Globally, cashew snacks take a hit following Tanzania President’s nutty move

By Gill Hyslop contact

- Last updated on GMT

The price of cashews has jumped in the past 10 days, making them unattractive for snack producers. Pic: ©GettyImages/snowpeace19
The price of cashews has jumped in the past 10 days, making them unattractive for snack producers. Pic: ©GettyImages/snowpeace19

Related tags: Cashew, Tanzania

The global price of cashew nuts jumped nearly 10% over the past week, after the Tanzanian government started buying the entire country’s stock at a higher price.

The global price of the commodity has jumped from $1.15 to $2.40 per kg in the past 10 days.

In the US and Europe, cashews compete with other nuts, like almonds and pistachios. With every increase in cashew prices relative to other nuts, its use in snacks is falling.

The global price rise is inextricably linked to Tanzania President John Magufuli’s recent ‘political manoeuvres.’

Purchase price lower than production cost

Cashew farmers had been holding back from selling after prices fell below what they said it cost them to produce the nuts.

The Cashewnut Board of Tanzania (CBT) had proposed a price of Tsh1,500 ($0.65) per kilogram of raw cashew but the government rejected it, proposing Tsh3,000 ($1.30) as the least price.

Last week, Magufuli stepped in and ordered a 94% increase in the domestic price to help the farmers – setting it at Tsh3,300 ($1.80) a kilo.

However, private buyers baulked at the higher price, so the president instructed a government-owned bank to buy the estimated 220,000 tonne crop at his preferred price.

“We will buy the entire crop, then we will look for buyers and we will eat anything that is not sold,”​ said Dr Magufuli.

He then deployed the country’s military to supervise the purchase of cashew nuts in southern region and guard it.

Dubbed Operation Korosho, the move is a welcome relief to the aggrieved farmers. The Tanzania Agricultural Development Bank has paid Tsh4.5bn ($2.1m) to cashew nut farmers in Mtwara, Lindi and Ruvuma regions since the operation started two weeks ago.

Pushing up the commodity price

However, the events have pushed the global price of the commodity from $1.15 to $2.40 per kg in the past 10 days.

Snacks account for over 60% of the demand for cashews; however, the rising price is dampening enthusiasm for the nut.

According to Cashewinfo, an India-based industry research organization, ‘Tanzania’s nuts policy is so bad it's good.

‘By buying up the entire cashew harvest at a near-100% premium, the Tanzanian president hopes to help farmers … but [he has now] made it the government’s problem to sell them on. The mainly Vietnamese firms that turn the fruit into tasty snacks are refusing to buy at the elevated prices.

‘The upshot is Tanzania's fruit is vastly uncompetitive. This raises the prospect of the entire 2018 harvest going to waste.

‘Without any buyers … the country is on the hook for an unbudgeted $320m, over 2% of planned 2018-19 spending.’

It added that ‘Magufuli's scheme has a certain base political logic. Farmers are an important constituency: last year, cashews were the most valuable export crop, earning $540m.’

Tanzania's beleaguered cash crop

GettyImages African with cashew nuts Virginia Yunes
©GettyImages/Virginia Yunes

Cashews are the most valuable export crop for Tanzania's $56bn economy.

The country has about 700,000 hectares under the crop. Lindi, Mtwara and Coast regions account for over 80% of total area, with smallholders forming the majority of the producers.

Tanzania ranks fourth in the production of cashew nuts in Africa and eighth at a global level, with the Far Eastern countries taking the top slots.

However, poor regulation and lack of reliable payments to farmers has posed significant challenges. The lack of domestic processing firms, too, is costing the country vital foreign revenues and thousands of jobs.

Tanzania’s president has become actively involved in reviving its cashew processing industry.

In June, Magufuli threatened to sack ministers who complained about proposed changes to the Cashewnut Industry Act introducing an export levy to be collected and channelled into the National Treasury’s Consolidated Fund, rather than to the cashew nut fund.

Before launching Operation Korosho, he then sacked the Minister of Agriculture and his Industry, Trade and Investment counterpart, disbanded the CBT and revoked the appointment of its board chairperson.

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1 comment

Kazi nzuri iliyofanyika

Posted by Lalu,

MSIMAMO WA JPM KUHUSU SERIKALI YAKE KUNUNUA KOROSHO UMEAZA KUPATA MATOKEO MAZURI

TAREHE 27/11 2018

MTAALAMU MMOJA ANAE JIHUSISHA YA UTAFITI WA KOROSHO ALISEMA KUWA

TANGU JPM AFANYE UAMZI WA KUIELEKEZA SERIKALI KUNUNUA KOROSHO

BAADHI YA WAFANYA BIASHARA WAKUBWA WA KOROSHO WANA TAFUTA NJIA YA KUKUTANA NA RAIS WAMUOMBE AWAKUBALIE WAO WAINUNUWE KOROSHO KWA SERIKALI

WAFANYA BIASHARA HAO WAME FIKIA UAMZI HUO BAADA YA KUBAINI KUANZA KUPANDA KWA BEI YA ZAO HILO KTK BAADHI YA MASOKO YA NCHI ZA NJE

MTOA HABARI HIZI ALISEMA

NCHI YA UBELIGIJI INATUMA UJUMBE KUJA HAPA NCHINI KUONANA NA RAIS KUMUOMBA AWAUZIE MAGANDA YA KOROSHO ILI WAKAMUWE MAFUTA YA KULAINISHA MITAMBO YA MASHINE KTK NCHI YAO

MAONI YANGU

KAMA BEI YA KOROSHO ITAPANDA KTK SOKO LA DUNIA SERIKALI ITAIUNZA KOROSHO ILIYO BANGULIWA KWA KWAFAIDA KUBWA

KAMA KWELI NCHI ZINAZO HITAJI MAGANDA YA KOROSHO ZITAHITAJI KUNUNUA MAGANDA YA KOROSHO ILIYO BANGULIWA HAPA NCHINI ITAKUWA MWANZO MZURI WAKUJUWA THAMANI YA MAGANDA YA KOROSHO

PIA ITASAIDIA KUHIMIZA KUANZISHWA KWA VIWANDA VIKUBWA VYA KUBANGUA KOROSHO KTK NCHI YETU

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