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NEWS UPDATES 16 July 2010

Lack of capital slows farm exports

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Agricultural produce exporters were concerned about losing opportunities to make higher export turnover due to a capital shortage, a recent meeting held by the Vietnam Ministry of Industry and Trade, the Viet Nam News reports. At the meeting, which was aimed at speeding up exports for the final months of the year, representatives from export associations said they had lost many chances to buy cheap raw materials for export contracts of farm produce. He said prices were sharply increasing in the global market.

Deputy chairman of the Viet Nam Cashew Association (Vinacas) Pham Van Cong said cashew prices in the world's market in the second half of the year were forecast to be roughly 14 percent higher than current prices, adding that many cashew exporters had signed lucrative export contracts. Despite good export prospects, Cong admitted that cashew exporters did not have enough raw materials in stock due to their failure to access bank loans. It was estimated that 80 percent of the businesses could not access bank loans.

Cong said cashew businesses currently were buying only 300,000 tonnes from domestic suppliers and importing 100,000 tonnes of raw cashew nuts. However, processors had so far used almost all of the raw materials they had bought; yet the cashew industry was targeting an annual output of up to 650,000 tonnes.

Therefore, Cong said, raw material shortages at processing plants were a major difficulty in the growth of the cashew sector.

The Vinacas representative confirmed that without capital, the cashew industry's target of exporting $1 billion in 2010 would not be easily achieved.

Vinacas proposed the Government direct banks to lend its member businesses VND1.1 trillion ($57.9 million) to buy remaining raw materials available on the domestic market.

In addition, it said the businesses also needed to borrow about $300 million to import 300,000 tonnes of raw cashew nuts to ensure production for export in the remaining months of Coffee businesses were also under various pressures, including capital shortages. Most firms did not really have enough capital to do business, said Nguyen Cong Hoang, deputy general director of the Viet Nam Coffee Corporation (Vinacafe).

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