|August 22, 2003
Tanzania loses billions in raw cashew exports
Tanzania is losing billions of shillings every year by exporting unprocessed cashew nuts. One processed tonne fetches five times more. The country exports more than 90 per cent of its total cashew production to India in the raw form. After the commodity has been shelled in India, the nuts are re-exported to the United States and Europe where they fetch fabulously high prices.
A recent survey by Business Times has shown that if Tanzania would process all its annual cashew production of about 130,000 tonnes and export the resultant nuts, it could be earning about US$381.42 million per year (nearly Tsh400 billion). Currently, the country has a processing capacity for only 30,000 tonnes, not all of which is utilised, anyway. Were the opposite the case, export of the processed item would fetch $88 million per year. As a result of certain domestic difficulties, however - including faulty or inadequate trade arrangements - only a small amount of processed cashew nuts is exported each year. The survey showed that unprocessed cashew nuts from Tanzania currently trade at an average f.o.b price of US$580 per tonne in the world market, compared with an average of $2,934 for a tonne of processed cashew nuts.
According to an analysis by this paper, this works out at five times the value of one tonne of processed cashew nuts over and above the value of one tonne of unprocessed cashew nuts. In the first three months of this year, Tanzania managed to export only 4,900 tonnes of unprocessed cashew nuts valued at $2.9 million at the price of $591.8 per tonne. On the other hand, 66,000 tonnes of the unprocessed commodity valued at $39.4 million were exported at the price of $588 per tonne in the last three months of 2002. Tanzania and Guinea-Bissau are the largest producers of cashew nuts in Africa, each accounting for eight per cent of the world's production.
However, the East African country has not been particularly effective in exploiting this resource, with its cashew processing industry barely ticking over. It has refurbished only one plant out of the ten that were set up in the 1980s, the remainder having had to close within five years of launching. This situation was the result of many problems, including inadequate cashew supplies, lack of credit, lopsided competition, fluctuating prices, and a tenuous marketing chain as a whole, confounded by a surfeit of greedy middlemen.
Observers say the supply problem could be overcome if the industrialists control their production costs, and were knowedgeable regarding market information. The universal problem of credit finance in Tanzania is also a setback to the cashew industry, with the banks being reluctant to extend loans to the sub-sector in particular, and farming in general.
Another cashew trade problem is the stiff competition from India and Pakistan. India's supremacy in the cashew sub-sector is overwhelming. It is the world's premier producer, unleashing 375,000 tonnes on the market in 2001/02. It is also the largest cashew nut processor in the world - churning out 0.6 million tonnes per year - and the biggest exporter of the nut, at around 0.1 million tonnes a year!
Total world cashew nut production stood at 1.178 million tonnes in 2001/02. India's share in that was 32 per cent, with Africa some way behind at 28 per cent. According to research by the EU/ACP, Africa as a whole accounted for 70 per cent of the global cashew nut production in the period between the 1950s and '70s.
Currently, however, the crop has been adversely affected by lack of high performance plant materials, poor management, attack by parasites and bush fires, as well as the domineering position of oligopolies formed for the most part by Indian companies that generally dictate terms for other producers.
According to the ministry of agriculture and food security, cashews in Tanzania are primarily grown for export, with a very small proportion of the crop being processed and consumed domestically. Production has dramatically increased from 16,500 tonnes in 1986/87 to 80,000 tonnes in 1995/96, before reaching 130,000 tonnes today. (Business Times, Dar es Salaam)