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  • Isaac Piyouri: Strengthening Africa’s cashew industry; the role of governments

    Sep 7th, 2020

    With the world overwhelmed by an unexpected deadly novel virus that is destroying lives, businesses and ruining plans and dreams, the Coronavirus disease 2019 (Covid-19) has almost left the world doing nothing but thinking, researching, planning and dreaming of an end to it. Governments across the world have been left with no options, over the past six months, than to push valuable time, and resources into testing for, managing and controlling the spread of Covid-19 and its dire consequences on individuals, and businesses, paying less attention to some other equally important sectors. Already receiving relatively less attention from African governments over the years, the agricultural sector seems to have been neglected now that there is probably a justifiable reason in Covid-19. But the sector cries for more attention, time and resources now than probably ever before. The cashew industry employs over 2 million African farmers. According to the African Cashew Alliance (ACA), cashew is the main source of income for over 1.8 million families in West Africa, majority of who do not have alternative sources of income. These farmers cultivate the land, and after harvest, sell their Raw Cashew Nuts (RCNs) out to people who mostly export them to countries like Vietnam, India, and Brazil, for processing. What has changed? Cashews are harvested between October and January in East African countries like Kenya and Tanzania and between January and May in West African countries like Cote d’ Ivoire, Benin, Ghana, among others where over 78% of Africa’s RCNs are produced. The ACA reveals that as of February, when Africa started recording cases of Covid-19, the cashew season has not reached its peak. This means that at the time, most farmers were either preparing to harvest or had harvested and were waiting to sell. They explain that, with the pandemic and closure of borders and restriction of movements, those who harvested could not sell because there were no buyers and those who were yet to harvest were discouraged by the fall in prices. “With the outbreak of the ongoing pandemic, farmers have experienced rapidly declining farmgate prices, which are currently at 2010 levels. The prevailing farmgate prices are below levels that ensure economic viability while some are not able to sell at all and most do not have the appropriate facilities to store, thus will lose heavily,” the ACA reveals. Managing Director of the African Cashew Alliance, Mr. Ernest Mintah, explains that the fall in prices was because there were fewer buyers coming to the farmers to buy. “The buyers could not travel to come down and they were also not willing to release funds for their agents to buy the raw cashew nuts,” he explained. For some reasons, which will be explained in a latter article, local processors were not in the best position to take advantage of the fall in RCN prices to increase processing. As a result of this, farmers were, and some are still, not selling, most of them have been discouraged by the prices and one can only imagine what they are going through in these difficult times. The ACA estimates that, over 200,000 to 300,000 metric tons of RCNs will remain on farmers’ fields, homes and in poor storage facilities and will likely go waste. This will also affect the quality of raw cashews from Africa and possibly reduce Africa’s production capacity. What should African governments do? As African governments focus on containing the spread of Covid 19, dealing with its impacts is equally very important. In the agricultural sector, governments will have to put in place short term, medium term and long-term measures to deal with the shattering impacts this pandemic is having on already vulnerable farmers, creeping agro-processors, and other people in the food chain. In the short term, strategic measures ought to be put in place to relieve farmers of some of the challenges they find themselves in these times. The welfare of farmers should be paramount. This is why the government of Ghana’s free water and electricity for all initiative is very commendable. But most importantly, African governments need to find a way for farmers to sell their raw cashew nuts. In this regard, a Marketing and Information Systems (MIS) expert and Consultant with the ACA, Mr. Jim Fitzpatrick believes some governments have been more proactive than others. According to him, the Ivorian government have been very proactive in this regard, by supporting farmgate prices in the country. It is very important for governments to support by either buying and properly storing RCNs or by supporting local cashew processors financially to buy the over 200,000 to 300,000 tons of RCNs within the continent. “The priority should be that farmers who grow the crop should have a way to sell it,” Jim Fitzpatrick said at a virtual ACA forum to examine the cashew industry. This pandemic has once again exposed Africa’s biggest challenge: exporting raw agricultural products without adding value. The time has come for African countries to increase local processing of agricultural products. But for this to be possible, African governments need to empower and create favourable environments for local processors. In the cashew industry, through the efforts of governments, the ACA, GIZ, and other partners, about 10% of raw cashews produced in Africa are processed locally. But this is awfully low and could further decline this year if most local factories remain shut due to the pandemic. With about 50 local factories across the continent, the ACA estimates that Africa has the capacity to process over 400, 000 metric tons of RCNs annually if all existing capacities are fully utilized. Unfortunately, most of these factories are processing below capacity and some had to shut down due to the pandemic. Mr. Mintah attributes the “underutilization” of these factories to “lack of access to financing to buy raw materials” and the absence of supportive policies. Governments therefore need to, within the short to medium term, support local processors with reliable mechanisms for accessing finance so as to maximize processing. Governments also need to support these factories with relief items like sanitizers, nose masks, and other items needed during this pandemic so they can cut down cost and continue to process. Aside increasing Africa’s processing capacity, this will also protect over 40,000 jobs. Finance wise, governments will need to waive some taxes and imports duties on processing machines and equipment and also make funds available to them by helping them access loans at lower interest rates. Stimulus packages should be made available to local processors to enable them maximize processing. It is also very important for governments to address Africa’s poor storage of cashews and other agricultural products. Proper storage facilities like warehouses should be constructed at community levels to ensure that RCNs are stored in proper conditions. This will reduce post-harvest losses, make it easier for processors to buy and also increase the quality of these crops. Finally, it is necessary for governments to cooperate with the Consultative International Cashew Council (CICC) to put the necessary regulatory structures and policies in place to empowerlocal producers and processors. The structures should not just be set up on paper but should be implemented. It is very necessary for governments to speed up the implementation of structures like the Tree Crop Development Authority, in the case of Ghana, and other similar structures across the continent. The cashew industry, and the agricultural sector at large, plays a very significant role in what Africa is today andwill become in the future. Local processing is surely what Africa needs.


    Source: https://www.myjoyonline.com/