THE RISE OF AFRICA’S CASHEW INDUSTRY – PART 2 : Challenges for Vietnam from African Cashews

Africa’s cashew industry holds enormous potential for growth, especially if the continent can expand its processing capabilities and improve logistics. With continued support from Governments, International Organizations, and Industry stakeholders, Africa could emerge as a global powerhouse in both cashew production and processing, providing high-value products to markets worldwide.
In recent years, Vietnam’s cashew industry has been facing growing challenges from African countries and Africa is becoming a formidable competitor to Vietnam in the cashew industry, from pricing, supply to processing technology.

1. Price Competition

One of the biggest challenges for Vietnam is pricing.
African countries, particularly Côte d’Ivoire, Nigeria, Ghana, and Tanzania, have lower production costs compared to Vietnam. This is mainly due to cheaper labor and material costs in these countries.
African cashews, therefore, enjoy a competitive price advantage, prompting importers from Europe, the U.S., and the Middle East to turn to suppliers from this region.

2. Large Supply of Raw Cashews

Africa is one of the largest producers of raw cashew nuts globally. With vast cultivation areas and favorable climate conditions, African countries can supply a large volume of raw cashews.
Vietnam, on the other hand, relies heavily on importing raw cashews from Africa for domestic processing needs. This creates significant dependency on foreign supply, while also reducing Vietnam’s competitiveness compared to countries with self-sufficient resources.

3. Investment in Processing Technology in Africa

In the past, African countries mainly exported raw cashews to Vietnam and other countries for processing. However, in recent years, many African nations have begun to invest heavily in cashew processing technology domestically to increase the added value of their products.
As these countries expand their local processing capabilities, the demand for exporting raw cashews to Vietnam decreases, directly impacting the supply chain for Vietnamese cashew businesses.

4. Quality and International Standards

While African cashews have a price advantage, Vietnamese companies are known for their higher product quality and adherence to international standards. Vietnamese companies like SVC Cashew have maintained international certifications such as BRC, HACCP, and ISO, ensuring high quality and food safety for demanding markets like the U.S. and Europe.
However, with the continuous improvement of quality and standards from African producers, Vietnam will need to maintain and elevate its standards to keep its market position.

Which strategy does Vietnam need to adapt and price trend in Q4 2024?

Part 3 to be continued…

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