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1. Background

Tanzania is Africa’s largest cashew nut grower after Mozambique and Ivory Coast, and the world’s eighth biggest producer. The Cashew nut Board of Tanzania (CBT) reports that Tanzania in 2012 produced about 158,000 metric tons of cashew nuts. Out of this 88% is exported as raw nuts, while 12% is processed internally, leaving a lot of value added and employment opportunities with the importing countries.

Cashew nuts provide an important source of income for 250,000 smallholder farmers in Tanzania. Main production areas are the districts of Mtwara, Lindi, and Ruvuma. They account for 80-90% of Tanzania’s marketed cashew nut crop. Cashew nuts are the source of three-quarters of total cash incomes of farmers in these districts.

2. Production, Processing and Marketing.

2.1. Location & Production

The sub-sector contributes 18% of Tanzania’s merchandise export earnings. The average smallholder cashew farmer occupies about one to two hectares of cashew nut trees, sometimes intercropped with food crops, mainly cassava, grain staples and legumes. Large-scale private plantations occupy about 2,000 hectares in Lindi and Mtwara regions. 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.

Failure to utilize full capacity is due to insufficient fund for purchasingthe raw cashew nuts and meeting production. Currently there are only three working plants located in Mtwara, Dar es Salaam and Newala which can process not more than 20,000 tons per year.

Table 1: Cashewnut Area ('000'ha), Production ('000'tons) and Yield (tons/ha) by Region

    Year
Region Data 2005/6 2006/7 2008/9 2009/10
Dar Es Salaam Area(‘000’ha) 3.99 2.68 1.51 2.55
Production(‘000’tons) 6.99 4.24 5.35 2.34
Yields(ton/ha) 1.68 1.58 3.54 0.92
Iringa Area(‘000’ha) 0.62 0.62 0 0
Production(‘000’tons) 0.1 0.08 0 0
Yields(ton/ha) 0.16 0.13 0 0
Lindi Area(‘000’ha) 33.39 34.19 27.92 26.07
Production(‘000’tons) 28.78 19.5 17.31 13.59
Yields(ton/ha) 0.86 0.57 0.62 0.52
Mbeya Area(‘000’ha) 0.62 0.58 0.3 3.56
Production(‘000’tons) 1.04 0.83 0.37 0.48
Yields(ton/ha) 1.68 1.43 1.23 0.14
Morogoro Area(‘000’ha) 0.12 0.03 0.49 0
Production(‘000’tons) 0.13 0.08 0.03 0
Yields(ton/ha) 1.05 2.49 0.06 0
Mtwara Area(‘000’ha) 0.39 211.48 192.81 0
Production(‘000’tons) 39.7 33.1 37.74 38.99
Yields(ton/ha) 0.17 0.16 0.2 0
Pwani Area(‘000’ha) 19.48 54.07 7.54 107.43
Production(‘000’tons) 6.59 19.96 13.21 15.53
Yields(ton/ha) 0.34 0.37 1.75 0.14
Ruvuma Area(‘000’ha) 27.96 54.09 7.75 41.87
Production(‘000’tons) 5.68 12.48 5.19 2.1
Yields(ton/ha) 0.2 0.23 0.67 0.05
Tanga Area(‘000’ha) 3.4 3.97 1.93 23.99
Production(‘000’tons) 1.91 1.96 2.21 1.13
Yields(ton/ha) 0.56 0.46 1.15  

Source: www.tanzania.go.tz/agriculture, 2013

 

2.2. Processing of Cashew Nut.

The total installed cashew nut processing capacities in Tanzania was about 42,800 (2009/10) and 94,000 (2011/12) tons per season. In 2013, the annual processing capacity is 136,700 tons at 25 plants, with a capacity range of between 300 and 12,000 tons per plant (TCB/Daily Nation, 6 -9-2013).

The average capacity utilization for the large scale cashew nut processing firms has been low at about 21 % last year.costs together with product market uncertainty.

The investment of new processing plants, besides new employment opportunities, would lead to a USD 110 Million in annual average income (Tanzania Cashewnut Board-website: www.cashewnut-tz.org).

 Table 2. National Data on Production Trends of Cashew Nuts.

    Year
Region Data 2005/6 2006/7 2008/9 2009/10
Cashew Nuts Area(‘000’ha) 319.97 328.64 240.25 190.651
Production(‘000’tons) 90.65 92.23 81.42 74.17
Yields(ton/ha) 0.28 0.28 0.34 0.39

Source: www.tanzania.go.tz/agriculture, 2013- Note that there is no area planted for Mtwara Region (2009-2010) in above data. This could also not be found on the mentioned website. Therefore yield figures in table 2 are probably too high. The production of cashew nuts in Mtwara is much higher in the 2007-08 latest figures of the Tanzania Cashewnut Board (62 Tons) in comparison to the data from Ministry of Agriculture (37.7 ton).

There is a lot of scope for improved efficiency in management and accounting in cashewnut processing from the extraction phase till the utilization of manpower and machineries and the purchase of raw materials.

 

2.3. Cashewnut Marketing 

Farmers sell their cashew nuts under the Warehouse Receipt System (WRS) whereby farmers are paid 70% of the value of their cashew nuts sold through co-operatives and others are not paid at all. The global demand increases with 9% per year and Africa, which produces 43% of cashew nuts, is the only region that can supply this. This makes the cashew nut in Africa, especially the one from Tanzania highly demanded and good marketable.

Tanzania cashewnut is also easy to market due to its high quality and value. Research shows that Tanzania produces one of the best cashew nuts in the world, which is mainly exported to India. Around 85% of Tanzanian cashewnuts are sold in-shell and 99% of these cashewnuts produced in Tanzania go to India which is currently also the largest producer of cashew in the world. However, as India does not have enough cashew nuts for the domestic market, it has to import from East Africa. The India imported price (CIF) is much higher than the Tanzanian exported price (FOB). This is of course caused by cost, insurance and freight charges and the exporters trading margin. 

Tanzania explores new cashewnut markets in other countries. The Cashewnut Board of Tanzania (CBT) enhances a transparent auction system, rationalizing costs in the marketing system between producers, organized in primary cooperatives, who sell their produce to Cooperative Unions, making use of the Warehouse Receipt System and finally ensuring raw cashew nut exports.

 

3. Potential for Investment in Cashew Nut Industry

  • Establishmen of new cashewnut processing and packaging factories.
  • Increase and improve cashew nut processing capacity (quantity & quality).
  • Establishment of new cashewnut orchards in high potential regions and processing cashew-apples to make cashew apple juice, jams, chutneys, pickles and other preserves.
  • Purchase of raw cashew from small-scale farmers for processing and export.
  • Manufacture and distribution of small-scale mobile cashew processing machines.
  • Provision of extension and advisory services to small scale.
  • cashewnut farmers groups and estate farmers in the cashewnut sector.
  • Improvement in quality of cashewnut seedlings.
  • Pest and insect control on cashew nuts.
  • Establish and strengthen Cashewnut Farmers Association/ Marketing Cooperatives.
  • Improving access to credit facilities.
  • Improve Efficiency of cashew nut marketing system/ AMCOS.

 

4.  Financing needs in Cashew Nut Industry.

Entrepreneurs / farmer groups may seek financial assistance for:

  • Modernization and or expansion of cashew nut processing plants.
  • Upgrading of cashew nut processing equipment.
  • Diversification into new marketing channels.
  • Establishing of new cashew nut processing facilities (buildings, processing equipment and transport) for the domestic and export markets.
  • Provision of agro- phyto-sanitary services in the areas of diseases monitoring, control and prevention through the use of herbicides and pesticides.
  • Establishment of storage and transportation facilities for the cashew nut products.
  • Extension services through the establishment of training and research institutions for the cashew nut industry.
  • Purchasing of land to be used for expansion of cashew nut production.
  • The purchase of different inputs to facilitate intensification of cashew nuts production (seeds, fertilizers and agro-chemicals, even improved weeding).
  • Purchase of proper packaging materials (containers and plastic bags).
  • Construction of storage facilities, packaging and marketing equipments.

 

5. How can PASS help farmers in the Cashew Nuts Industry?

  • Through feasibility studies and business plans PASS can assist entrepreneur’s access to bank loans (financial linkages).
  • Assist in capacity building of farmers groups and entrepreneur management skills
  • Assist cashew nuts entrepreneurs with layout for design and equipment for cashew nuts processing plants.
  • Assist cashew nuts producers with market research, market linkages and assist cashew nuts factories in marketing strategies for improved retailing of cashew nuts products.
  • Organization of farmers into groups, which can be used as focal points for contract farming, input supply credit, produce-price negotiation and provision of advisory service.
  • Improve efficiency in management and accounting in cashewnut extraction, utilization of manpower and purchase of raw materials.
  • Support cashew nuts agribusinesses with inadequate amount of collateral / security for a commercial bank loan.
  • Assistance of eligible individuals and companies to access loan facilities for their viable investment through appraisal of loan write ups in line with specific bank’s terms and condition and linkages.

 

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