plant cashew nuts on at least 2 lakh hectares of land. For this, the DoE is working to distribute free saplings, encourage orchard expansion and develop new varieties, so that it becomes possible to increase the yield quickly."'
Status of processing sector
A total of 12 factories have been set up in the country for processing cashew nuts. These factories process about 300 tonnes of cashew nuts every year.
People involved in the sector said the cost of setting up a factory made with manual machinery is low, but it is necessary to invest much more to set up a factory with automated machinery. If one wants to start a manual factory on a small scale, one would need to invest around Tk0.5 crore. On the other hand, one has to invest Tk3.5-4 crore at the initial stage if one wants to set up a factory with automated machinery.
They also said so far only local raw materials are being used in the cashew processing industry as they cannot import raw materials from abroad due to high costs.
Md Ibnul Arifuzzaman, managing director of Jackpot Cashew Nut Industries Limited in Nilphamari, started the factory with an investment of Tk35 lakh. At present, the amount of his investment is more than Tk1 crore. This factory produces seven tonnes of processed cashew nuts every month.
He told TBS, "The size of the native cashew nuts is a bit small. There is demand for it in the local market, but there is very low demand for it in the world market. If we want to capture the world market, we have to import and process raw cashew nuts, but due to high costs of import, we are not able to do it."
However, the agriculture ministry said the import duty on cashew nuts has recently been reduced from 90% to 5% so that industries can easily import it as raw material.
But the entrepreneurs said despite decreasing the import duty to 5%, currently one has to spend 37.5% of the total price on various VAT and taxes to import raw cashew nuts. The cost of importing processed cashew nuts is lower than the cost of importing raw cashew nuts and marketing them after processing.
Arifuzzaman said, "We demand that the government lift all kinds of tariff on the import of raw materials. This is very important for developing the industry."
Sources said exporting cashew nuts from Bangladesh has not started yet. Entrepreneurs are discussing complexities regarding tariff with the Ministry of Agriculture. Only if the government assures them of cooperation will the entrepreneurs start importing raw materials and export the nuts after processing.
Entrepreneurs also said the lack of bank loans is a bigger problem than importing raw materials. Once these problems are resolved, the entrepreneurs will invest here and success in exports will come.
"New entrepreneurs will not be encouraged if the government does not cooperate in removing the complexities in obtaining bank loans," said Arifuzzaman.
Shahidul Islam, director of Research, Development and Expansion of Cashew Nuts and Coffee project, said, "The processing sector is developing at the private level. We are working to make it easier for them to get bank loans and to help ease the complexity of importing raw materials."
World market for cashew nuts
Currently, the global production of cashew nuts is more than 35 lakh tonnes. India alone is producing 7.5 lakh tonnes of cashew nuts, Vietnam is producing 4 lakh tonnes and four to five countries in Africa are producing 12 lakh tonnes of cashew nuts every year.
The global market for cashew nuts is worth $9.8 billion. Vietnam alone is exporting cashew nuts worth $3.5 billion to the global market. The market for cashew nuts is growing at a rate of 4.5% per year worldwide, according to the industry insiders.
The top three cashew nut exporting countries are Vietnam, India and the Netherlands. Germany, Brazil, the United Arab Emirates, Ivory Coast, Indonesia, Belgium and the United States are also exporting significant quantities of cashew nuts.
Challenges faced in Bangladesh
The main challenges in cashew nut cultivation in the hills are: increasing the productivity of existing varieties, ensuring fair prices for farmers, training farmers in modern production techniques, management, and marketing, producing quality cashew nut following good agricultural practices and increasing the number of processing plants.
Agriculture Minister Dr Md Abdur Razzaque told TBS, "In order to make agriculture profitable, it is necessary to cultivate unconventional cash crops, including cashew nuts, coffee and black pepper."
"There is a huge demand for these not only in the country, but also in the international market, and their prices are high too. That is why the cultivation and processing of these crops should be increased," he said.
"There is a huge potential for cultivating these crops in large areas of the hills. We are emphasising increasing cashew production as well as innovating improved varieties and technologies. Doing so will revolutionise the economy of the Chattogram Hill Tracts." He continued, "We are working on the kind of benefits that need to be provided to attract investment in the processing industry, because our latest target is to earn foreign exchange through exports," he added.