Goa-based Ajanta Industries has successfully implemented a contract farming model for cashew farmers in the region.
Ajanta Industries was established in 1982 by Mr. A. S. Kamath.Headquartered in Ponda, Goa, the company is involved in the processing of cashewnuts. It does not have any farm of its own but has formed a club by the name of Ajanta Organic Farmer’s Club, which has many farmers enrolled in it. “We provide the inputs for farming, latest farming techniques and motivate them for organic farming. Once the farms are certified, we give them premium to market prices and enter into buyback agreement with a minimum support price. However, this is limited to only raw cashewnuts,” avers Mr. Kamath.
Processing Capacity : Mr. Kamath maintains that the company has been manufacturing cashewnuts more than its processing capacity. “Nowadays our processing capacity has been increased to 15,000 quintals but we are facing shortage of raw cashewnuts like Karnataka and Maharastra. Presently, Goa produces about 20,000 tons of raw cashew and there has hardly been any increase in the crop for the last 10 years. If this continues probably we have to depend more on imports from other countries,” he maintains.
Government Initiative : Mr. Kamath says, “The government of Goa is doing a lot in supplying the grafts to the farmers at concessional rates for the last few years.
However, proportionate increase in the crop is not visible. This is because, the concentration is more in distribution rather than finding out whether the subsidy and fertilisers are properly utilised or not. Goa has very limited scope for increasing the production because of limited land availability for cashew cultivation. The crop has not increased. It is the processing capacity that has gone up. Now the government of Goa has come up with Horticulture Mission 2005 and has earmarked funds or rejuvenation of existing plants, cash incentives for organic certification. The government of India too has come up with the idea of AEZ for the state of Goa with thrust on providing the infrastructure for cashew industry thereby to increase the cashew export from the region.”
Cashew Byproducts : When asked if the cashew byproducts like wine are contributing in any significant way, Mr. Kamath says, “As of now no. The cashew wine is called feni in Goa. The government of Goa wants to patent it so that it could be marketed worldwide. However this is in the initial stages and we may have to go a long way. The political instability in Goa is also a factor, which delays all the projects.”
He adds, “We have about Rs.12 crores of export from Goa in 2004-05 and this figure may go up to Rs.14 crores in 2005-06.”
The company also exports cashew kernels. “We have been doing it for the last about 3 years. The destinations are US, U.K. and Europe. The kernels are exported mainly in flexipacks rather than in tins. The main consumer of cashew kernel in the world is US, which itself constitutes 52% of world sales. This financial year 2005-06, it has been about 50%,” informs Mr. Kamath. Speaking about the largest producer of cashew, Mr. Kamath says the main producer of raw cashew in Goa is the Forest Corporation. It has about 900 hectares of land under cashew cultivation with about 1,800 mts of raw cashewnuts. The average yield per tree is as low as 3.5 kgs per tree compared to newly developed grafts that give about 8-10 kgs per tree. “Out of our total production, about 15% goes out during the peak production period and an equivalent quantity or a little more is sourced by the industry by way of imports,” he explains.
Cashew Demand : When pointed that there has been a rise in demand for cashewnuts in 2005-06 from overseas Mr. Kamath disagrees. “I don’t think that there has been an increase in demand. The quantity exported may have gone up. But the unit realisation per kg is surely less. It was about USD 2.65 per labs in 2004-05, which is presently 2.05/lbs. The domestic demand is steady and we are consuming 22% of our own production. Cashew is more and widely used in sweets and bakery products, because there is very little demand for pieces of cashew in the world market. The wholesale price is about Rs.225 kg as against Rs.265 in 2005
[hidepost] Cost of Cultivation : Giving an estimate of the cost of cultivation of one acre of cashew Mr. Kamath says, “In ideal conditions, one can grow 45 – 50 plants. I am not aware of the costing. One can earn about Rs.14,000 per acre from 5th year. However, this is not the net profit. This is only the realisation per acre if 50 plants are grown taking into consideration an average yield of 8 kgs per tree.”
Promotion of Cashew Consumption : Mr. Kamath appreciates the government of Goa for promoting the production cashewnuts, by way of providing the plants, fertilisers, equipments, subsidy for organic certification, drip irrigation etc. “The government is also giving subsidy on acerage basis in two or more installments. The role of the industry is limited in promoting the production.”
When asked about the role played by the company in promotion of cashew cultivation, Mr. Kamath says, “Our role basically is to train the farmers for better cultivation, post harvesting practices and promoting the finished products i.e., cashew kernels. We also create awareness among housewives and people in general that eating cashew is good for health because we believe that there is scope to increase the domestic market which comprise 22% of the total consumption.”
Problems Faced By Farmers : Commenting on the problems affecting cashew farmers, Mr. Kamath laments, “They are reluctant to cut the old and low yielding trees so that the plants get rejuvenated and give more yield. The other problem is the small holdings of land. The government should open up waste land to these small farmers on long lease and the farmers can increase their yield.” He further adds, “I don’t think that there is any other major. In fact there are various advantages to cultivating cashew as no cattle eat this plant. The plants don’t need much of water either. These added advantages have inspired the farmers in AP, Orissa to take up cashew cultivation in a massive scale. AP is now a major producer of raw cashew in India. To some extent adverse weather conditions affect the production of raw cashew but as a whole, the farmers are always rewarded well in the long run. This will continue as long as there is mismatch between the Indian supply of raw cashew and production. When I say production, I mean processing of raw cashew in India.”
Company Size : The company has 150 employees with female workers comprising above 90% of the workforce. The annual sales turnover of the company is about Rs.8 crores according to Mr. Kamath. He says the company has invested about Rs.20 lakhs in plant and machinery.
Future of Industry : Speaking about the future of cashew exports industry in India Mr. Kamath says, “The risk factor is more in the industry. If the exports are up, it for the reason that Indian cashews are always graded well. Inspite of the efforts of the various state governments, the production is going up at a very slow pace. I won’t be surprised if Vietnam takes the lead position in cashew production and exports in the near future. It is viable in a small way, if it is a small enterprise. Either, it should be small or too big to have access to various sources from where it can source cheaper raw cashew nuts. The only alternative which is viable is to increase the indigenous production in India because this mismatch between the processing and production is going to continue for atleast a decade now. It needs more of government attention as it provides lot of employment opportunity in rural areas. The other specialty of the industry is that, it doesn’t give any burden on the state governments for electricity, water etc.
Till the production is stepped up, the future of the industry is in question.” The company started exporting cashew kernels from 2002-03 and presently is exporting about Rs.4 crores worth. “While all these years we are depending on the local raw cashew nuts, we also stated importing the nuts for off season processing as and when we felt the shortage of indigenous raw nuts. As president of the Goa Cashew Mfrs. Association, I am educating the Goan processors to keep the cost of production at the minimum as the margins in the industry are coming down. I had recently got the permission from the Ministry of Agriculture, New Delhi to import raw cashew nuts to Goa directly from other countries as and when the shortage is felt so that they can use the idle processing capacity,” avers Mr. Kamath.