Why the cashew nut crisis will be a mountain to climb

Dar es Salaam. The government is running against time to manage what appears to be a monumental task to raise hundreds of billions of shillings to fix the ongoing cashews marketing crisis.

The Citizen has learnt that in addition to requiring over Sh660 billion to buy some 220,000 tonnes of cashews expected in the 2017/18 season, the government is mulling the importation of machinery to be able to locally process the entire produce.

Government officials are themselves confident of meeting all the demands on the cashews marketing as recently directed by President John Magufuli. Reality on the ground, however, paints the picture of a steep mountain to climb to avert another crisis during next year’s marketing season.

While authorities have remained tightlipped on the mechanisms to raise the billions needed to turn around the sub-sector in the short run, the cashews crisis will leave the already overburdened Treasury under more pressure.

Cashew nut export data in recent years shows that the government earned forex income averaging $350 million (over Sh675 billion) annually from the crop. The income was reportedly a whopping $540 million (Sh1.3 trillion) last year when farmers harvested record yields.

But with the current crisis, this amount in forex earning is uncertain, at least for now as the government has not been clear whether it has any plans of exporting the crop in its raw or processed form. President Magufuli is on record saying that the processed produce may be sold within the country to allay fears it may be uncompetitive on the international market.

The Cashews nut Board of Tanzania (CBT) website shows that Tanzania has over the years exported more than 90 per cent of its produce, with less than 10 per cent processed locally due to low capacity following the collapse of many factories formerly owned by the State.

How quickly the government will be able to marshal capacity to process more than 200,000 tonnes this season remains one of the biggest puzzles, even as it recently moved to repossess the moribund Buko Investment Holdings Factory in Lindi with a 20,000 tonnes annual processing capacity.

Yesterday, the Permanent Secretary in the ministry of Industry, Trade and Investment, Prof Joseph Buchweshaija told The Citizen that the government’s plan to buy and process the cashews locally still stood.

“We are supposed to abide by directives of President Magufuli who made it clear that no single cashew will be exported unprocessed this season. Therefore, our plan is to process all cashews domestically,” he said in a telephone interview.

He revealed the government was mulling a takeover of nearly 10 other formerly public-owned processing factories from private owners. He also said a team of experts has been assembled under the Tanzania Industrial Research and Development Organisation (Tirdo) to evaluate and establish requirements for domestic processing to be a success.

He said experts’ recommendations will also determine requirements for the revival of the Buko Investment Holdings Factory, currently in the hands of the Tanzania Peoples Defence Forces (TPDF).

Some of the privatised cashew nut processing factories include MeTL, Sonel of Mikindani, Premier Cashews, Mtwara Company (2006), River Valley Foods and Lindi Farmers Company. The Kibaha Cashew factory, which is now (Terra Cashew Processing Tanzania) located in Kibaha is fully operational and has a capacity of processing 6000 metric tonnes annually and is currently operating.

“We will also hold talks with owners of functioning private factories on how best we can collaborate in processing the produce. We will then sign contracts with them,” said the PS.

“We don’t want the factories to die or suspend production because it is the government’s role to ensure they prosper and protect jobs created for Tanzanians.”

Mtwara Region has nine cashews private processing factories with a total capacity of 26,500 tonnes annually. The factories and respective processing capacity in bracket include Micronix Mtwara (2,000), CC 2005 factory (5,000), Hawte investment (2,000), Amama factory (2,000), Micronix Newala (2,500), Yalin Korosho (10,000) and small scale processors (3,000).

However, Yalin Korosho, Agro-focus and Micronix Masasi are not operating because while Yalin Korosho is still under construction, Agro-focus factory has been abandoned and the latter has a pending case at the courts.

Asked about the slow pace in paying farmers, Prof Buchweshaija said the government had enough money to purchase all cashews. “Criticism will always be there, but, the government has committed to ensure farmers benefit. That is why we are carefully verifying the list of farmers,” he said.

The government has so far purchased some 130 tonnes of the nearly 110,000 tonnes in the warehouses for major cooperative unions and farmers’ associations (Amcos). Only Sh5 billion has been released for payment to farmers who have been verified.

There has been fear that the exercise would lead to the confiscation of cashews worth billions of shillings belonging to traders who may not necessarily be farmers. Suppliers and other stakeholders owed billions of shillings by farmers are also in limbo over their payment.

Business people were locked out of buying the produce after failing to match the price of Sh3000 a kilo directed by Dr Magufuli. The President would later raise the offer to Sh3,300 a kilo, directly and fully paid to farmers.