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  • Tanzania: Cashew Prices Fall Amid Challenges

    Dec 20th, 2016

    Cashew nut prices have started to decline sharply from an all-time high of Sh4,000 per kilogramme due to logistical challenges traders face.This has prompted a fresh outcry from farmers, who initially thought prices would keep on increasing.At the last auctions conducted on December 9 in Newala and Ndanda in Mtwara Region, a kilo of cashew nuts fetched a minimum of Sh2,750, a 31 per cent drop from a high of Sh4,000 at previous auctions.

    Cashew Nut Board of Tanzania (CBT) officials believe that prices have fallen due to reduced competition after traders found it difficult to ferry their consignments out of Mtwara to overseas destinations after authorities barred them from transporting the commodity by road.At the beginning of the harvesting season in October, Mtwara regional authorities directed traders to use Mtwara port.

    But there was a shortage of vessels, leading to cashew nuts piling up in warehouses.CBT Director General Hassan Jarufu said export permits had been issued for 97,000 tons by the end of last week despite the fact that a total of 211,000 tons had been bought, leaving the rest (114,000 tons) piled up in warehouses.Mr Jarufu told The Citizen in an interview that 55,000 out of the 97,000 transported tons belonged to Vietnamese businessmen and the remaining 42,000 tons were owned by Indian traders.

    "A fall in prices of the commodity was expected and farmers shouldn't expect prices to stabilise under the current circumstances where businessmen have the commodity piled up in warehouses."Customers and lenders have stopped sending money for purchase of new consignments until the godowns are cleared."Mr Jarufu said Tanzania was lucky this year because businesspeople were eager to proactively compete during auctions, adding that this was healthy for the prosperity of farmers.

    "The process to purchase and transport cashew nuts has to be accelerated as this will attract more players next season," he noted.At the latest auction on December 9 in Newala, members of the Tandahimba and Newala Cooperative Union (Tanecu) sold the commodity for a maximum of Sh2,900 per kilo and a minimum of Sh2,700.This was lower compared with prices at the previous auction held on December 2, which ranged between Sh4,000 and Sh3,000 per kilo.

    Similarly, at the December 9 auction, farmers sold their produce at a maximum of Sh2,800 and a minimum of Sh2,750.Mtwara Port manager Stella Katondo told The Citizen that her office was aware of a slowdown in business and falling prices, and wondered why traders were reluctant to use the port to transport their merchandise."The Mtwara regional government is the one mandated to decide how the commodity is transported. Ships have docked at the port and plenty of empty containers are there. I don't know why consignments are not moving," she said.

    Reached for comment, Industry, Trade and Investment minister Charles Mwijage told The Citizen that the government was monitoring falling prices in Mtwara and would issue a statement this week."We are closely following up the situation in Mtwara. The ministry's permanent secretary responsible for trade and investment is currently in the region evaluating the magnitude of the problem. The ministry will issue a statement after receiving an assessment report," he said in a telephone interview.Last month, CBT asked the government to address challenges facing cashew nut buyers, warning that ongoing wrangles between farmers and crop buyers on the one hand and Mtwara regional authorities on the other was unhealthy for business prospects in the country and could lead to a fall in prices.

    The concern was voiced a few days after the Vietnamese embassy asked the government to allow traders to transport cashew nuts by road to Dar es Salaam Port to enable them meet their obligations to customers and lenders.The appeal came after a Vietnamese company, Starnuts, failed to transport 3,700 tons of cashew nuts because vessels used to ferry the commodity to Dar es Salaam were reportedly booked until January.The Mtwara regional administration has banned the transportation of cashew nuts by road for various reasons, including ensuring that traders pay all the requisite taxes and levies.

    Traders buying cashew nuts in Mtwara Region are required to transport the commodity by sea through Mtwara Port.The First Secretary in the Vietnamese embassy in Dar es Salaam, Mr Ton Ho Tri Dzung, told The Citizen that Starnuts had planned to purchase 22,000 tons of cashew nuts this season, but this would not be possible because of the ban on transportation by road. He appealed for the ban to be lifted to enable Vietnamese buyers to transport cashew nuts by road to Dar es Salaam for onward shipment to Vietnam.