African Cashew Alliance

The Clipper magazine, the most widely read fruit and nut industry magazine with a worldwide distribution in over 90 countries, wrote a report on the African Cashew Alliance's third annual conference...

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 The „African Dream“ arouses confidence and scepticism

By Jens-Axel Breuer, The Clipper, Munich

Welcome to the African Dream! Kees Blokland from Global Trading in the Netherlands had included this sentence in his presentation in bold type. It was clear to all those taking part in the annual conference of the African Cashew Alliance (ACA) in Dar es Salaam, Tanzania, that there would still be a long way to go until the dream comes true. The first signs of
progress in this direction are already discernible. The third annual conference of the African Cashew Alliance took place in Dar es Salaam from 17 to 19 September, with 140 participants from Africa and a few international visitors. Three years ago, there were only about forty taking part. From Costco as the discount buyer to Kraft Foods as the processor and the Bill & Melinda Gates Foundation as the large-scale investor, skeptical voices as well as confident ones were to be heard. On the second day, solutions in the field of cultivation, processing, politics and financing were elaborated and presented.

Kees Blokland from Global Trading knows only too well that cashew nuts are still being produced in Africa and exported to Brazil, India and Vietnam as comparatively cheap raw materials. The result is that the African market loses a large part of the profit margin as well as its control
over the market. What can change and
what will have to change in Africa?

Production is increasing in Africa

First the good news: production is on the rise in Africa. The sector is recovering again after the slump in the seventies. Vietnam and West Africa together ensure an increase in the worldwide production of cashew nuts of 7% per year. In India and Brazil, production is growing much more slowly, and production in East Africa is suffering from excessive age of the trees. 40% of the worldwide production of cashew nuts is currently accounted for by Africa. In terms of quantities, it amounted to 140,000 t in 1998, and a total of 240,000 t are forecast for 2010. The next piece of good news: the chances for a considerable increase in the consumption of cashew nuts are very good indeed: Francisco Pileggi presented a study made by Kraft Foods. Here are the results:

Cashew nuts are the most popular variety of nuts with consumers, even before almonds and other varieties. The most cashews are consumed by people over 40, so the demographic development of the human race speaks clearly in favour of cashew nuts. Up to now, cashew nuts have sold with virtually no research into the health benefits. Better research and marketing with the focus on the health aspects of these nuts would allow consumption to be increased considerably.

Money in sight?

And here‘s yet another piece of good news: the Bill & Melinda Gates Foundation is planning a gigantic programme for the development of the African sector. The representative of the foundation declared that a decision on this matter is expected to be made by the end of October. On the one hand this proves that the Foundation, which acts with great foresight, has realized that it is worthwhile to invest in the sector. The commitment of the richest foundation in the world also gives reason to hope that this planned investment will have good results in the years to come. It is thus still the case that cashew nuts are produced in Africa and that the great majority of them are exported in the raw state to India, Brazil or Southeast Asia. In 2006, 587,000 t of cashew nuts were produced in Africa, but only 43,000 t were processed there – whereas in India, 270,000 t cashews were produced and 825,000 t of them were processed. The producers realize that this means that they will lose a large part of the potential income. Up to now, for every kg of cashew kernels, a sum of US$ 1.57 has remained in Africa. If Africa completes its production chain, an average of up to US$ 4.51 could be earned in Africa – 255% more at the same yields as before.

Instead of a few rich cashew planters, there are
a lot of poor ones

You can earn a lot of money with cashew nuts – but not necessarily in the production of the raw produce. More money is made in India because the yields are higher - six times as high as in Benin in fact. In addition, more whole nuts are harvested, and more ‚white‘ kernels are left over. According to the calculations made by the Bill & Melinda Gates Foundation, African producers could earn up to 103% more on their harvests, but only by increasing productivity, direct sales and the use of seals of approval. Whereas farmers in Benin are still on average harvesting more than one tonne per year, farmers in Mozambique don‘t produce more than 74 kg per year. The fragmentation is a logistical challenge – and instead of a few rich cashew farmers there are a lot of poor ones whose options for pre-financing pesticides and equipment are negligible.

A head start for African dealers and
processors

A.M. Beno Mhagama from the Cashewnut Board of Tanzania put it in a nutshell: „Cashew nuts are produced by very poor people – and consumed by very rich ones,“ he explained. For him, the production of cashew nuts in Africa is its greatest
potential but also its greatest challenge, with expensive pesticides, underpaid producers, expensive credits and the present production chain, which is not continuous yet. Up to 100,000 t of cashew nuts could be processed instead of the current total of no more than 30,000 t. At interest rates of 15% and more for the producers, many are working under pressure from the
banks Mhagama believes that the principal challenge is the professionalization of the industry: there is a lack of reliable data on harvest quantities as well as producer and world market prices, and there is a lack of coordination on the part of the processors. It was suggested that a time corridor should be created which only allows bids to be made by African processors and dealers in the first month after harvesting. Francisco Pileggi from Kraft Foods presented important data from trend research – and an extremely hopeful outlook for the sector. He very impressively proved that only firstclass produce can profit from these positive effects. Why has the consumption of cashew nuts only increased so little over the last few years whereas the growth rates for almonds and pistachios exceed 10%? According to Pileggi, this is mainly a result of the intensive work carried out by the Almond Board of California. The Board has done a lot of research into the health aspects of almonds and communicated its findings accordingly. Pileggi believes that health as a marketing factor is the best instrument for future success – and that includes cashews.

Is India worried about Africa‘s industry coming
of age?

Hari Nair from the Western India Cashew Co., Quilon, is not worried. In fact, he is confident that African producers and Indian companies will continue to cooperate in future. India assumes that African cashew nuts will be processed in India in the future too. Also, India is glad about the massive growth of domestic production and the increase in the domestic consumption: the
development of cashew production in India is impressive, going from 50,000 t in the year 1980 to more than 600,000 t in
2007. Nevertheless, this increase is having difficulties keeping up with the development of the demand on the domestic market, for the spending power of the Indian population is increasing – and so is its ability to buy cashew nuts, which can be found everywhere in India and are used as gifts, cooking ingredients and sweets.

More manual work or less of it?

Until a few years ago, there was no alternative to the manual shelling of the cashews. In Africa, the shelling of cashew nuts is considered as a job creator and therefore welcomed. Things are different in India: 400 man-days of hard work are necessary in order to shell a tonne of cashew nuts. This makes the cashew nut one of the most labour-intensive agricultural products in the world. This was not a problem as long as workers were available for no more than two dollars a day. However, the positive
economic development in India is causing wages to rise. Hari Nair explained that an objective of 40-80 man-days of work per tonne of cashew nuts is being aimed at for the future. „The Ultimate Source“ – that‘s what it said in big letters on
the banner of the annual conference of the African Cashew Alliance. All those taking part in the annual conference realized that the development in Africa is moving forward constantly. In other words, we can still expect a lot of encouraging news from Africa.