Cambodia might be the World’s Largest Cashew Producer as Exports continue to Baffle

Cashew Nut Kernel

Cambodia

Vietnam

Published Oct 26, 2021

Cambodia’s cashew exports to Vietnam showed a massive 595% increase, on a value basis, for the first nine months of 2021, compared to the same time in 2020. According to Vietnam Customs, to date, an incredible 1,100,118 MT of cashews, valued at USD 1,843,964,698, have been imported from Cambodia. As far as an export figure of 1,100,118 MT from Cambodia is concerned, this number is baffling the market, as this means their production increased from only 219,000 MT last year to over 1,000,000 MT this year. This vast increase in production was fairly unexpected, but became apparent as trade figures between these two countries were reported.

Cambodia's cashew Production

Cambodia's major potential in the cashew market has been pointed out for years. The climate is perfect for the cultivation of cashew trees. Furthermore, cashews are fairly drought-resistant, making them even more enticing for production in the northern and central parts of the country, where most cashews are already being cultivated. Cashew production increased steadily over the five years ending 2020, but the 2021 crop dropped a bombshell on the market. In 2020 production was 219,000 MT but it seems to have exploded and could top 1 million MT or even more in 2021, if a correlation between exports and production is drawn.

Sources: Cornhouse, INC, Cambodian Ministry for Agriculture

What happened in 2021?

While there have been reports that Cambodia is expanding the area under cashews, the incredible increase in export figures and production is still bewildering. This would mean that a five-fold increase has gone mostly under the radar. However, there are two important points that help make sense of the vast expansion.

First of all, a project launched as far back as 2017 between the Vietnam Cashew Association (Vinacas) and Cambodia’s Ministry of Agriculture was aimed at increasing Cambodia’s cashew production to 1 million MT. This project has been relatively low-key, with the market not expecting the sudden increase in production. However, considering that cashews take only 3 to 5 years to become productive, it would fit the timeline perfectly.

Secondly, due to the Covid-19 pandemic, the border between Cambodia and Vietnam is being officiated more strictly than before. This means that cross-border trade between the countries is being reported more accurately. This could be an indication that the Cambodian crop has been underestimated in the past.

These reported export figures are still far above what was expected. If Cambodia’s exports, and thus production, did indeed increase to more than a million MT, that would slingshot them to the top of world cashew production, overtaking Ivory Coast. The cashew harvest runs mainly from January to April, which means exports are slowing down, however, it has already quadrupled from 2020, with three more months to go.

Source: Vietnam Customs, ITC Trade Map

Trade between Cambodia and Vietnam

Most cashews from Cambodia are exported to Vietnam where the shelling industry is much more advanced. The investment by Vinacas in the above-mentioned project makes sense, since cashews need only cross the border from Cambodia to Vietnam, and additionally, Cambodia’s cashew processing facilities are not comparable with that of Vietnam. As a result, nearly the whole Cambodian crop goes to Vietnam where it is processed and then exported to the rest of the world. Vietnam is the world’s largest importer, processor, and exporter of cashews. Up to now, Vietnam imported mostly from Ivory Coast, which is, or rather was, the world's largest producer (900,000 MT in 2020).

While cashews were at the forefront, total exports from Cambodia to Vietnam exploded in the first nine months of the year. Over this period, the value of Vietnam’s total imports from Cambodia was USD 3.708 billion, up by 396% from the same time last year. Furthermore, Vietnam’s government signed a special decree in which there is no import duty on 31 commodities from Cambodia. This agreement started on September 13th, 2021, and will continue until December 31, 2022, which means trade between the two nations could increase even further.