31 Aug 2012 Intellasia Finance Vietnam - Hong Kong Business ...

BUSINESS
Vietnam finance & business 31 August 2012
Cashew paradox:
farmers cut trees,
firms increase imports
Third, in case the plant was transferred to SCIC, industry experts assumed the plant's
performance could hardly be noticeably improved since SCIC did not have much experience
in governing and managing cement business and construction industry.
Besides, it takes time for the MoF and SCIC to mull the plant reshuffle plan.
According to Vinaincon's chief accountant Hoang The Hien, Vinaincon is still waiting
the government's instruction about how to deal with Thai Nguyen cement debts. The
plant now runs at 50-60 per cent capacity which fails to cover high borrowing cost and
machinery amortisation fees.
To get additional income sources for paying debts, the plant must reach at least 80 per
cent capacity, a target now out of reach in the face of low cement market consumption.
Thai Nguyen cement's total designed capacity is 1.51 million tonnes per year. Its official
cement brand is Quang Son.
http://www.vir.com.vn/news/business/cement-plants-feet-caught-in-stone.html
31/AUG/2012 INTELLASIA | TUOI TRE
While local farmers have been jostling to chop down their cashew trees due to dirt
cheap prices, cashew manufacturers have had to import half of the raw materials needed
for production.
The import rate is expected to rise further in the future, as the local areas for cashew
plantations have increasingly decreased, despite the fact that Vietnam is the world's
top cashew nut exporter.
In the southern province of Binh Phuoc, farmers are still busy emptying their cashew
plantations, as prices have nearly halved compared with the same period last year.
"Prices have fallen from VND30,000 a kilogram last year to only VND17,000 a kilogram
now," said Bui Minh Tien, from Loc Ninh District.
Tien said he is switching to growing pepper, which will yield bigger profits, as he is
no longer able to make ends meet with the VND45 million (US$21,500) annual income
from the 3.5-hectare cashew plantation.
Following the trend, other farmers in neighbouring localities have also replaced their
cashew gardens with pepper or rubber crops.
And this tree cutting wave is out of authorities' control, Nguyen Van Toi, director of
the province's Department of Agriculture and Rural Development, admitted.
"Cashew manufacturers do not buy the products directly from farmers, but via a multilayer
chain of traders and small plants, and farmers are thus forced to sell at low prices,"
he explained. "So there is no surprise when farmers rush to empty their
plantations."
Increased imports
In an opposite race from the farmers, manufacturers have had to increase imports of
raw cashew for their production.
Local manufacturers are expected to import an additional 400,000 tonnes of cashew
this year, according to its governing body, the Vietnam Cashew Association (Vinacas).
In the year to mid-August, some 215,000 tonnes of cashew have been shipped to the
country, according to figures from the general Customs Department.
However, the director of a cashew manufacturer in Dong Nai said the number is much
bigger, as some companies are using a large amount of raw material imported in late
2011.
"Some major businesses have been exporting products made merely from imported
materials this year," an industry expert, who wished not to be named, said.
"Manufacturers prefer importing than buying from local farmers because imported
prices from Cambodia and African countries are far lower than domestic rates," explained
another company director, who also wished to remain anonymous.
http://tuoitrenews.vn/cmlink/tuoitrenews/business/cashew-paradox-farmers-cuttrees-firms-increase-imports-1.84755
Intellasia 31 August 2012 39 / 46