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Jishughulishe...WEST AFRICA RAW CASHEW NUTS: 2018 PRICE REPORT
https://www.linkedin.com/pulse/west-africa-raw-cashew-nuts-2018-price-report-henry-ejike
The cashew crop became an important cash crop in West Africa in the 1990’s when its commercial importance was realized. The crop was introduced to the region by Portuguese explorers in the 17th century. Governments in the region used it to fight deforestation in the 1950’s and 1960’s.
The three leading exporting countries in West Africa by volume are: Ivory Coast, Guinea Bissau and Nigeria. Other important exporting countries are Benin Republic, Ghana, Burkina Faso and Senegal. According to a report released by RONGEAD for the Africa Cashew Initiative (iCA), West Africa accounted for 45% of total world production of raw cashew nuts in 2015 estimated at 1,500,000 MT. And with the current push for improved seedlings, better pre-harvest and post-harvest practices, this is projected to increase to 2,500,000 MT by 2025.
The importance of this crop as a source of foreign exchange cannot be overemphasized. According to the National Cashew Association of Nigeria (NCAN), Nigeria earned $402 million from export of raw cashew in 2017 by exporting 220,000 MT; up from the 175,000 MT exported in 2016 and projected a 10% increase in 2018.
The raw cashew season in West Africa starts in February/March and ends in July/August. The Nigerian season which starts in February/ March flags off the RCN season in West Africa.
PRICE REPORT: NIGERIA.
The current 2018 season in Nigeria opened on high farm gate price levels to the disappointment of many stakeholders particularly exporters and wholesalers. Many had hoped that 2018 prices will start at 5% - 10% of the 2017 prices. In 2017, farm gate prices started at $1, 527/MT on average. This gradually increased to a high of $1,700 - $1,800/MT on average before easing towards the end of the season in May.
However, in the current year 2018, farm gate prices started at $1,944/MT. This means the prices started at even higher than the peak price in 2017. As a result, many small and medium volume importers, even the big processors either reduced their imports or in many cases, totally pulled away. Exporters who had signed contracts in the anticipation that price differentials between 2017 and 2018 will be negligible found themselves unable to meet contract obligations. Needless to say this situation literally took many industry players by surprise including the National Cashew Association of Nigeria (NCAN) whose president Mr. Tola Faseru it was learnt attributed the high price crises to excessive pent up demand.
Opinions to the cause of this situation are varied. Exporters and other middle men lay the blame on the door steps of Asian importers whom they allege since 2015, have been encroaching upon the farm gate. In explaining this allegation, we shall identify five key players in the export chain: The farmers, the LBA’s, the wholesalers, exporters and the importers.
The LBA’s are small collectors who buy from several farmers and sell to the wholesalers, the wholesalers in turn sell in large quantities to the exporters, and the exporters finally export to their foreign buyers (importers).
The LBA’s, the wholesalers and the exporters who are in the middle of the chain allege that the Asian importers in trying to reduce cost have circumvented them, choosing instead to go directly to the bush to buy from the farmers. This they say was very rampant in 2017.
Consequently, the farmers having developed a taste for the foreign currency offered to them by the importers as against the local currency they collect from the local middle men, have preferred to offer their crop to the importers thereby crowding out the local middle men. What this scenario led to was the huge price hike resulting from the excessive demand from exporters who had contracts obligations. Some players in the industry also allege that the price hike was a deliberate gang up by the farmers who have become too greedy.
As at the time of writing this report, FOB prices in Nigeria on average is $1,950/MT - $2,000/MT.
The government through the ministry of Agriculture should as a matter of urgency, take a more active role to sanitize this sector and put in place effective measures to protect the local exporters. This industry is too important to be left to the whims of unscrupulous players.
PRICE REPORT: BENIN REPUBLIC.
The 2018 season in Benin was flagged off on the 20th of March. Benin is the fourth highest producer in West Africa after Ivory Coast, Guinea Bissau and Nigeria. Many Indian processors prefer the Benin origin due to its softer hulk which makes it easier and cheaper to process. The out turn is 48 – 52 lbs.
FOB prices at the time of writing this report is $2,000 - $2,100/MT.
It should be noted that a huge amount of raw cashew from Nigeria find their way through the land borders into Benin Republic for onward shipment to Asia. In 2015, the figure that was exported through the land border from Nigeria to Benin was put at 55,000 MT (source: RONGEAD for iCA).
PRICE REPORT: GUINEA BISSAU.
Guinea Bissau is the second highest producer in West Africa after Ivory Coast. In 2015 the country’s output stood at 220,000 MT amounting to 6.6% of total world production. Average Kernel Output Ratio (KOR) of raw cashew in this country is 52 – 54 lbs. This quality is considered excellent.
As at April 2018, average FOB prices in Guinea Bissau is $1,700 - $1,900/MT.
PRICE REPORT: COTE D’IVOIRE.
Cote d’ Ivoire is the highest producer of raw cashew nuts in the world. The total production hit a record high in 2015 at 702,510 MT. Sadly though, less than 10% of this volume is processed into kernels as is the case with all the raw cashew producing countries in Africa. The government sets the farm gate price at each official flag off of every new season. In 2017, the farm gate price set by the government was 440 CFA francs per kg, up 26% from 350 CFA francs per kg in 2016. Currently, the FOB price on average is $1,700/MT - $1,800/MT.
There has been consistent increase in the price of raw cashew nuts since 2014 without a corresponding increase in the prices of kernels in the major importing and processing countries like India and Vietnam. This price trap has negatively impacted processors particularly in India.
It is expected that this successive increases in raw nuts prices over the years will not be sustainable in the long term. Experts predict an easing of prices in the raw nuts market in the coming seasons.