It is better to temporarily shut down the industry, instead of selling finished goods below the cost or buying raw material above the cost of production.
If the available raw cashew is of poor quality, then the only viable alternative is to increase the kernel market above the no loss level.
This is our simple calculation —
At present, the average import price of 21% filling raw cashew is ₹13500/Quintal.
If the wholesale price of W320 reaches ₹900/kilo, the average for 21 kilo may be 6% less, i.e around ₹846 as every grade is not a W320. There are many lower grades like BB, DW, Dotted grades and Red grades.
GST is 5% and interest factor may be 5%. After deducting 10% for these two costs, the figure comes to ₹761.4/kilo.
21 * 761.4 = 15989. If the by-products are worth ₹611, the final figure of all sales is ₹16600.
₹16600 – ₹3100 (Labour, Manufacturing, packing, commission, transportation, maintenance, depreciation and other expenses) = ₹13500/
“So the production cost of W320 is ₹900/kilo”
(Our calculation is approximate and also subject to quality of grading & region wise changes. Labour cost is 8-10% less in Vietnam but Indians get better quality nuts from Africa because of the distance factor)