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Africa is missing out on the wealth of opportunity offered by cashew nuts which have a booming global demand.
This reality is despite the fact that the continent grows most of the world’s raw cashews. The losses come about because cashew nut producing countries in Africa only process a fraction of them.
Cumulatively, African countries grow more than half the world’s supply but they are not cashing in on the opportunity due to their lack of processing industries.
Read: Earnings from Cashew nut farming in Tanzania set to grow
The United Nations Conference on Trade and Development (UNCTAD) notes that world trade in raw cashew nuts more than doubled to 2.1 billion kilogrammes between 2000 and 2018 with African producers accounting for almost two-thirds of the growth.
Côte d’Ivoire is Africa’s largest cashew nuts producer.
A special UNCTAD report titled Commodities at a Glance: Special issue on cashew nuts notes that African farmers and exporters only get a fraction of the final retail price.
From this, data shows that countries that grow cashew nuts but do not process them at a significant scale retain only a small share of the value created as the nut travels from farm to store.
Miho Shirotori, who leads UNCTAD’s work on trade negotiations and commercial diplomacy notes that African farmers, exporters and workers are missing out on a wealth of opportunities which could be a big contributor to the revenue deficits experienced in Africa.
About 90 per cent of the raw cashew nuts traded in the global market are grown in the tropical climates of 20 western and eastern African nations. After, Côte d’Ivoire, the main producers are Tanzania, Nigeria, Benin, Guinea-Bissau, Mozambique and Ghana.
Despite this production, less than 15 per cent of the continent’s nuts are shelled on African soil. The rest of the produce is exported mainly to Asia, where 85 per cent of the world’s cashews are shelled. The shelling adds value to the commodity.
India and Viet Nam are just the two Asian nations that accounted for about 98 per cent of the world’s raw cashew imports between 2014 and 2018.
From Asia, the cashews are transported to Europe and North America where even more value is added. Here, 60 per cent of traded kernels are roasted, salted, packaged and consumed as a snack or an ingredient in a drink, bar or other product.
With Africa missing out on revenue generation from value addition, the cost of limited processing cannot be underestimated.
The report notes that although it is challenging to calculate how much Africans are losing, the report provides indicative calculations.
In 2018, for example, the report highlights that the export price of cashew kernels from India to the European Union was about 3.5 times higher than what was paid to cashew farmers in Côte d’Ivoire. There was a 250 per cent difference in price.
Again, after secondary processing in the EU, the price of the cashew kernels was about 2.5 times higher than when exported from India. These numbers show that what is sold in the EU is about 8.5 times more than when the cashew nuts left the farm in Côte d’Ivoire.
Shirotori adds that the numbers show potential for value creation in African cashew-growing countries, 14 of which are classified as ‘least developed’. She notes that through value creation, these producers can offer better wages for workers and more money can be pumped into the local economies.
Read: Cashew nut farmers get financial boost from Exim Bank
Cashew nut production has the potential to reduce poverty in the producing countries.
The report highlights the potential cashew nuts have in contributing to poverty reduction, which is one of the UN Sustainable Development Goals.
With most cashew nuts coming from smallholder farmers in rural areas, there is a direct link between value addition in the cashew sector and the achievement of poverty reduction goals. The report notes that cashew nuts are a source of income for an estimated three million smallholder farmers in Africa.
The untapped poverty reduction potential offered by cashew nuts is greatest in Africa since the continent produces more than half the global supply.
For perspective on how the cashews can hugely contribute to economic empowerment, Côte d’Ivoire exported 654,327 metric tonnes in 2018 making it the world’s largest exporter of cashews in the shell. It was followed by Ghana and Tanzania.
Globally, the annual production is about 6 million tonnes of raw cashew nut (RCN) whose estimated value is US$ 6.5 – 7 billion.
Apart from cashew nut shell liquid which is used as oil for industrial purposes, 60 per cent to 80 per cent of cashew kernels are roasted and consumed as a snack. The USA, the European Union, Japan and the Republic of Korea are the world’s biggest cashew nut markets.
Between 2014 and 2018, Africa produced more than half of the global cashew nut output with West Africa and East Africa accounting for average annual shares of 42 per cent and 10 per cent of the global RCN production respectively.
To tap into the potential that the cashew nut sector has, Benin and Côte d’Ivoire began large scale cashew production in the 1990s, recording high growth rates since, which has put them among the top 10 producers in the period 2014–2018.
On the other hand, Tanzania experienced a decline in cashew nut output throughout the 1970s and 1980s but is reviving production since 2010.
In regard to RCN exports by value, Côte d’Ivoire recorded the highest revenue in the period 2014–2018, with estimated average annual exports of US$827 million. It was followed by Tanzania, with US$364 million, and Ghana with US$247 million.
The report notes that the cashew value chain is largely divided between cashew-growing countries that produce RCN mainly for export and countries that have a processing industry.
As mentioned earlier, countries that produce RCN without processing them on a significant scale retain only a small share of the value that is generated in the cashew industry.
For Africa, this represents a significant potential in terms of local value creation, employment and rural development.
Read: Tanzania’s cashew exports hit 40 per cent, Bank of Tanzania reveals
Source of original article: Investing – The Exchange (theexchange.africa).
The content of this article does not necessarily reflect the views or opinion of Global Diaspora News (www.GlobalDiasporaNews.com).
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