By Patrick Nelle, bird story agency
In a little over 10 years, Africa has become the global powerhouse producer of cashew nuts. Now the hunt is on for greater dividends.
A booming global demand for the cashew nut – as a food and for its medicinal properties – has been good for African producers of the South American species. The continent’s output now represents 58% of the global cashew harvest, from 37% in 2008, according to the Africa Cashew Alliance (ACA).
West Africa takes the lion’s share of global output with 44%, while East Africa accounts for 13% of world production.
Côte d’Ivoire is by far Africa’s biggest cashew harvester. According to figures released by commodities markets analysts N’kalô the West African nation produced 1.123 million tonnes of cashew in 2021, a phenomenal 18% leap from 2020. In 2022, Côte d’Ivoire is again expected to breach the 1 million tonne mark. In 2019, Côte d’Ivoire was the world’s third-largest producer (with 731,000 tonnes), after Vietnam (2.6 million tonnes) and India (786,000 tonnes).
But by exporting the nut in its raw form, African countries have been failing to extract additional value from the commodity. Cashew can be sold either as raw nuts, or as a shelled cashew nut, in which case the nut is separated from the shell and is ready for use. According to ACA, from 2000 to 2019, Africa sold 98% of its harvest as raw cashew nut, missing enormous revenue opportunities.
Reports give a glimpse of what Africa has been missing. In 2018, India exported cashew kernel to the European Union at a price that was more than three times higher than the price paid to cashew farmers in Côte d’Ivoire. And after additional processing in the European Union, the price of cashew kernels was about 2.5 times higher than when exported from India and about 8.5 times more than when purchased in Côte d’Ivoire. Global market projections for cashew kernel should be a green light for growers and processors, as the market is expected to grow to almost $7 billion in 2025 from just over $5 billion in 2019.
Fortunately, African countries are starting to tackle the issue by investing heavily in cashew processing capacities. Côte d’Ivoire is spearheading the ongoing trend. Through an ambitious programme formulated by the government, the goal is to process half of their cashew harvest into cashew kernel by 2026.
As a result, the country’s cashew kernel output has rapidly increased in the last couple of years, reaching 180,000 tonnes in 2021. The country plans to establish three new processing units in the country in 2022.
For Lucman Diaby, who is deputy CEO at Cicajou, a cashew processing company that operates in Côte d’Ivoire, this is a big move forward.
“To date, Côte d’Ivoire has a 14% cashew nut processing rate. But a few years ago we were at less than 10% and we could only produce 40,000 tonnes of kernel. We’re still far from our 50% goal but we are making great progress,” he told bird in an interview.
Other West African nations are also doing well. Nigeria now produces 68,000 tonnes of cashew kernel – a 27% increase. In Ghana the production has inflated by 25%, to 15,000 tonnes, while in Burkina Faso the trend is up by 31%, with 17,000 tonnes of cashew kernel.
Other huge cashew growers like Benin, Togo, and Senegal are on track to multiply their processing capacities, and West Africa has already increased its cashew kernel output 3.5 fold.
In East Africa, big players like Mozambique and Kenya have lower outputs than their West African counterparts, but they are far more advanced when it comes to the share of cashew that is processed locally. Mozambique produces around 130,000 tonnes of raw cashew nut, and is able to process 49% of it. The 6,000 tonnes harvested annually in Kenya may not place the country in the same category as Côte d’Ivoire or Tanzania, but the country processes 83.3% of its production into kernel.
Among the big producers, Tanzania, the second African largest raw cashew nut producer, is still struggling to revamp its cashew processing capacities. The East African nation transforms only 2% of its 300,000 tonnes annual output.
African government policies and incentives to convince investors to pour cash into cashew processing have been decisive in developing the industry. Côte d’Ivoire has set a substantial package of incentives consisting of credit guarantees, subsidies, duty-free importation of processing equipment, and tax exemptions. Encouraged by government decisions, 350,000 small farmers have entered cashew farming and the country’s processing capacity is following suit.
“We now have about 30 cashew processing plants across the country,” confirmed Diaby, who also chairs the GTCI, or the Côte d’Ivoire Cashew Industry Group, which groups cashew processors. Each plant employs between 300 and 800 workers.
“Impressive progress recorded by Côte d’Ivoire demonstrates increased mastery of the cashew value chain and industrial processing expertise by private operators as well as responsive and well-targeted government policies and regulations to support them to succeed,” reads the ACA’s 2019 investment guide.
Guaranteeing supply is unexpectedly a serious challenge for local processors across Africa. India and Vietnam account for more than 90% of the global cashew kernel exports, yet represent only 30% of raw nut global output. To secure their own supply, they deal with local farmers deep in the African countryside, depriving local plants of raw material.
Kenya tackled the issue by banning the export of raw cashew nuts. In Côte d’Ivoire, the government has set a quota, reserving 15% of raw cashew nuts for the local industry.
Cashew kernel is only one of the many products derived from raw cashew nuts. Through additional processing, Africa can produce consumer items including white and roasted kernels, milk, soap, oil and other products.
But in order to fully leverage the potential of cashew, Africa will have to improve its production not only in quantity but also in quality.
According to Food and Agriculture Organisation (FAO) 2021 data retrieved by the World Forestry Organisation, between 2000 and 2019 the average market value of shelled cashew from Africa was $3,148 per tonne while the global average during the same period was $5,886 per tonne. The difference could be explained by lower quality kernel than that from other big exporters like Brazil, India and Vietnam.
“Kernel exported from Africa is processed by small scale industries and local processors with low capacity and expertise, which can also affect kernel quality,” the study states.
Whatever the case, Africa’s efforts are clearly paying off.
“Increasing processing capacity in Africa holds tremendous potential, generating an estimated $280 million in added value and creating more than 250,000 new jobs,” the ACA said in a report released in 2020.
Cashing in big-time may well be within Africa’s reach.
/bird story agency