Glut, price volatility force cashew exporters into processing
With global supply outstripping demand, thus leading to decline in the price of raw cashew nuts (RCN), the Nigerian Export Promotion Council (NEPC), has tasked exporters to explore local processing rather than hoarding, with expectations of improved prices.
Indeed, the NEPC noted that despite Nigeria contributing to more than Africa’s supply of cashew nuts, less than 10 per cent is processed locally.
Specifically, the prices of raw cashew nuts (RCN) fell from over N600,000 ($1,666) per metric tonne (MT) in April 2018, to about N300,000 or $833 since July last year, thus forcing many exporters to hold excess stocks of RCN.
Similarly, cashew nuts valued at $300 million were in March this year, trapped at the Lagos Ports due to challenges of congestion and inefficiency.
Cashew nut kernels are mainly used for the snack market as a roasted and salted snack. It is attracting more interest from industrial users, and as such used for cookies, cereals, and also promoted as a topping on ice-cream.
Executive Director/Chief Executive Officer of the NEPC, Olusegun Awolowo, noted that there was a need to increase investment in cashew processing to add value to the cashew value chain, and to mop up excess RCN and process into cashew kernel for the premium export market.
Awolowo, who was represented by the Director, Products Development Department, NEPC, William Ezeagu, at a Cashew Forum in Lagos, explained that the programme was conceived against the background of persistent downward prices of raw cashew nuts resulting in supply glut in the commodity producing countries like Nigeria.
“Nigeria currently is one of the major exporters of raw cashew nuts in the world. The council is very much aware of the fact that we lack more of processors of Cashew. For instance, in the last two years, raw cashew nuts sold at $1,800 per metric tonne but this year, the price has crashed to about $1,100 leaving a huge gap in excess of RCN unsold
“Therefore, it is important to invest in processing. Cashew kernel export is a major opportunity for Nigeria. Nigeria exports RCN whereas 50 percent processing of it will create 9,000 jobs with a chain of economic multiplier effects,” he added.
The Managing Director, African Cashew Alliance (ACA), Ernest Mintah, urged the government to unveil and implement policies that will encourage and protect investments in the processing of the commodity.
According to him, the government has a lot to do in enlightening farmers and value-chain operators on the benefits of processing the commodity, especially when jobs are being exported through raw materials export.
On his part, Vice Chairman of the Niger State chapter of National Cashew Association of Nigeria (NCAN), Garuba Kontagora, noted that there was a need to sensitise farmers on best practices, adding that many products being exported were unripe for plucking, and this affects their performance in the export market.
Co-Founder/CEO of FoodPro Limited, Ayodele Olajiga, said the importance of cashew processing to economic development cannot be overemphasized, since it creates sustainable jobs, and leads to an overall increase in the value of the cashew sector.
He added that capacity utilisation in the cashew processing sector is about 50 per cent and can be improved upon if trading of raw nuts is discouraged.