Home   >   NEWS & VIEWS   >   News

  • Cashew processing shortfall hinders economic potential 06/09/2022

    Jun 9th, 2022

    The cashew value chain is considered one of the most industrious sub-sectors of the agriculture sector, with the global cashew kernel market expected to grow from $5.394 billion in 2019 to $6.932 billion in 2025 at a compound annual growth rate (CAGR) of 4.27 percent, according to Research and Markets, the world’s largest market research store. Data provided by the National Bureau of Statistics (NBS), showed that the commodity is Nigeria’s third largest agricultural export after sesame seeds and cocoa beans, fetching the country N72.8 billion in 2021, representing 14.4 percent of the country’s total export value. Industry analysts however argue that Nigeria’s export value is way below its potential, noting that the country has failed to leverage on its processing capacity as a result of the negligible number of processing industries, missing out on opportunities offered by rising global demand. Market reports show that Vietnam, as a result of its remarkable cashew processing capacity, is one of the leading exporters of processed cashew and generates more wealth in the cashew value chain compared to Nigeria, despite being the largest buyer of Nigeria’s raw cashew nuts. In its assessment of the Nigerian cashew industry, Africa’s fastest growing commodities market player, AFEX, described cashew nut as a major commodity with a fast growing market demand and high potential to generate foreign exchange and create massive income and employment opportunities for Nigerians engaged in its value chain. In the report, titled, “Commodity Focus: Raw Cashew Nuts”, the company noted that cashew is an important industrial raw material with rising demand in the confectioneries, food, and beverage industries globally with a high potential to contribute to Nigeria’s non-oil export value and FX earnings from non-oil exports. AFEX bemoaned that Nigeria, despite being one of the largest producers of raw cashew nuts, only processes a fraction of its total production, with the majority shipped to countries such as Vietnam for processing before being exported back to Nigeria. This, it stressed, places Nigeria at a disadvantage as the country is forced to import the processed commodity at a higher quotation compared to its raw form. AFEX encouraged the government to create a policy environment that enables cashew processors to operate with competitive transformation costs and facilitate access to the main export markets. It also called for the facilitation of research that would help identify agricultural practices and technologies that function best in local environmental and economic conditions. The commodity market operator also recommended other solutions including, improving rural infrastructure to better connect cashew farms and processing sites; facilitating market entry through technical skills development and better access to market information; strengthening capacity among cashew processors to meet quality standards in prospective foreign markets, and promoting the development of cashew byproducts, such as beverages based on cashew apples, which are normally discarded as waste. It further stressed that the traceability, transparency and sustainability of food supply chains are becoming increasingly important for consumers and suppliers globally, noting that this could benefit African processors who source their nuts locally rather than through long supply chains. On his part, Babatola Faseru, president of the African Cashew Alliance (ACA), remarked that local processing of cashew nuts in Nigeria remains very low as between 10 and 15 percent of total production is processed locally. Faseru explained that a large number of the local processing plants in the country were underutilised due to lack of access to reliable sources of funding, huge logistics problems at port access roads, lack of proper policies and regulation of the industry. He also opined that Nigeria’s competitiveness in the cashew processing sub-sector is very low compared to more developed countries that enjoy stable electricity and robust financing from the government and financial institutions. The ACA president listed some of the substantial by-products of cashew to include, cashew nut shell liquid (CNSL) used for industrial and medicinal purposes, as well as additives in the confectionery and beverage industries. He added that provision of funds by the government to set up cashew processing factories, which must be long term finance, will boost the country’s processing capacity, help fix the huge imbalance between the amount of cashew exported out of the country and the amount processed in Nigeria and ultimately, increase the value gained from the crop’s production. Daniel Gemana, the managing director, Vertex Agro Limited, a cashew processing and exporting firm, explained that though Nigeria has the potential to earn significant revenue from the processing of cashew nuts, local processors are faced with challenges; including a lack of capital to acquire machines and difficulties in accessing raw cashew nuts from farmers. Gemana further pointed out that many of the processors were operating below the installed capacity due to erratic electricity supply, poor transportation infrastructure, difficulties in accessing raw cashew nuts from local farmers, and lack of capital to purchase modern equipment for efficient cashew processing. He enjoined the government to facilitate the granting of loans and enhance an enabling and business friendly environment to promote the cashew industry, adding that investors would be lured to set up processing factories if there were incentives provided by the government. According to him, Nigeria would generate more revenue, create more employment opportunities, improve its competitiveness in the international market, and enjoy several other benefits if more attention is concentrated on cashew processing. Meanwhile, Julius Berger Nigeria Plc, Nigeria’s leading construction giant, recently announced the diversification of its investment portfolio into cashew processing with the establishment of an internationally-benchmarked and top quality-driven cashew processing plant in Epe, Lagos State. Speaking on the development, Oyindamola Asaaju, Julius Berger’s cashew projects commodity and marketing manager, explained that the company is committed towards strengthening Nigeria’s cashew industry by implementing a highly efficient no-waste operational practice. “Clear national occupational standards and demand-driven international product quality would define and drive the company’s operations,” Asaaju added.