New cashewnut marketing system: Success and challenges

Mtwara. Two years on, cashew nut stakeholders share the success and challenges of the primary marketing system that was introduced to support local processors.

For a long time, cashew nut trading has been done through the warehouse receipt system, in which buyers compete in auctions conducted by cooperative unions.

However, foreign buyers who only collected raw cashews for export dominated the trading system. This did not favour local processors, who claimed they could not compete with the exporters in the auctions.

The government, which plans to see 60 percent of the local cashews processed locally by the 2025/26 season, introduced the primary marketing system, which allows licensed local processors to buy raw cashews from the Association of Marketing Cooperative Societies (Amcos) without competing with exporters in the auctions.

According to the Cashewnut Board of Tanzania (CBT), the processors must get valid licenses for participating in the primary market in the particular season and will continue buying in the Amcos branches even when the main auctions at the cooperative level are ongoing.

Selling cashew nuts through the primary market is voluntary, the CBT states in this season’s primary marketing guidelines.

“We are trying to attract investors in the processing of cashew nuts in Tanzania and allow small farmers to sell their little produce on time,” says CBT director general Mr Alfred Francis.

Advantages of the new system

The cashews bought in the primary markets must be locally processed and should not be exported.

The primary market system has had different impacts on different stakeholders, who narrate both success stories and challenges in the implementation process.

The CBT plans to increase raw cashew nut production to 700,000 tonnes in the 2025/26 season, compared to the 236,213 tonnes that were produced in the 2021/22 season.

The board also wants to ensure that 60 percent of the cashews are locally processed by that time. Increased processing will lead to increased output of other cashew products as well as broaden the market for cashews grown in the country.

The establishment of an initial market to allow local processors to buy cashews without competing with exporters of raw cashews is one of several strategies that have been implemented to encourage cashew processing in the country in order to achieve this goal.

The government’s move aims to enable local processors to get raw materials (cashews) to meet their factories’ needs.

However, there has been a lack of understanding that has been confusing leaders of major cooperative unions and the farmers themselves. Ahmed Abbas, the regional commissioner for Mtwara, expressed disappointment with the farmers’ demand for payment for cashews that were awaiting sale. He claims that this action could have a negative effect on the farmers’ ability to make a living.

The RC says it would be wise for buyers of cashews in the initial market to be known and to make agreements with growers instead of leaving them in the dark, not knowing where they would sell their cashews.

“It hurts the farmer, who expends a lot of energy preparing his farm, harvesting, and then sitting and waiting for the initial market, about which he is unsure and has no agreement, and now they start to complain that they have not been paid while their cashews are still waiting for the initial market and the buyers have fled, this is a problem,” says the RC.

Small and large-scale processors

The chairman of the association of large-scale cashew processors, Mr Bahati Mayoma, says the initial market has not waived the government levies, which are all paid in accordance with the law.

Mr Mayoma says action would be taken against buyers of cashews at the initial market, who violate the procedure and do not pay the legal levies.

“In the last season, for the first time in a year, through the initial market in Mafia, all cashews were processed. The auction controls the price to be competitive, but it kills local industries,” says the chairman.

“The initial market has been operational for two years. It was introduced after local farmers felt they were not being treated fairly by the government because cashews are grown in the country and create jobs here but when it comes to buying the cashews, we are forced to compete with foreign buyers,” shares Mr Mayoma.

He says more than 10 new factories have been established, and those that were closed have reopened, bringing new hope, especially to the locals.

“More than 10,000 tonnes have been bought in this season, which has never happened in recent years. After the end of the season, we will add value, but last season 14,000 tonnes were processed in the country,” he notes.

He says the new system is going to bring about a revolution in cashew processing as factories have been revived, jobs have been created, and farmers are now able to sell their cashews at any time. According to him, this is the right system. He wants action to be taken against those who violate it.

“So far, more than 23 factories are processing cashews, whereas in the past there were less than ten factories, but the initial market has increased investment in the cashew sector in terms of processing.”

For his part, the chairman of the Association of Small Scale Cashew Processors, Mr Tumpase Magehema, says they are yet to benefit from the initial market because many small-scale processors are processing their own cashews.

“We are yet to benefit from this market; the procedure is not clear to us as it appears there are two permits, which means one has to make two applications, something that doesn’t enable small-scale processors to enter the market,” says Mr Magehema.

Cooperative unions

The manager of the Mtwara Masasi Cooperative Union (MAMCU) Biadia Matipa, says the cooperative unions support cashew processing because it adds value to the cashew crop.

He adds, however, that the initial market has been a problem for them to understand as over 200 tonnes of cashews are still in primary cooperative societies waiting for buyers at the initial market.

“In the auctions, we sold 1,400 tonnes of cashews, whereby more than Sh206 per kilo was deducted, but in the initial market, there is no deduction as the farmer gets his whole money. When we announced the closing of the auctions, farmers said they would sell their cashews at the initial market,” says Matipa.

In order to help the farmers, Mr Matipa urges the Tanzania Cashewnut Board to take immediate action to find buyers for the unsold cashews.

“Since the value of the unsold cashews will decrease the following season, many second-grade cashews will have to be sold at a loss.”

For his part, the manager of Tandahimba & Newala Cooperative Union (Tanecu), Mr Mohamed Mwinguku, says the initial market has many challenges and should be improved.

Mr Mwinguku, for example, claims that they sold 59,000 t last season, of which only 502 tonnes were sold in the initial market system, and that they were not paid.