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  • Tanzania: Struggles of Local Cashew Processors

    Jan 19th, 2020

    Local cashew processors in are now grappling with inadequate supply of raw cashew nuts (RCNs) as raw material for their firms. However, they still hope that the government would fulfil its promise to protect domestic investment. Speaking to The Citizen, Akros Company Limited director John Joseph said there were fears that most domestic processors would close shop over inadequate supply of raw materials due to high price in cashew auctions compared to ability of individual companies.

    He noted that already an investor, who had ambitions of expanding his firm's processing capacity to 30,000 tonnes from 2,400 tonnes annually, has closed shop over lack of raw materials, expressing worries that his firm would probably follow suit. "We told the government that we can't buy billions of tonnes of RCN in order to meet annual processing demands for our companies. We requested for special treatment in procurement of raw material amounting to 50,000 tonnes-which is our processing capacity," he said. He said this year, his company did not buy raw cashew nuts due to high prices, noting that therefore no domestic or foreign clients would be serviced.

    According to him, last season the government pledged to offer special treatment to domestic processors during cashew auctions by purchasing a bulk of cashews and selling them in small amounts to local processors, something which didn't happen. He said Sh16,340 was required to process 4.3 kilo of RCN to produce a kilo of processed kennels. "Unfortunately, processed cashews (kennels) is sold at $6.5 which is equivalent to Sh15,000. However, price for agricultural crops are subject to abrupt volatility," he noted.

    "People revived old factories, some of them secured loans for investment from financial institutions following encouraging statements from the government. November last year, I was denied a Sh150 million loan due to unreliability of the business especially in getting raw materials," he added. Mr Joseph said he required Sh4.5 billion to buy 1,200 tonnes of RCN which is enough for annual processing, noting that, however, financial institutions can only give loans enough to cover 100 tonnes which is a monthly requirement.

    The chairman of domestic cashew processors, Mr Salum Mkemi, said challenges facing domestic processors has forced them to procure RCN which is unsuitable for export, mostly from Coast Region in order for their factories to operate.He said the government's process to assist domestic processors wasn't an easy to go job and that it required legal issues to be sorted out first.

    "The government could see how export levy would help to close the cost gap in order to protect and promote local processing without also affecting farmers revenue and prosperity," he said. Mr Mkemi said Tanzania had high quality and valuable cashews which is mixed by low quality product from western Africa in order to make their factories operate annually.