How to Start a Profitable Cashew Nut Processing Business

If you live in a cashew-growing area and want to start a cashew nut business, you’re in the right place. Here in this article, you will learn the important steps to starting a profitable cashew nut processing business.

There are two different ways you can initiate the processing plant. One is semi-automatic and another is fully automatic. The cashew nut processing business involves the recovery of edible kernels from the raw nut by mechanical means.

Why Cashew Nut Business?

Starting a cashew nut processing business can be a lucrative and rewarding venture for several reasons:

• Growing Demand: Cashew nuts are a popular and healthy snack, enjoyed by people all around the world. The demand for cashew nuts is on the rise due to their nutritional value and versatility in various culinary applications.
• Profit Margin: The cashew nut processing business offers attractive profit margins. Raw cashews can be sourced at reasonable prices, and the value addition during processing significantly increases the per-kilogram selling price.
• Export Potential: Cashew nuts have a strong demand in the international market. By meeting quality standards and certifications, you can tap into the export market, which can be highly profitable.
• Low Investment: Starting a cashew nut processing unit can be relatively cost-effective, particularly if you begin on a small to medium scale. The primary expenses include machinery and equipment, which can provide good returns on investment.
• Reduced Wastage: Cashew nut processing ensures minimal wastage. It allows you to utilize the entire cashew nut, including the kernel, shell, and even cashew apple for various by-products.
• Shelf Stability: Processed cashew nuts have a longer shelf life compared to raw cashews, which can reduce the risk of spoilage and financial losses.
• Diverse Product Range: Cashew nut processing can lead to various product lines, including whole roasted cashews, cashew splits, flavoured cashews, cashew butter, and more. Diversifying your product range can cater to a broader customer base.
• Sustainable Business: Cashew nut processing promotes sustainability by utilizing a natural resource (cashews) to create value-added products. It also encourages eco-friendly practices, such as waste utilization and organic processing options.

14 Steps to Start Cashew Nut Processing Business

1. Understand the Market

Begin with thorough market research to understand the demand for cashew nuts and related products in your region. Identify your target audience, including consumers, retailers, and manufacturers.

In the local market, raw and roasted cashew is a profitable FMCG product. Almost every grocery store, supermarket, and mall sells these items regularly. Furthermore, the bakery, confectioneries, hotels, sweetshops, and restaurants are the major bulk consumers of cashews.

2. Create a Cashew Nut Processing Business Plan

If you are looking forward to making a profitable cashew nut processing unit, a professionally documented business plan is a must. There are plenty of free business plan templates available on the internet to get help from if you want to write on your own. However, hiring a professional business plan writer would be advised if you planning to fund your unit.

3. Legal Formalities

Register your business and obtain the necessary licenses and permits. Furthermore, compliance with food safety regulations is crucial.

4. Choosing the Location for Cashew Nuts Processing Business

If you are planning to start on a small scale, An area of around 600 sq. mt. is sufficient. However, you must ensure that open land is available for drying purposes. If the land is strategically located in a ready market, the profitability of the unit will increase. The purchase of raw cashews is another factor to consider.

If the location is near a cashew-growing area, it is a big advantage. If not, like if you import raw cashews from other countries like Vietnam or African countries, factory locations in proximity to ports will reduce the cost of transportation considerably.

5. Arrange Finance

The amount of investment in developing a cashew nut processing unit largely depends on land, building, machinery, equipment, and allied civil construction works. In addition to this, you must have a stock of raw cashew nuts at least for three to six months.

You need to have a clear idea of how much investment you need for setting up the unit. Here, your business plan will come in handy to pitch the fund to investors.

6. Procurement of Raw Cashews

Source high-quality raw cashew nuts from reliable suppliers or directly from cashew-producing regions. It is important to ensure they meet the required quality standards.

7. Processing Machinery

You need to invest in the necessary machinery for shelling, peeling, grading, and roasting the cashew nuts. It is advisable to consider machines that are efficient and easy to maintain.

8. Cleaning and Shelling

The initial step is cleaning the raw cashews to remove dirt and foreign materials. After cleaning, the nuts are shelled to separate the kernels from the shells.

9. Peeling

If you are planning to produce peeled cashew nuts, you will need peeling machines to remove the outer skin of the kernels. Peeling is the removal of testa from kernels. Kernels after removal from the dryer being brittle are cooled for 24-48 hours for moisture absorption. You can remove the testa using sharp bamboo sticks. The average peeling capacity is 7-10 kg/head.

10. Grading

Grade the cashew kernels based on size, colour, and quality. Grading of raw nuts before processing reduces broken kernels. Nuts are conditioned by sprinkling water and allowed to remain moist for 24-48 hours. This step is essential for also packaging and marketing.

11. Roasting

Roasting enhances the flavour of the cashew nuts. You can offer different roasting options, such as salted, unsalted, or flavoured. Generally, you will need to roast the raw nuts to make their shell brittle and to lose the kernel from the shell. The popular methods of roasting are drum roasting, oil bath roasting, and steam boiling.

12. Packaging

Package the processed cashews in attractive and airtight packaging to maintain freshness and prevent contamination. Cashew nuts get rancid and quickly go stale, necessitating packaging to have a permeability of oxygen and moisture. Generally, you can pack the bulk of cashew nuts in tin containers (metal cans) after evacuating and filling them with CO2.

A flexible packaging system with N-gas infusion or moulded vacuum packaging can considerably reduce the packaging cost. So, you must use the updated and modern packaging machine for cashew packing.

13. Marketing and Distribution

Develop a marketing strategy to promote your cashew products. Consider selling them to retailers, wholesalers, or directly to consumers. Establish distribution channels that reach your target market effectively.

The demand for cashew nuts is worldwide. This product has got a huge export potential. You must have a well-designed marketing plan to ensure your products can reach most countries. Register your company with B2B marketplaces like Alibaba, Amazon, and eBay, and list your products. Creating a small online store is an easy way of reaching a wider audience with much less cost.

14. Branding

Build a brand for your cashew nut products. A unique name and attractive packaging can help distinguish your products in the market.

Read: Profitable Agriculture Small Business Ideas

Frequently Asked Questions

What equipment do I need to start a cashew nut processing business?

Essential equipment includes cashew shelling machines, peeling machines (if you plan to produce peeled cashews), grading machines, roasting machines, and packaging machinery.

Where can I source raw cashew nuts for processing?

You can source raw cashews from cashew-producing regions, wholesale suppliers, or cashew nut farmers. It’s important to establish a reliable supply chain.

Are there any quality standards for cashew nuts?

Yes, there are quality standards for cashew nuts, including parameters for size, colour, and moisture content. Compliance with these standards is essential for market acceptance.

How can I ensure the freshness and shelf life of my cashew products?

Proper packaging is crucial for maintaining freshness. Use airtight, moisture-resistant, and food-grade packaging materials. Ensure your processing area is clean and free from contaminants.

What are the marketing strategies for cashew nut products?

Effective marketing strategies include building a brand, creating an online presence, attending trade fairs and exhibitions, supplying to local retailers, and partnering with wholesalers. You can also explore export opportunities.

What are the common challenges in the cashew nut processing business?

Challenges may include sourcing consistent raw cashew nut supplies, maintaining product quality, and dealing with price fluctuations. Seasonal variations and competition are other factors to consider.

Do I need any certifications for a cashew nut processing business?

It depends on the country you are planning to launch. In India, obtaining certifications such as FSSAI (Food Safety and Standards Authority of India) can enhance the credibility of your products, especially if you plan to target a wider market.

How can I differentiate my cashew products from competitors?

Differentiation can be achieved through product quality, unique flavours, innovative packaging, and marketing your products as premium or organic, depending on your niche.

Can I start a cashew nut processing business from home?

Starting a cashew nut processing business from home is possible but may be limited in scale. Commercial processing units with dedicated space are generally more suitable for larger production.

What is the typical investment required to start a cashew nut processing business?

The investment can vary significantly based on the scale of your operation. It includes the cost of machinery, raw materials, packaging, and marketing. In India, starting a small-scale cashew nut processing unit may require around INR 5-10 Lacs, while larger operations can require several lakhs to crores.