Vietnamese cashew processors are paying the price for ignoring warnings about price slumps issued earlier this year. They continued to pay too generously for the unshelled nuts they process and are already feeling the pain as market prices continue to slump.

Processors have been paying over VNÐ8,800 (US$0.58) per kilo of unshelled nuts, while experts say Ð8,000 is as high as they can pay if they still hope to break even.

Export prices have plummeted by between 30% and 40% to below US$3,000 per tonne, Ho Ngoc Cam, the chairman of the Vietnam Cashew Producers Association (Vinacas) told an industry meeting in Ho Chi Minh City on Monday.

The problem is compounded by a decision by China to hike import duties to approximately 40%. Since China traditionally buys 35-40% of Vietnam’s processed cashew crop, the resulting 50% year-on-year import slump has hit Vietnam hard.

Processors are examining a number of options to improve their revenues, including more plantings of high-yielding varieties and investment in modern processing equipment to raise product quality. Another idea is to eliminate import duty on unshelled nuts.