ABIDJAN - Cashew nut farmers and exporters in Ivory Coast are seeing a slump in sales as Vietnamese exporters try to get out of contracts following a drop in world prices, an official said on Tuesday.
Ivory Coast is the world's top cashew nut producer with output of 770,000 tonnes expected this year. Exporters in Vietnam, which has a major cashew processing industry, buy 70 percent of that production.
International prices for cashews have dropped by nearly half since March after consumers in the United States and Saudi Arabia objected to high prices. In response, exporters want to pay less than the state-imposed price for this season.
"The contracts that the exporters signed have been called into question," Adama Coulibaly, the general director of Ivory Coast's cotton and cashew council, told Reuters. "The Vietnamese processors have seen their margin erode."
Coulibaly said Ivorian authorities were in discussions with the Vietnamese exporters to insist that they respect the contracts signed in February at the beginning of the cashew-growing season.
According to farmers and exporters, between 150,000 and 200,000 tons of cashew nuts have not been sold because exporters have not been willing to buy at the fixed price.
At a warehouse in the commercial capital Abidjan, thousands of bags full of raw cashews lay on the floor awaiting buyers.
Farmers, meanwhile, warned that they would consider switching to other crops if the current impasse persisted.
Ivory Coast's cashew sector employs about 450,000 growers and has been an important source of economic growth since the end of a brief civil war in 2011.
Authorities are hoping to increase the country's processing capacity from the current 100,000 tonnes per year to at least 300,000 tons by 2020 in order to make the sector less vulnerable to international market swings, Coulibaly said.