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Controversy over Cashew Development Corporation's Guinea-Bissau raw nut deal

Ignatius Pereira

KOLLAM: When a ship carrying 12,500 tonnes of raw cashew nut from Guinea-Bissau calls at Tuticorin port on Friday, it could very well stir a hornets' nest. As much as 6,000 tonnes of the consignment is for the public sector Kerala State Cashew Development Corporation (KSCDC) and the remaining for private sector cashew factories.

While the KSCDC purchased the raw nut at the rate of $1,260 a tonne, the private sector bought it for $925 a tonne. A difference of $335 for a tonne, and for 6,000 tonnes the difference works out to $20,10,000.

It is alleged that some people stand to benefit from the excess payment. Sources say that over the years, all deals of the KSCDC have been fixed in the same pattern with the result that the Corporation has always remained in the red.

In the latest Guinea-Bissau deal, apart from the excess payment, another curious aspect about the purchase is that it has not been made through a Letter of Credit (LC), but under Cash Against Document (CAD). It is said that under such a deal, there will be no assurance on the quality of nuts since there is no agreement on performance guarantee.

When contacted, KSCDC Managing Director K.A. Ratheesh did not dispute the mode of purchase (CAD) and the price tag. But he denied all allegations about the quality of nuts being imported from Guinea-Bissau.

Mr. Ratheesh said that since the KSCDC deals were strictly on tender basis, the deals had always been transparent. The KSCDC has offered a higher price because of the risk factors faced by the suppliers — payment to suppliers keep pending.

The consignment arriving on Friday is raw nut from the first crop in Guinea-Bissau. This is superior quality nut giving the expected outturn. Also, the season in the next raw nut exporting country, Indonesia, begins only four months later. So there is heavy competition for purchasing the Guinea-Bissau stuff.

He wanted the critics of the deal to inspect the documents of the remaining 6,500 tonnes. There will be a small variation in the prices. The $925-a-tonne deal could have been made much later, either for poor quality nut or for subsequent crop, he said. The CAD system is much safer that the LC system since payment is made only after inspecting the quality in the former. The imported nuts will be sufficient for the KSCDC factories to function till September, he said.

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