Article

Question: Who sets the standard for quality control of export products in India?

Answer: In India, the Government of India under export act, 1963 (Inspection and quality control) has provided standard specification of exporting the Indian cashew Kernels

Question: Please elaborate on the Quality control and inspection (before shipping) mechanism in case of cashew nuts?

Answer: All the quality control and inspection for cashew is done as per consignment / lot. Samples are taken from these consignments to check the quality of the cashew nuts (both as raw material and finished product). Some of the cashew type though are subjected to very few inspection like Salted and roasted types because of their pre-maintained quality while manufacturing.

Question: Please comment on the standardization of packaging and weighing in cashew exports?

Answer: 2 tins (CO₂ filled, vacumised and completely sealed) are exported together in a lot with the weight of each tin being 11.34 kgs approximately. Hence, in a lot, the net weight generally transported is approximately 22.68 kgs which is approximately 50 lbs. Tins are nowdays replaced by flexible packing and even to reduce the damage to consignment, some of the exporters go for 10 Kgs pack instead of standard 11.34 Kgs. A normal shiiping container for export contained upto 700 such cartons of cashew.

The freight on the shipment of the lot is charged as per cubic meters on volume basis. Even in certain scenarios, the export can be less than full container, but it costs more than full container.

Question: Please elaborate on some of the contract terms of the export?

Answer:

Contract Terms

1. FOB (Free on board) is mainly used for making the contracts for exports.

2. Pricing is USD per lb (for the cashew trade in International market). Forward pricing as well as current pricing options are available to the exporters to safeguard exchange rate fluctuations

3. Since, the cashew prices are very vulnerable and its price changes very quickly, its business is solely done on the basis of first come first offer and its immediate acceptance.

4. The insurance cost is taken care by the importor of the cashew

5. While making the contract, the specifications such as pricing, grade, shipment details etc needs to be clearly mentioned.

6. The payment is done based on LC (Letter of credit) only. The LC is normally completed one month before the shipment & once made becomes irrevocable.

Question: What are some of the specified grades of cashew prescribed by Government of India? On what factors are they decided?

Answer: Depending on the available color, the shape of the cashew and its size, the major grades of cashew nut in India are splits, butts, white / scorched wholes, pieces etc. Although only 26 different variety of cashew is exported (which is available commercially), the Act of the Indian Government suggests 33 grades in totality. Some of the typical examples are as follows:

· W-180 (Cashew King, most expensive and largest in size), W-210 (Called as JUMBO nuts), W-240 (Good pricing with popular grade), W-450 (Very popular low priced whole grade, it the tiniest as well as has the least cost among all varieties in small size)

· For usage in home and preparation of snacks, Butts, splits & pieces are majorly used.

· Scorched whores are brown in colour due to longer roasting time, but maintain the same nutrition level as compared to any other variant of cashew.

Question: What are the Problems associated with the manufacturing of the Cashew in India, with regards to the safety of the labor?

Solution

Problem: Presence of Caustic oil in the outer shell (Hard) which can harm the human skin & can even burn it. Also it can produce fumes when heated (which can be noxious in nature)

Old Scenario: Involved high investment including machinery & labor force. The outer shell was removed with the help of mechanical processing (Drum roasting, hot oil water bath) and machine cutting (sometimes even large impact was also used).The labor force was mainly women involved to peel of the left over shell.

New Scenario: Still, the safety remains a major concern as gloves provided wear in no time. Also, in many cases, only oil is applied on workers skin to protect them from burning, which is inadequate. The process is still not fully automated and exposes the worker to greater health risk

Question: What are some of the major findings from the report (workers condition, prices, major players)

Answer:

· With the entry of countries like Vietnam, the share of India in International export of cashew has gone down significantly. The international prices of the cashew fluctuates drastically (due to their demand, exchange rate fluctuation and strict international norms for exports). The suppliers have to bear the burden of maintaining the quality throughout the process of shipping.

· The labor safety and work conditions are increasingly detororating in near future because of shift from a big industry to a small cottage industry in order to provide means of living to below average income people.

· Many of the employed women workers complain that the income generated from working in the cashew industry is not enough at all to sustain a living.

· Even the Government has not taken significant steps to address this issue for a very long time. This industry, which has the capacity to make its presence in global market is losing out because of lack of initiatives for workers from the government

Hence, the international trading though seems profitable, but is not able to contribute significantly in raising the standards of people involved in this industry

Question: Can you provide a framework to address the strength, weakness, opportunity and threats in this sector for India?

Answer: We can use SWOT analysis for analyzing the case

Strength

1. Good expertise in making cashew

2. Skilled labor available at low cost

3. Plentiful raw material

4. Good old knowledge to process and make cashew in workers family

5. Easy to finance as they are now run on small scale (microfinance)

5.

Weaknesses

1. Harvesting is not done in a good way

2. Soil productivity is not taken care of

3. Scientific research is not avaialbe for harvesting the crop as on date

4. Poor supply chain management (transportation and warehousing)

4.

Opportunities

· Introduction of better machinery can be given

· Retail markets has a greater application

· Employement opportunities

Threats

· Good international competition

· Highly changing price in market

· Seasonal product

India has god given abundant natural resources and has a big labor force skilled to take care of this industry. India has a good prospect in excelling in this industry. It is a industry which can provide livelihood to many in coming years (highly labor force intensive industry). Even Indian researchers have gain recent success in achieving high yielding crop for cashew (3 tons per hectare of cashew nuts). India needs to make sure that they increase their production to a-tleast 2 times to meet the requirement in future.