Cashew cultivation is emerging as a lucrative cash crop for farmers in Sri Lanka, showcasing considerable potential for growth both in the local market and in terms of export. This agricultural trend has gained traction, particularly in the arid regions of the country, with a significant portion of cashew cultivation concentrated in districts such as Puttalam, Mannar, Vavuniya, Jaffna, Trincomalee, Batticaloa, Polonnaruwa, Monaragala, and Hambantota. 

The increasing cultivation of cashew not only serves as a promising avenue for local farmers, but also positions Sri Lanka as a potential player in the global cashew market, promising economic opportunities and sustainability for the agricultural sector.

The commencement of the cashew season in Sri Lanka typically occurs in March, extending throughout the month of April. Engaging in cashew cultivation is not without its challenges, as it involves navigating various risks inherent to the process. Notably, the shelling phase stands out as particularly laborious and time-consuming, demanding meticulous attention to detail and dedication from those involved in the cultivation process.

The report by the Sri Lanka Cashew Corporation (SLCC) sheds light on the overarching trends in the production of cashew nuts, offering a detailed breakdown of the volumes for the years 2019, 2020, 2021, and 2022, where the respective production volumes of cashews ready for consumption stood at 5,396,000 kg, 4,989,000 kg, 1,579,000 kg, and 2,828,000 kg respectively. This underscores the fluctuations and patterns in cashew production, providing valuable information for stakeholders and industry observers.

Despite Sri Lanka’s rich endowment of fertile soils, ample water resources, and a climate ideal for cashew cultivation, production has experienced a significant decline over the course of the last three years. This decline in production raises concerns about the sustainability and efficiency of the cashew industry, prompting stakeholders to evaluate and address the underlying factors contributing to this downturn.

In light of the prevailing circumstances, the Cabinet has granted approval for the importation of a maximum of 15,000 tonnes of cashew nuts for the current year. This decision stems from the acknowledgment that the existing local production capacity is insufficient to meet the demand, necessitating the need to supplement it through imports.

In 2019, top exporters of cashew nuts – fresh or dried, shelled or peeled – were Vietnam, Côte d’Ivoire, India, Tanzania, and the Netherlands.

Declining production 

Speaking to The Sunday Morning Business, SLCC Chairman Saranga Ratnayake said that cashew production was declining due to adverse weather conditions. Cashew flowers bloom from January to February, but this has become a challenge due to the rain. This shift in weather meant that crops could no longer grow, causing cultivation to drop, he said.

Reports indicate that Sri Lanka’s cashew nut harvest in 2021 also declined by 40% from the average yearly harvest due to the weather conditions.

Ratnayake pointed out that while the annual demand for cashew was typically around 25,000 tonnes, this year’s production could fall below 10,000 tonnes. Consequently, there is a significant disparity between the actual quantity needed and the anticipated production. 

“We will need to import a substantial amount of cashew. Although the initial Cabinet paper suggested 15,000 tonnes, we plan to negotiate this figure based on the current situation and the expected yield for the year. Discussions have taken place and we are considering allowing a quantity below the initially proposed 15,000 tonnes,” he added.

The global cashew economy is booming and Sri Lanka has to compete with some of the largest cashew exporters in the world including Indonesia, the UAE, Africa, Brazil, Vietnam, and neighbouring India. 

Export concerns 

Speaking to The Sunday Morning Business, Export Development Board (EDB) Export Agriculture Director Janak Sanjeewa Badugama noted that cashew production was highly seasonal, meaning that output was not available throughout the year. He further noted that Sri Lanka had various agencies involved in cashew cultivation. 

“Based on the details provided, it appears that cashew plantations are currently facing challenges related to inadequate maintenance. Ongoing issues, including a shortage of essential resources, pose a significant threat, and there is a risk that the entire production process may experience a complete halt in the foreseeable future,” he warned.

In terms of cashew exports, there are issues regarding the country’s requirements for exportation as well as the supply chain since the current background indicates a deficit. Although the domestic price of cashews is high due to the limited supply, exporters are not in a position to compete in the market with the current scenario, which poses a significant challenge in expanding their market, according to Badugama.

“Sri Lanka is not the only country that supplies cashews to the international market. Under such circumstances, international buyers will obviously not accept our price levels because they can compare and contrast with competitive countries. Unique features, such as varieties, may not be a significant factor when it comes to the mass market.” 

Furthermore, beyond their utilisation as edible snacks, these nuts serve as the foundation for a diverse range of high-value products, adding significant value to the market. These products encompass an array of options, including raw, roasted, spiced, and fried kernels, each catering to distinct consumer preferences and contributing to the overall versatility of these nuts in the market.

A strategic response 

Meanwhile, National Chamber of Exporters President Jayantha Karunaratne noted that the recent Cabinet decision to initiate the import of cashews could be a strategic response to the surging demand within the country. 

This upswing in demand is potentially fuelled by the notable influx of tourists to Sri Lanka, indicating a substantial market need that the Government seeks to address through the importation of cashew.

In light of the growing interest in Sri Lanka as a tourist destination, the Government’s decision aligns with the aim of meeting the heightened demand for cashew and ensuring a stable supply to cater to both local and international markets.