More duty planned on cashew nuts to protect local industry

The government has planned to raise the import duty on processed cashew nuts with the aim of supporting the thriving local industry, which is poised to meet the increasing demands of the domestic market and expand its exports.

According to finance ministry sources, the government may increase import duty on processed cashew nuts from 15.25% to 43% in the budget of 2024 FY.

The Bangladesh Trade and Tariff Commission and the ministries concerned propose to raise the import duty rate on processed cashew nuts, aimed at fostering the growth of the local industry.

BSRM, a prominent player in the steel industry, has established a factory through its sister concern, Bangladesh Agricultural Products Ltd, in Chattogram. This pilot project has a processing capacity of two tonnes per day. The company is making significant investments to expand production.

Tapan Sengupta, deputy managing director of Bangladesh Agricultural Products Ltd, told The Business Standard, "The export potential in this sector is highly promising. There is also a growing demand for cashew nuts within the country. With these objectives in mind, local factories are being established."

He further mentioned that the development of the industry has provided encouragement to local producers, resulting in a threefold increase in the price of their products over a span of two years.

Major corporations, including Citi Group and JMI Group, have made investments in the cashew nut processing sector. Additionally, several medium and small-scale factories have been set up to produce processed cashew nuts.

As of now, the country has a total of 22 cashew nut processing factories. Collectively, these companies have a current annual production capacity of over 150,000 tonnes. To sustain this level of production, approximately 600,000 tonnes of raw materials are required.

Cashew nut cultivation is gaining popularity in the country's hilly regions, with an annual production of around 2,000 tonnes. As the industry continues to develop, the government has opted to maintain a nominal tax rate of 1% on the import of raw cashew nuts. This measure aims to support the growth of the sector.

Industry insiders have revealed that raw cashew nuts are imported primarily from African countries. Given the existing capacity, the sector demands approximately 650,000 tonnes of raw materials.

The international market price for raw cashew nuts ranges from $800 to $1,200 per tonne. As per international standards, it is feasible to produce 1 kg of processed cashew nuts from every 4 kg of raw cashews.

However, the minimum export value for processed cashew nuts in the international market stands at $6,000 per tonne.

Md Ibnul Arifuzzaman, managing director of Jackpot Cashew Nut Industries Ltd, highlighted the growing international demand for processed cashew nuts. He said, "Given this scenario, it is crucial for the government to safeguard this industry."

Meanwhile, the National Board of Revenue recently took a decision to support this industry. Previously, the import of processed cashew nuts incurred a base price of $1.83 per kg, whereas the new base price has been set at $6 per kg.

Global market for cashew nuts

Currently, the worldwide annual production of cashew nuts exceeds 35 lakh tonnes. Amongst the major contributors, India accounts for 7.5 lakh tonnes, Vietnam for 4 lakh tonnes, and several African countries collectively produce 12 lakh tonnes annually.

The global market for cashew nuts holds a value of $9.8 billion. Vietnam stands out as the largest exporter, with cashew nut exports worth $3.5 billion. Industry insiders indicate that the global market for cashew nuts is expanding at a rate of 4.5% per year.

Vietnam, India and the Netherlands rank as the top three exporting countries for cashew nuts. Notable quantities of cashew nuts are also exported by Germany, Brazil, the United Arab Emirates, Ivory Coast, Indonesia, Belgium and the United States.