Racketeers put cashew industry in crisis

By Our Staff Reporter

KOLLAM, OCT. 14. Crafty manipulations effected by a group of raw nut dealers based abroad are taking the cashew industry here to the brim of ruin. If these operations continue unchecked, many cashew processors would have no other go but to quit the industry by the year-end as had happened in the year 1999.

The aim of the operation is to create an artificial price rise for kernels and through it manipulate a bigger price rise for raw nuts. While those involved in the racket would initially lose a few thousand dollars through the purchase of kernels, they finally manage to earn a couple of million dollars in raw nut deals.

This group had successfully effected this operation at the same time in 1999 and the resultant bullish trend in the raw nut market saw several processors quitting the industry after incurring heavy debts on account of losses suffered.

The game plan begins ahead of the mid-November raw nut crop season in Tanzania and Indonesia. This is the time when both raw nut and kernel prices remain somewhat low. At this time, this group, which otherwise has no business interests in kernels, enters the cashew market to purchase kernels at prices which are higher than the international market prices.

The modus operandi is to quote 10 to 15 cents more on a pound than the market rate and purchase two or three containers which is enough to push kernel prices up in the international market. This creates an euphoria in the industry and there is a natural rush to purchase raw nuts at high prices in the hope that kernels would bring back handsome profits.

By purchasing kernels in this manner, the group would stand to lose about $3,500 or Rs. 1.5 lakhs on a container. The containers are stored at warehouses in New York, Singapore or Rotterdam and sold away at prices which are much lower than the purchase price. One container means 35,000 pounds of kernels.

However, by suffering this loss they manage to push up the price for Tanzanian and Indonesian raw nuts by at least $125 a tonne. It means that by effecting a deal for even 25,000 tonnes of raw nut, they would make an additional profit of more than $3 million or Rs. 15 crores.

It may be noted that during this season, the cashew industry here imports around 1 lakh tonnes of raw cashew from Tanzania and at least 25,000 tonnes of raw cashew from Indonesia.

Through an operation in 1999, the group managed to take the price of raw nuts to even $1,300 a tonne when the market price stood at $900 a tonne. This time, their target is to raise raw nut price to $700 from the currently prevailing market rate of $540 a tonne. In fact, the game plan has worked as the price of raw nuts has already crossed $690 a tonne in Indonesia.

The fact is that the monopoly of all raw nut deals in the international market has been taken over by this group since the past many years by managing to enter the good books of those concerned in the raw nut exporting countries.

This has resulted in a situation in which the raw nut exporting countries are prepared to enter into any deal only through the group as they stand to gain by the arrangement.

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Section  : Southern States
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