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How to Start a Cashew Nut Processing Plant Business

Do you want to start a cashew nut processing business on a small scale or from home? If so, find here a stepwise guide on starting a cashew processing plant with the manufacturing process, licenses required, setup cost, machinery, etc.

In India, mainly the 8 states are popular for the commercial cultivation of cashews. These are Andhra Pradesh, Goa, Kerala, Karnataka, Orissa, Maharashtra, Gujarat, and Tamil Nadu. Raw cashew is not ready-to-eat food items. Processing is a must. The cashew processing unit is a small-scale and profitable agro-based business in India.

Processed cashew nuts from raw cashews are the famous dry fruits. These are consumed directly or converted to a variety of products like salted cashew nuts, Kaju Burfi, cashew curries, etc  In India, the processing of cashews is a manual and highly labor-intensive process. Mechanization in cashew processing is picking up gradually. Availability of raw material and optimum utilization of the plant is crucial in this manufacturing operation.

12 Steps to Start Cashew Nut Business

1. Research and Market Analysis

It is essential to conduct thorough research on the cashew nut industry before you launch the business. You must understand the market demand, trends, and competition. Furthermore, identify your target audience, including wholesalers, retailers, and export markets.

2. Cashew Processing Business Registration & License

In starting a cashew processing unit, you will need to obtain several registrations and licenses from Govt. authorities. These are as follows:

  • Registration of the firm: You can register the business either as a proprietorship or partnership firm. In the proprietorship, you must register the firm as One Person Company. For partnership operation, you can register as LLP or Pvt. Ltd. company with ROC.
  • In addition, obtain a Trade License from the Municipal Authority.
  • Apply for GST Registration.
  • Apply for Udyog Aadhaar MSME online registration. This is optional. However, it will help you in getting technology cooperation and subsidy from Govt.
  • ‘Consent to Establish’ and ‘Consent to Operate’ from State Pollution Control Board
  • License from boiler inspector.
  • Also, apply for ‘Agmark’
  • Apply for online FSSAI registration. The processing units should follow the Food Safety and Standard Authority of India (FSSAI) Act 2006. FSSAI Act is applicable in India for all food products. It prescribes minimum standards operating procedures, food safety norms, packaging & labeling norms.
  • Finally, you can protect your company brand name, through Trademark Registration.

3. Cost of Starting a Cashew Nut Processing Business

A small-scale automatic cashew nut plant with a capacity of processing 350 kg/hr of nuts will around Rs. 2.5 lacs. The entire allied machinery and equipment costs will be around Rs. 10 Lacs. You also need a minimum area of 2000 sq. ft space for installing the plant and storage facility. Overall the cost of setting up a cashew nut processing plant will be in the range of Rs. 25 lacs to Rs. 35 Lacs.

4. Arrange Funds

Financing for food processing falls under priority sector lending. The loans to units meeting the criteria of MSME are classified under the MSME sector. Such units can be financed by any scheduled commercial banks, Regional Rural Banks, and Cooperative Banks.

It is compulsory to take a bank loan to avail of various subsidy schemes of the government. Ministry of Food Processing Industry, GoI is implementing a centrally sponsored scheme known as the National Mission on Food Processing (NMFP) jointly with State Governments.

5. Location Selection

You need to choose a location for your processing unit with easy access to raw cashew nut suppliers and transportation hubs. Additionally, ensure the facility meets hygiene and safety standards.

6. Procuring Raw Cashew Nuts

Establish relationships with reliable suppliers of raw cashew nuts. The quality of your raw material significantly impacts the quality of the final product.

7. Cashew Processing Unit Setup

A plot of land measuring 500 sq.m will be sufficient for the small-scale cashew processing unit. However, the site should be leveled and with open space for sun-drying of raw cashew. One can start a cashew processing unit at any location in the country.

However, you must select a location carefully. Take the decision strategically keeping in view the availability of a ready market and cheap labor. You can take the help of transport to get the raw cashews to the processing unit from raw material growing areas. Setting the unit in a cashew growing area will add the advantages of readily available backward and forward linkages.

8. Invest in Equipment

There is a wide range of processing equipment you will need to purchase. It includes cashew nut shelling machines, drying machines, sorting and grading machines, and packaging equipment. Ensure that your machinery is of high quality and efficiency.

You will need to procure the following machinery and equipment for the cashew processing unit.

  • Steam Boiler
  • Cooking Vessels
  • Semi-automated Peeling Machine
  • Multi-color Cashew Kernel Sorting Machine
  • Husk Winnowing Machine
  • Steam Pipeline
  • Hot Oven
  • Hand Operated Cutting Machine
  • Cashew Peeling Machine
  • cashew filling machine
  • Pieces separator
  • Weighing scale
  • Sealing Machine
  • Food-grade plastic tubs, buckets, crates, bowls
  • Diesel Generator Set

9. Hiring and Training

Recruit skilled and experienced labor for processing. You will need to provide training on the proper handling and processing of cashew nuts to maintain product quality.

10. Cashew Nut Processing Steps

The basic cashew nut  processing process is the following:

a) Cleaning and Grading

First, sort and clean the raw cashew nuts to remove foreign matter and damaged nuts. Grading ensures uniformity in the final product.

b) Steaming

Secondly, steam the cashew nuts to soften the shells, making them easier to shell.

c) Shelling

Thirdly, use cashew nut shelling machines to remove the shells. Ensure minimal damage to the kernels during this process.

d) Drying

Fourthly, dry the kernels to reduce moisture content. Proper drying is crucial to prevent mold and ensure a longer shelf life.

e) Peeling and Grading

Fifthly, remove the inner skin (testa) from the kernels and grade them based on size and quality.

f) Roasting

Sixthly, roast the kernels to enhance flavor. You can add flavorings or salt at this stage, depending on the market demand.

g) Packaging

Finally, package the processed cashews in attractive and airtight containers to maintain freshness and quality.

Do remember to implement stringent quality control measures at every stage of processing. It will ensure that only the best-quality cashews reach the market.

11. Profit Margin

The profit margin typically depends on several factors. Some of them are sourcing costs of raw cashew nuts, transportation costs, manpower expenses, and promotional expenses. If planned correctly, one can easily expect a net profit margin of a minimum of 30% from the cashew nut processing plant business.

12. Have a Marketing Plan

Having a well-planned marketing strategy is critical to the overall success of the cashew nut business. Create an efficient network of dealers and wholesalers to reach a wider market. Also, create brochures, pamphlets, and other promotional tools to develop brand awareness of your cashew nut company.

Having an online presence is almost mandatory nowadays. Create a website and publish all the necessary information about your products. Furthermore, explore social media platforms, enlist with B2B marketplaces, and make your presence felt online.

Frequently Asked Questions

Is the Cashew Processing Business Profitable?

The demand for cashew nuts is increasing rapidly.  India is the leading producer, processor, consumer, and exporter of cashew nuts in the world. It is one of the important agricultural commodities exported from India to many countries in the world.

However, the local domestic market consumes about two-thirds of cashews produced in the country. India accounts for 65 percent of total cashew nut exports in the world and export cashew to more than 60 countries. The Cashew Export Promotion Council of India (CEPCI) works towards the promotion of cashew nut and cashew nut shell liquid (CSLN).

What are the essential licenses and permits required to start a cashew nut processing business in India?

You will need licenses from FSSAI (Food Safety and Standards Authority of India), a trade license, and compliance with labor laws. It is advisable to check the specific regulations for your state.

Where can I source high-quality raw cashew nuts in India?

You can source raw cashew nuts directly from farmers, through agricultural cooperatives, or from wholesale markets in cashew-producing states like Kerala, Goa, and Maharashtra.

How can I ensure the long shelf life of processed cashew nuts?

Steps like proper drying, packaging, and storage in a cool, dry place with minimal exposure to moisture and sunlight will help extend the shelf life of cashew nuts.

Can I start a cashew nut processing business on a small scale?

Yes, you can start small and gradually expand your business as you gain experience and market share.

How do I handle cashew nut waste and by-products?

You can explore opportunities to use cashew nut shells for various purposes. It can be fuel or compost.

About Next What Business Research Team

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.