Exporters say a severe capital shortage is preventing them from purchasing materials and boosting shipments in the remaining months of the year.
Nguyen Van Cong, vice chairman of the Vietnam Cashew Association, said local producers are running out of materials but don't have enough money to purchase more cashew.
Local farmers have around 50,000 tons and the industry plans to import a further 300,000 tons of cashew nuts, but it would cost nearly VND7 trillion (US$366 million) to buy them, Cong said at a meeting between exporters and trade officials in Ho Chi Minh City Friday.
The problem is cashew companies are unable to access bank loans, he said. "If they don't have money to buy the materials needed, they won't have enough profits this year and hundreds of thousands of workers will lose their jobs."
According to the association, cashew prices will rise around 14 percent on the global market in the rest of the year and it's now a good time for local exporters to stockpile materials. The association has proposed that the government orders commercial lenders to provide loans to cashew businesses. Without this access, the target of $1 billion from cashew exports this year will be hard to achieve, it said.
Other crops, including pepper and coffee, are also caught in the same situation.
Tran Duc Tung, general secretary of the Vietnam Pepper Association, said at the meeting that as the largest pepper producer, Vietnam can easily control prices on the world market.
However, due to the capital shortage, both exporters and farmers are unable to maintain stocks of their products and wait for higher prices, he said.
Nguyen Cong Hoang, deputy general director of state-owned Vietnam National Coffee Corporation, said the government needs to have a long term strategy to support local exporters in purchasing raw materials.
The government had approved in April a plan for exporters to buy 200,000 tons of coffee over a three-month period to stabilize prices, but companies had not been able to access bank loans until June, Hoang said. "By the time they got the money, foreign companies had already bought all the coffee from farmers."
Deputy Industry and Trade Minister Nguyen Thanh Bien said his ministry will work with the State Bank of Vietnam and the Finance Ministry to improve credit access for exporters.
Vietnam's agricultural exports reached VND75.9 trillion in the first half of 2010, up 5.14 percent over the same period last year.