Increased production in all the producing countries means even at an average annual growth of 10 per cent, global cashew production will be 1.5 million tonne of raw cashews, or 15 million cartons of cashews by 2005.

While Asia is said to be the predominant player in the world cashew trade, producing more than 50 per cent of the world's raw cashew production and consuming around 35 per cent of global production, it is the emergence of some of the African countries in this segment that is worth taking note of Almost 100 per cent of the world's raw cashew are imported into Asia; 70 per cent of the world's cashew shelling is done in Asia; 35 per cent of world's cashew consumption is in Asia; over 75 per cent of world cashew kernel exports are from Asia.

Major threat to Asia's predominant role in global cashew trade is the increasing production in Africa and the desire of various African countries to increase cashew processing facilities in their country. Despite the relatively poor infrastructure, lack of skilled manpower and other resource constraints, the cashew processing in Africa is still posting high growth rate.

There is lot of scope for linkages between Asia and Africa in the area of processing as well as production because processors in Asia provide a ready market for raw cashews produced in Africa. This will ensure remunerative prices for the African farmers and will also ensure that the processing units which come up in Africa are efficient. Proper coordination and cooperation between Asia and Africa can convert the threat into an opportunity for improving the health of cashew sector in both continents.

Within Asia, the two main producers are India and Vietnam. Indonesia is another important producer. Thailand, Cambodia and Philippines also produce cashew in small quantities. China and Japan are the two big consumers in Asia, apart from India which is the second largest consumer in the world.

Despite this overwhelming presence in the world cashew trade, no Asian country is leading the market. Global cashew markets are led by the activities of roasters and marketing companies in the two other major consuming blocks - the US and the EU. This is natural because creating sustainable demand is more important than production and processing which are low-tech, low-investment segments of the cashew trade.

Major investments are required in brand building, promotions, identifying new uses etc. These initiatives can come only from large food companies in the developed countries who have financial and other resources. Cashew sector in the producing and processing countries is fragmented. Margins at production and processing level are much smaller than at the retail marketing level. Apart from large production, Asia's strength is in excellent processing infrastructure, first in India and now in Vietnam and Indonesia as well.

With limited mechanisation of some parts of the processing cycle Asian countries have significant competitive advantage over the more mechanized processing being used in other countries. This enables them to process at lower cost and achieve better realization per mt of raw cashew than the mechanised processing. Lot of work has been done in the last few years in Asia to upgrade quality and hygiene standards. This effort needs to be sustained to meet the continuously tightening food safety requirements.

Cashews' share in the world nut business -and more significantly in the world snack food and food market - needs to be increased. New uses for cashews as an ingredient in foods - for instance, increased use in chocolates, ice creams, cooking etc have to be found to make cashews a part of the daily diet rather than just a snack food.

Health and nutritional benefits have to be emphasised so that consumers become aware about cashews as a food rather than a luxury snack. Another challenge is modernising processing units, continuous upgrading of packaging, quality and hygiene standards. Only this will provide the confidence in product quality which is essential for the large food industries to increase the use of cashews as an ingredient in their products. Like all other businesses, cashew trade will also have to adapt - and adapt quickly - to the all pervasive influence of Internet.

Faster communication and more transparent trading mechanisms will mean that all players will have to become more efficient, control costs and find ways to do business safely because reduced margins at each stage of the cycle from farm to shelf will reduce the ability to sustain losses.

Close cooperation and coordination between all segments of the cashew trade - producers, processors, traders, roasters, marketers and food companies - will be required to meet these challenges and convert them into opportunities to build a strong and sustainable world cashew economy.

Hope, the ongoing World Cashew Conference in Kochi will give an opportunity for all players to think and discuss these issues and set the ball rolling for the overall improvement of the global cashew trade.

(The author is director, Samson Trading Co)