Tanzania: Going nuts over cashew

Tanzania is one of the largest producers of cashew nuts in Africa and with the world demand for this commodity set to expand substantially, the revenue potential is excellent. But, a creaking marketing system and limited local value addition has meant that the real profits from the crop are made elsewhere. What should be done? Aamera Jiwaji reports.

 In October, thousands of small-scale cashew nut farmers in the southern and coastal regions of Tanzania will begin to harvest their crop and sell it to cooperative societies at an agreed price.

With the cashew nut being the most-consumed nut in the world and global prices expected to soar to an all-time high in 2014 (raw cashew nut prices are expected to be 15-20% higher than in 2013) it ought to be a joyous moment for Tanzanian farmers, for whom the cash crop is the third-highest earner of foreign exchange after coffee and cotton.

But it isn’t.

 More than likely the season will again be characterised by tensions in the coastal regions, which contribute more than 87% to national production. With some luck, the situation will not disintegrate into riots as happened in April 2013, when farmers protested against receiving less than the price agreed from the Cashewnut Board of Tanzania (CBT).

The high value of cashew nuts has undoubtedly helped politicise the issue in the country but last year’s violence suggests a dissatisfaction with the government’s attempts to regulate the sector.

It has also brought into question the 2013 introduction of a warehouse receipt system, ideally to prevent exploitation of farmers and enhance competitiveness between processors, but which in reality has allowed black market sales – with their instant and not instalment payments – to continue unabated even though they offer lower prices than the government.

But a fair and transparent pricing model is just one of the hurdles the Tanzania government is struggling with. The country ranks as the eight-largest producer of cashew nuts in the world, and is the continent’s biggest grower after Nigeria, Côte d’Ivoire and Guinea­-Bissau, according to 2012 statistics from the United Nations Food and Agricultural Organisation (FAO). In a good season it generates up to 20% of African production and in 2013 contributed between 10% and 14% of the country’s foreign exchange.

While its export volumes of 158,000 metric tonnes of cashew nuts in the 2011/2012 season, according to a 2012 report by the CBT, are insignificant in relation to worldwide annual production, which is at 2.1m tons of raw nuts, Tanzania has significant competitive advantages since it produces larger nuts than other African nations and its harvest coincides with the end of the Indian and West African season.

In addition, the expected depreciation of Tanzania’s currency against the US dollar bodes well for the country since it will translate to a higher realisation for their nuts in their local currency, according to the 2014 Cashew Handbook.