Africa Biz Construction and Business News
Ivory Coast Cashew Industry Suffering from Low Prices
September 12, 2018
Côte d'Ivoire, the world’s largest producer of cashews, could see a major shortfall in export sales for the import crop as prices fall significantly this year and farmers are unable to accept current low prices.
Processed cashew nuts.
While cashews are a popular nut crop worldwide, demand can fluctuate wildly even for the high-quality cashews Côte d'Ivoire is famous for.
While all the way up to February 15, 2018, the price of cashews in the country was running relatively steadily at around 500 FCFA (francs) per kilogram from the field, at 525 F/kg sold in domestic stores in the country, and 584 F/kg at export locations at the country’s ports. Then, as purchasers globally began to push back against such high prices, particularly in the United States and Saudi Arabia, producers have been unable to sell for anywhere near those levels.
As Soulemane Bamba, a cashew nut farmer in the country noted in a recent interview, “We now only have unreliable buyers who give us a very low price. Meaning 250 Francs (US $0.44) and 200 Francs ($0.35 U.S. cents), despite the fact that our cashew is of high quality.”
That represents a drop of 50% in selling price of this important crop for the country.
Part of why this is happening is that while the African country produces excellent quality product, it sells through a very narrow set of channels. Adama Coulibali, General Manager of the Ivory Coast cotton and cashew council, said about this that, “Unfortunately, we have only two clients. There is Vietnam, which takes around 70 percent of cashew exports [and] India which takes around 28 percent of our exports. … And when there are difficulties in a country like Vietnam, then it has a negative impact on our clients.”
Côte d'Ivoire’s biggest customer, Vietnam, did buy a record 450,000 tons of product out of Côte d'Ivoire’s total production of 711,236 tons in 2017. Facing the same pressures on cashew price as Côte d'Ivoire is, it has been working to boost its own production and by providing funding to assist producers in nearby countries such as Cambodia.
Côte d'Ivoire’s 2017 production represented half of all cashew production in West Africa and 22% of the world’s cashew production. Producers are hopeful that something else will happen to push prices back up this year as the country aims for 770,000 tons of product produced this year.
Those higher prices are not likely, especially as competition heats up for the product around the world. Another issue is, as Metan Koné, Secretary General of the Cashew Producers of the Ivory Coast (Fenacajou-Coop-Ca) noted “exporters have informally decided to stop buying” at these higher levels.
Without a means of increasing cashew prices, finding a way to improve productivity in producing the products, or adding more value by selling more processed cashews, Côte d'Ivoire could see a decline in production as farmers grow frustrated and cannot afford to sell product at such low prices. This is in part behind why in April 2018 the country signed a loan agreement with the World Bank to improve and enhance the country’s cashew nut processing capability. According to authorities, if that capacity could increase from the current 100,000 tons of processed cashews per year to an estimated 300,000 tons by 2020, the country might become less dependent on specific raw product market price volatility.
Cashew farming currently employs about 450,000 farmers in the country. If something positive cannot be achieved, those numbers could drop and the country’s position as number one supplier in the world of the highest quality cashew crop could be threatened.