African Cashew Alliance

Home

Activities

2006 Activities & News

Cashew processing ramps up in West Africa

WATH FACTOR

by Leah Quin

Finsihed cashews from Guinea Bissau

It’s tough work to process a cashew.Transforming the raw kernel into a delectable snack is a days-long process, during which the cashew will be roasted, shelled, heated, skinned, graded, sorted, cooked, salted and packaged. To prevent fragile nuts from breaking, much of this work is done by hand. In the early stages, workers sometimes coat their hands with thick grease to protect skin from the acid in the cashew shell.Cashew processing is labor-intensive and requires little technology. Workers tend to make more than the minimum wage. It would seem to be ideal employment in West Africa, which produces a large share of the world’s cashews.

Yet more than 90 percent of West Africa’s raw kernels are shipped to India, which has built up such a large cashew-processing industry that it must import as much as is grown locally. India then ships the final product to the US and Europe.

A growing number of governments, donors and businesses want processing to happen in West Africa, creating jobs and allowing the region to reap the higher prices of a value-added product. Not to mention cutting shipping costs between West Africa and Southeast Asia.“All West Africa nuts get processed, just not in West Africa,” said Greg Vaut of USAID’s West Africa Regional Program, who recently founded the Africa Cashew Alliance. “We’re not talking about increasing demand – we’re talking about adding the value here rather than there.”Olam International is leading the charge. The Singapore-based agricultural products giant opened cashew processing plants in Nigeria and Ivory Coast in 2004 and is planning similar facilities in Ghana and Guinea-Bissau, said Olam’s West Africa manager, Ranveer Chauhan.

Skinning a cashew

“We are investing everywhere in every part of the supply chain,” Chauhan said. “This has been a good time for us to take the first step. Now the industry needs government and donor support to really get it going.” Like most would-be exporters in West Africa, processors face an intimidating array of obstacles: bureaucratic red tape, high port costs, heavy taxation, unsteady power supplies. But cashew processing has its own hurdles, first and foremost training a workforce to produce good quality whole nuts at a rate fast enough to compete with India and Vietnam. The West Africa Trade Hub is working on solutions to these problems, through technical assistance, trainings and its participation in the Africa Cashew Alliance, a coalition of cashew producers, buyers, USAID and non-governmental organizations.

WATH’s financial consultant, Judd Welsh, recently conducted workshops on costing and pricing in Guinea-Bissau, as well as financial analyses of several of that country’s largest processors. The tiny former Portuguese colony is the world’s sixth-largest producer of raw cashew kernels, but it processes only a tiny percentage of them – and those are more expensive than those processed in Southeast Asia.

Welsh’s workshops calculated the impact of absenteeism, tardiness and broken kernels on competitiveness. All three could be improved through training and boosting worker awareness.
“Inefficiencies are effectively eating up 35 percent of the value,” Welsh said. If fixed, Guinea-Bissau would be brought in line with world prices, he found. Such ground-level solutions are a beginning. But even if productivity improves, a major US broker warns that the market will be nearly impossible to enter without cooperation between governments, donors and the processors themselves.

Processing plant in Guinea Bissau

“West Africa can’t be effective on a small-scale basis,” said David Rosenblatt of the Richard Franco Agency. “You can’t have one factory operating as an island. It might be good to get 10 factories working together for one joint packing facility. If you’re not thinking on that scale, your project becomes much tougher.”

The African Cashew Alliance seeks to foster that kind of collaboration through sharing of information and expertise, Vaut said. Groups like TechnoServe have helped revive cashew processing in East Africa, while US food giant Kraft is providing technical assistance to processors in Guinea. More than 60 showed up at the Alliance’s inaugural meeting last June, indicating a desire to work together, Vaut said. Its first major study – now being planned by WATH – will examine the potential for processed cashews within African urban and tourist markets as a way to grow the industry here and internationally.

Building a reputation is important. Even Olam has had difficulty selling processed cashews directly to Europe from West Africa, Chauhan said. Buyers are simply more accustomed to buying from established processors. Rosenblatt said it will be tricky for West Africa to compete, considering how far it has to go to build the industry. Then again, he added, Vietnam only opened its country to outside markets in 1994 and is already rivaling India in reputation of its cashew processing. “There’s no reason West Africa couldn’t do the same,” he said. “You just need to know it won’t be easy.”

[ Back ]