Tanzania Should Cash in On Processing Nut

During the 2014/15 season to date, Tanzania has made $225.5 million from exporting 149,742 tonnes of raw cashew nuts.

According to the Tanzania Cashew nut Board (TCB), this is part of 195,000 tonnes collected by farmers in their primary associations through the warehouse receipt system.

This is good news, but the country can do far better if more thought is given towards increased processing at home. Processing can increase earnings, because the kernel is the real prize.

It is estimated that about 75% of cashew nuts imported into the United States are roasted (about 50,000 tonnes) and over half of this total will be used in mixed nut products, especially confectionery.

At one time, Uganda was quite comfortable with its standing on the Robusta production table. Then Vietnam came along and overtook it. Similarly, India was the cashew nut capital of the world, being the biggest producer and one of leading consumers. Then again, Vietnam came along and started shipping more nuts than India.

India now imports around 60% of the over 1.4 million tonnes of raw nuts required for processing, mostly from Africa. Exporters are now buying from Mozambique and Tanzania at a rate of $1,500 per tonne.

The issue here is complacency and using some foresight. According to TCB, currently the majority of harvested cashew nuts are purchased raw, exported and processed abroad, mainly in India. This is then re-exported to different countries around the world at a higher price than the original one.

Three years ago, the Agriculture Non Status Actors Forum (ANSAF) issued a report which showed that if the Tanzania's cashew nut sector performed to its full potential, it would create over 45,000 jobs in the country and make a significant contribution to the economy.

In 2014, Vietnam shipped cashew nuts to 50 nations around the globe, with the United States market accounting for 30% of Vietnamese cashew exports, followed by the European Union (EU) with 25% and China with 20%.

In recent years, Vietnam's cashew output averaged 400,000 tonnes per annum while local businesses' processing capacity hit one million tonnes. Now the country faces tough competition from other nations, especially those from Africa, including Tanzania.

From the mid 1960s mechanised processing factories were constructed in Mozambique and Tanzania to move the processing to the raw nut origins. But all attempts at significant hand processing outside India were found to be either too inefficient or too expensive in comparison to Indian labour. However times have changed.

It against this background that persuaded the Tanzania's Ministry of Agriculture, Food Security and Cooperatives to invite investors to set up cashew nuts processing factories to exploit the economic opportunities of processing the crop in Tanzania. Unfortunately, investors have been slow to take up the challenge. Perhaps it would help if the government came up with a Public Private Partnership (PPP) to set an example to other potential investors.

On the other hand, experts say cashew nut shelling is not an easy process: the raw nuts (often referred to as seed in the cashew trade) are difficult and unpleasant to handle, and the viability of a processing operation is critically dependent on the yield of the various grades of kernel.

Vietnam ships more than 160,000 tonnes of cashew nuts abroad annually, becoming the US largest cashew nut seller.

However Vietnam does not have the AGOA status. Under the African Growth and Opportunity Act (AGOA), Tanzania can export to the United States at much better terms than Vietnam. A crop like cashew nuts is an ideal way to exploit this preferential treatment. Vietnam is targeting a total revenue of $2.5 billion from cashew exports in 2015. This should provide the Tanzanians with some food for thought.