Cashew Nut Processing Business in India – A Business of All Seasons

Cashew nut processing business is one of the most sought after nuts among dry fruits obtained from an exotic tree species. The cashew nuts commercial cultivation practiced in different states, mainly in Andhra Pradesh, Tamil Nadu, Goa, Kerala, Karnataka, Orissa, Maharashtra, and Gujarat. INC estimated raw cashew production in India for 2020-21 at 6, 91,000 tonne against 7,42,000 tonne in 2019-20. The Global raw cashew production in 2020-21 is estimated at 3,722,000 tonne and total supply at 3,924,000, with carryover stocks seen at 202,000 tonnes. 

Cashew is a famous dry fruit and is highly in demand in all the seasons in India. It is either consumed as raw or used in different cuisines like sweets, preparing gravy, garnishing products, etc. Since India is a land of God and Goddess, dry fruits are used as a relevant edible item for ‘Prasada.’ 

About Cashew Nuts

Cashew nut formed outside the fleshy fruit also called the cashew apple. At the time of its maturity, the cashew apple and its seed fall on the ground. These seeds are collected and processed to get cashew nut. The cashew apple is fleshy and sweet is used to prepare a fermented fruit drink known as Feni.

Kerala is the leading state in the processing of cashew. More than two-thirds of cashew processing units are in Kerala, whereas the remaining scattered in all other states. The cashew tree or is a tropical evergreen tree that produces the cashew nut & the cashew apple. The cashew nut tree, native to Brazil, was introduced to Mozambique and then India by the Portuguese to control coastal erosion.

The cashew kernel is considered a rich source of fat and protein and is an excellent source of calcium, phosphorus, & iron. It comprises a very high percentage of polyunsaturated fatty acids, particularly the essential fatty acid linoleic acid. Three main cashew products are also traded on the international market: raw nuts, cashew kernels, and cashew nut shell liquid. A fourth product, the cashew apple, is generally processed and consumed locally.

Scope of Cashew Nut Processing Business in India

In India, the processing of cashew is done manually and is a highly labor-intensive process. The cashew processing business is considered highly unorganized and a bit scattered. Hence, if carried properly, the business can promise good profits. Women constitute almost 90 percent of the labor force in the cashew industry. Mechanization in cashew nut processing is picking up slowly. This model is prepared to guide to start a new small scale cashew processing unit.

Kerala is deemed as the leading state in the processing of cashew nuts. More than two-thirds of the cashew nut processing business is based in Kerala, whereas the remaining are scattered in the different states.

The units together have a processing capacity of more than 8 lakh tons per annum. Often Cashew nut processing business is considered profitable, and budding entrepreneurs can take this venture for long-term profits. The cashew nut processing business shall never run out of demand. However, tedious the cashew nut processing business has a promising future ahead of it. In the corona times, when there is a lack of opportunities, one can easily take up this business for stability.

Market Potential of Cashew Nut Processing Business

• The cashew nut processing business has been a steady business since time immemorial. Also, the nuts cashew market has been stable because of its easy availability and constant demand. Over some years, there has been a shift of trend and innovation in growing of its crop. As a result, organic cashew nut has taken a toll on traditional cropping and growing cashew nuts.
• The cashew nut market has been increasing significantly due to the several health attributes it possesses. Therefore, the cashew nut market is prospering like anything and has a bright future ahead. Also, in a country like India, the demand shall never go down because of its culture and tradition.
• The demand and market of cashew nut are expected to grow, notably in the outlook period. India’s dry fruit processing industry is multiplying, while cashew nut consumption growth in India is also tremendous.
• India is known to be a leading exporter of processed cashew nut based on imported raw cashew nut. The cashew nut’s international market is also growing, with innovative products introduced in snack foods, bakery items, and sweets.

Usage and Forms of Cashew Nut

Cashew nuts are used in multiple forms like:

• Raw
• Paste
• Roasted 
• Splits
• Gravy

By usage:

• Confectionaries
• Dairy products
• Snacks
• Bakery products
• Cereals
• Beverages
• Desserts

Business Report of Cashew Nut Processing Business

Before kickstarting a Cashew nut processing business, entrepreneurs must come up with a detailed business report. Business reports for any venture provide useful insight and long term planning. Preparing a business report is a must for business success. Any business report’s primary aim is to provide a critical analysis of how the business is doing in all administrative areas. Business reports are essential tools to guide in decision-making and to allow business owners and other workers the proper opportunity to deal and work upon any unidentifiable issues.

A cashew nut processing business report is made by compiling and reviewing the information within a specific framework like finance, sales, operations, manufacturing, marketing, inventory control, or any business area where performance is monitored and measured.

Once information is gathered and reviewed, conclusions and recommendations are made. The business report’s outcome may explain why an issue has occurred or may identify performance problems & generally recommend a course of action. The project report is thus, beneficial for the cashew nut processing business. 

Aim and Objective

• The cashew nut processing business’s aim and objective should be simple, i.e., to increase profitability and provide employment to maximum no. of people.
• The primary focus shall lay upon maximum women participation to promote gender empowerment.
• It is impossible to consume the cashew nut seed and apple in its raw form; hence, the processing is necessary.
• The main objective of the entrepreneurs should be to ensure good quality of cashews at a reasonable price.

Other Essential Steps include:

Location

One can quickly start a cashew processing business unit at any location in the country. However, a site must be finalized strategically, keeping in view the availability of a ready market and cheap labor. Most existing units import raw cashew from other countries like Vietnam, Africa, etc. However, the units located in cashew growing areas have added advantage of readily available backward and forward linkages.  

While deciding the unit for the cashew nut processing business, one must look into several factors. These factors include water availability, accessible transportation, close to the area where cashews can sell heavily, etc. The security of workers and especially women workers is the top priority. Premises should is finalized as per the safety of the workers. Apart from safety, the place should be spacious to accommodate machinery and equipment.

Allocating Funds for Business

The source of financing to food processing units like cashew nut processing business falls under priority sector lending. The funds or loans to units meeting the criteria of MSME come under the MSME sector. Such units avail finances through any scheduled commercial banks, Regional Rural Banks, and Cooperative Banks. Important terms and conditions of funding need full precaution. 

The entrepreneurs of the cashew nut processing business can approach any financing bank for finance. However, it is recommended to take a bank loan to avail of the Government’s various subsidy schemes. Therefore, the promoters should be careful in deciding means of finance. Also, there are multiple Government schemes in favor of the MSMEs to avail benefits of finances.  

Statutory Requirements / Government Approvals

Budding entrepreneurs may start their cashew nut processing business as an individual, proprietary concern, a partnership firm, or a joint-stock company. Individual or proprietary concern should have their Permanent Account Number (PAN) and should possess a bank account. On the other hand, Partnership firms should execute a partnership deed as per the laws of the Indian Partnership Act 1932 on a Non-Judicial Stamp Paper as per the Stamp Act and later on register the partnership firm with the Ministry of Corporate affairs.

Further lays a statutory requirement of FSSAI license for setting up of food processing unit. For cashew nut processing business MSME & GST registration is required. IEC Code is a must for Export of end products. Local authority clearance required for Shops and Establishments. Fire and Safety requirements and registration for ESI, PF, and Labor laws might be necessary if applicable in the current case. An entrepreneur may also contact the State Pollution Control Board, where ever it is relevant. Several other requirements may also have to be met for establishing a cashew nut processing business. 

Approvals Required

Following approvals are required to carry on cashew nut processing business:

i. Registration of concern with Registrar of Companies (ROC)

ii. NOC from Local Bodies like Gram Sabha or Municipal Corporation is mandatory.

iii. Approval of the Layout plan for construction is mandatory.

iv. Permission to dug bore well from Ground Water Survey and Development Authority (GSDA). 

v. Registration with District Industry Centre for a Small and Medium Enterprise.

vi. Application to State Electricity Board/ Authority for sanction of requisite power load.

Raw Materials and Other Equipment for Cashew Nut Processing Business

Raw Materials include:

• Cashew nuts
• Cashew Nuts Apple
• Tasteless Salt

Machinery includes:

• Cashew Drier
• Cashew Shelling Machine
• Cutter Mounting Table
• Grading Table
• Peeling Table
• The filling machine
• Packing Machine
• Vibratory sieve
• Other Miscellaneous Equipment

Project Cost and Other Essentials of Cashew Nut Processing Business

A cashew nut processing business’s primary component is land, building, plant and machinery, and manual labor /works. A project cost of Rs.158.50 Lakhs has been estimated for the cashew nut processing business. The working capital requirement may vary from one business organization to another. Hence, we are majorly focusing on fixed capital.

Manufacturing Process

• The process of manufacturing the cashew nut is well-established.
• Cashew nut processing business and methods have improved considerably over the years.
• Raw cashew nut is dried in the sun and stored in gunny bags—the stored raw cashews boiled by using steam in a boiler.
• There are manufacturers of small scale boilers available for boiling of cashew nut in most cashew processing areas.
• The boiling helps with the softening of the cashew shell. It becomes easy to remove nut inside cashew seed after boiling it.
• The outside of steamed cashew nut is removed by skilled labor by using cashew cutting hand-operated equipment.
• The cashew shell used to extract cashew nut shell liquid (CNSL), an essential by-product of the cashew industry.
• The cashew kernels are obtained and dried in a cabinet dryer. The outer reddish skin, known as testa, is removed to get cashew nut after drying.
• The actual recovery of cashew nut is around 30 percent, whereas 50 percent account for the shell, and the remaining 20 percent is process loss.
• Cashewnut is graded based on the color and on how the kernel got broken. The dried cashew kernels are more processed for producing roasted cashew, salted, flavored, coated cashew nuts, cashew kernel paste, etc.
• After having the final product of cashew-nuts, it is further packed and is made ready for marketing purposes. 

Backward and Forward Linkages

The entrepreneur can opt for roasting, salting, and spicing of cashew nuts packed in consumer packs as forwarding linkages. Moreover, the same infrastructure can be utilized for other dry fruits like almond and pistachio. Furthermore, product CNSL can be processed to make resin for automobile brake lining, waterproofing compound, paint, and varnishes.

Sale/Marketing

Marketing is critical for any business. There are multiple ways of marketing in the present scenario. The entrepreneurs can contact any local distributor for selling cashew nuts. They can promote their packed cashew nuts on the online portal as well. Nowadays, promoting manufactured products on social media is handy and feasible. It does not cost you a penny by listing your goods with various e-commerce websites like Bigbasket, Amazon, Grofers, JioMart, etc. Also, they take orders from big shot companies and prepare orders for them.

Cashew nut processing business is a profitable business. This kind of business ensures a good profit in the long run since these goods shall always remain in demand because of its specific features. However, the benefit they earn depends on several external and internal factors. If they want to increase the profit margin, they can think about reducing the cost price. Also, these types of items ensure a better margin if you can increase the sales volume. Increasing the sales volume provides reducing transport costs, infrastructure costs, and workforce costs too.

Conclusion

The cashew nut processing business can see leaps and bounds if handled prudently. The Indian Government has opted for many initiatives in schemes (MUDRA Scheme, Aatmnirbhar Bharat Scheme, etc.) to provide financial aid and boost small-scale industries and budding entrepreneurs’ morale. As an Aatmnirbhar Sena, we provide round the clock assistance to the earnest entrepreneurs by bringing them in sync with the Government schemes, implementing it, providing capital assistance, organizing skilled development sessions, etc.