Can West Africa cash in on its cashews?

Ninety percent of West Africa’s cashew crop is exported raw for processing overseas. Investment in mechanisation is essential if the region is to derive more economic benefit from its produce. Linus Unah reports

In the village of Opi in southeastern Nigeria’s Enugu state, dozens of villagers walk around a vast cashew plantation. The dry leaves on the ground rustle as villagers collect the highly prized nut, which grows on a large evergreen tree. They detach the nuts and pour them into baskets and sacks.

“These nuts are an important source of income for people in the community,” says Ndubuisi Eleje, a local farmer.

Across much of West Africa, cashew trees represent a major cash crop, with raw cashew nut production hitting 1.5m tonnes, or over 43% of the global supply in 2018, according to the International Nut and Dried Fruit Council.

Côte d’Ivoire, Guinea-Bissau, Nigeria, Benin, Burkina Faso, Ghana, Senegal and Gambia are the major producers in the region, with Côte d’Ivoire alone accounting for nearly half of regional production. West Africa’s total production outstrips East Africa’s 470,000 tonnes, which mostly come from Tanzania, Mozambique and Kenya.

But the bulk of what is produced locally, around 90%, is exported as unprocessed raw nuts to processors in India and Vietnam, before being dispatched to supermarkets in Europe and the United States. Vietnam imported around 53% of the world’s raw cashew nuts and India accounted for 45% last year. The loss of added value is worth about $200m, the World Bank estimates.

This large untapped processing potential is providing new opportunities in West Africa, where large-scale international processors like Singapore’s Olam International, European snack company Intersnack, Brazilian group Usibras, and Singapore’s international commodity trader Valency International all have a footprint. Locally, domestic processors are emerging and expanding, including Tolaro Global (Benin), Mim Cashew (Ghana), Anatrans (Burkina Faso), Cajou Espoir (Togo), FoodPro (Nigeria), and Cajou des Savanes (Côte d’Ivoire).

With demand driven by changing consumption patterns and the increasing use of cashews as snacks and bakery and confectionery ingredients, global cashew production has increased by over 830,000 tonnes, or 5%, in the last year.

Today the industry is worth over $7bn, attracting new suppliers who want to muscle in on the market and meet growing demand. In March, Vietnamese conglomerate T&T Group JSC signed an agreement to purchase cashew nuts from Côte d’Ivoire and build a processing plant.

The rise of the machines

For an industry that relies on food safety and traceability, the widespread use of manual processes including shelling, peeling, sorting and packaging is retrograde. Such processes can lead to contamination, affecting the quality of raw cashew nuts and losses due to discolouration, higher moisture content and poor post-harvest management.

For West Africa to become a dominant force in the cashew chain, there is a need to invest in mechanised processing. Mechanisation helps companies to improve quality, reduce costs, maximise profits and more efficiently use human resources. But the high cost of mechanisation and specialised labour is a challenge for local West African processors due to poor access to finance, says Ayo Olajiga, CEO of FoodPro, a Nigerian processor which began production in 2013.

Yet the competition is already showing the way. Investment in mechanised processing has propelled India and Vietnam to the top of the industry. Vietnam has grown to become the world’s second largest processor of raw cashews with a processing capacity in excess of 1.3m tonnes. In 2017, Vietnam was the top supplier for shelled cashews, accounting for 61% of the world exports, compared to India’s 23%.

Alongside mechanisation, new efforts are required to improve the productivity of farmers in West Africa. Large buyers including Olam, Intersnack, Walmart, Red River Foods and Usibras are working with trade groups, governments and other partners to train farmers to improve sustainable agricultural practices, distribute higher yielding seedlings, and improve market access, traceability and quality.

New markets emerge

If Africa’s producers can boost mechanisation and improve productivity, opportunity abounds. As consumers demand healthier snacking options, the European and North American market for cashew nuts is expected to continue to grow. Since 2013, shipments of shelled cashew nuts into Europe have risen by a yearly average of 21% in value and 12% in quantity, amounting to €1.6bn ($1.8bn) and 180,000 tonnes respectively, according to the Centre for the Promotion of Imports from Developing Countries, part of the Netherlands Enterprise Agency. In the past five years, European imports of cashew nuts from developing countries more than doubled from €534m in 2013 to €1.34bn in 2018.

The Netherlands, Germany and the United Kingdom offer good opportunities for cashew nut exporters from West Africa, as do growing markets with less competition in Central and Eastern Europe such as Poland, Czech Republic, Slovakia, and Bulgaria, which are witnessing annual import growth above 30% in value. Between 2007 and 2017, US imports of cashew kernels grew by about 29,000 tonnes as consumers flocked to supermarket and department store chains to buy the nuts. Emerging and smaller markets like Mexico, Canada, United Arab Emirates, Japan, Australia, China, Israel, and Malaysia are worth over $700m, creating further opportunities for farmers and processors.

To begin to tap into the lucrative market, industry players urge further investment in mechanisation, processing plants and favourable business climates for processors to compete.

“If you can work hard to adhere to quality standards, if you are efficient, you have a logistical advantage over the Asian guys in theory,” FoodPro’s Olajiga says. “Value creation will come from resolving our internal issues.”