Palasa-Kasibugga’s identity is intrinsically linked to the cashew industry, which has earned the twin towns the moniker of “White Gold City” for their role as the largest cashew kernel processing center in Andhra Pradesh.
Regional Economic Anchor
- Scale of Operations: The Palasa cashew cluster, which was established in the 1940s, comprises over 300 to 450 processing units. The Palasa variety of cashews is especially prized for its rich taste.
- Employment: This industry is a lifeline, directly or indirectly supporting over 20,000 families, primarily involving manual labor and providing essential income for women in the region.
- National Recognition: The dedication to quality has paid off, with Srikakulam Cashew winning the Best National Award under the Centre’s One District, One Product (ODOP) initiative in recent years, boosting the sector’s national profile.
Current Challenges Hitting Profitability
Despite this recognition, the sector is struggling to stay profitable due to significant market and policy issues:
- Illegal Imports and Price War: The most pressing current issue is the reported surge in illegal imports of cashew kernels, often mislabeled as “cattle feed” to bypass mandatory import duties and taxes. This influx of cheap, under-taxed kernels has severely depressed domestic prices by 20-30%, putting genuine Palasa processors at a significant disadvantage.
- Raw Material Dependency: Palasa factories require over 80,000 to 1,00,000 tonnes of raw cashew per year. Since domestic yield is insufficient (partially due to aging orchards and past cyclones), the units rely heavily on expensive raw nut imports from African countries.
- Taxation Burden: Manufacturers’ associations, like the APCMA, have publicly urged the government to abolish the Agriculture Market Committee (AMC) cess being levied on raw cashew nuts, claiming it amounts to double taxation and harasses traders who are already operating on low margins.
- Farmer Demand: Local cashew farmers are increasingly demanding that the government fix a Minimum Support Price (MSP) for raw cashews to protect them from fluctuating market prices and exploitation by middlemen.
The industry stakeholders are currently collaborating with state bodies to lobby the Central government for protective measures and fiscal relief to ensure the long-term sustainability of the “White Gold City.”