Cashews could hold the key to
Ivory Coast’s agricultural future. The country wants to gain greater value from
the vast quantities of cash crops it grows by processing them at home instead
of exporting them raw. And it is looking to its booming cashew industry to
provide much of a “value-added processing” push.
With production growing at 10 per
cent annually for the past five years, Ivory Coast is the world’s
second-largest producer. All this in a country that only started planting cashew
trees less than 40 years ago. President Alassane Ouattara says he wants half of
Ivory Coast’s 1.7m tons of cocoa grown yearly to be processed in the country by
2020, up from only 30 per cent now. “Our objective should be to process more of
the raw materials we produce,” he told the Financial Times.
Currently some 95 per cent of the
nuts produced are exported in raw form to India and Vietnam, the global centres
for processing and significant producers in their own right. In the next five
years, the government wants 30 to 40 per cent of nuts to be processed locally,
says Malamine Sanogo, managing director of the government’s marketing board,
the Cotton and Cashew Council (CCA).
“The raw product is there (in Ivory Coast) and there are currently very few factories,” Mr Sanogo says.
He argues that, in addition to
creating factory jobs, local processing boosts sustainability and guarantees a
stable market for future production. “It’s important to process locally
because, if we don’t, some day India and Vietnam might say ‘we produce enough
and we don’t want your cashews’. We need to process our own nuts and send them
to markets in Europe and the US in order to compete with India and Vietnam.”
The billions of dollars made in
India and Vietnam by processing Ivory Coast’s cashews could be brought home,
says Sunil Dahiya, business advisory manager at the African Cashew Alliance.
“The Ivorians are exporting all of the positive socio-economic impacts.” Singapore-listed
soft commodities trader Olam is the first leading multinational to start
processing cashews in Ivory Coast. In the central city of Bouake, Olam’s plant
employs more than 2,000 people with another 1,000 working at a second facility.
The need for a significant input of manual labour means many more staff will be
hired if operations are scaled up by Olam or others, potentially creating tens
of thousands, if not more, jobs.
Olam’s project is “opening the door to many new investments in cashew processing”, says Partheeban Theodore, Olam’s country head for Ivory Coast. “We are bringing infrastructure, technology, employment and skills development.”
He says the company also benefits
from processing the raw nuts locally because of reduced transport costs.
In Bouake, new restaurants, banks and stores are a sign of a lively local economy, boosted by the increased purchasing power of the factory workers and their families.
Mr Dahiya says that, in the short
term, both foreign and local companies need export incentives and tax
exemptions on some materials that must be imported, just as the government once
did with the cocoa sector. Ivorian companies, in particular, need access to
working capital loans, he says, which neither local or international commercial
banks are currently offering.
Aside from financing constraints for would-be investors, the eating habits of Ivorians and their neighbours in the region are another significant downside.
In the green fields near the
factory in Bouake, farmers grow mangos, yams — and cashews. But when they
choose a snack at roadside stands, they buy peanuts — not cashews — for 50 CFA
The reason is simple, says Mr
Sanogo: “Cashews are produced by the poor and consumed by the rich. The price
is very high and our purchasing power is weak.” Much scepticism remains.
“Africa needs to get more from its commodities, but a blanket approach to
processing won’t work,” says Victoria Crandall, soft commodities analyst at
Ecobank in Abidjan. “One model does not fit all, and the approach needs to be,
‘where do we get the most out of processing?’ Otherwise governments are bending
over backwards to get investors here and the governments lose money.”
Ms Crandall says cashew nuts and chocolate are generally not eaten by west Africans and the prospects of growing a local market remain slim.
In contrast, palm oil is
profitable for local processors for the simple reason that west Africans are
big consumers as it is a key ingredient of the local diet.
DekelOil, a UK-listed company
producing palm oil in Ivory Coast and exporting it in the region, leapt into
the market in 2008, beginning a long and delicate negotiation process with
rural communities effectively to arrange joint ownership of land for palm tree
growing carried out by the local farmers, says Youval Rasin, Dekel’s chief
executive. “We found a way to secure the land . . . (so)
that we feel safe and can invest.”
He adds: “There is a deficit of
800,000 tons yearly of palm oil in west Africa, so all our oil is sold