It’s About Time For Ghana To Cash-In On Cashew
Available statistics are warm on the fact that cashew is easily the most prospective, if not already the leading, non-traditional export revenue earner in the country and hence the need for the Executive and all stakeholders to work together to promote the growth of Ghana’s fledgling local cashew industry.
Undoubtedly, the cashew value chain brings a wide range of opportunities from production, through processing to the export of raw nuts – thus making it necessary that the government puts in place policies that would make the sub-sector attractive and transform it into a more relevant player in the new agenda for rapid economic transformation and development. In that regard, we need to take proper account of what we so hastily and so casually refer to as Ghana’s cashew industry.
The cashew sub-sector today
It is estimated that more than 300,000 farmers are directly engaged in cashew cultivation, generating a chain of ancillary employment for some extra 200,000 people who work as buying agents and dealers, transporters, retailers etc.
Ghana’s cashew industry ranks high among the most competitive and efficient in Africa. Presently, the average Ghanaian farmer gets something between 75 and 80 percent of value realization as against 55 and 60 percent achieved by farmers in neigbouring countries like the Ivory Coast and Nigeria.
Yet our cashew sub-sector itself is dominated by smallholder farmers who own and till up to nearly 90% of the cashew farms in the country, with average farm sizes ranging from 0.8 to 0.3 hectares. Like in all subsistence farming practice in Ghana, most of these producers rely on family labour, or sometimes hired labour, for most of the work on their farms. The much larger and more commercialized farmers account for only 12 percent of cashew farms and these operate farm sizes ranging between 4 and 40 hectares.
That the industry is capable of providing a permanent means of livelihood for more than one million families is a testament which logically warranting that cashew be designated as a strategic crop, requiring collective and well-orchestrated attention and support.
Processing Capacity
The cashew industry in Ghana currently consists of 13 processing companies with a total installed capacity of 35,000 metric tonnes per annum. All, but one of the 13 plants are small scale and sadly enough, only three of them are currently in business – and even so, operating at less than 40 percent of their respective installed capacities.
In spite of the much touted conducive business environment in Ghana, it has been established beyond doubt that the cost of processing cashew in the country is prohibitive and is stifling the growth of the industry. This unfortunate trend is the outcome of the combined effect of a number of factors, including the use of inferior processing technology which results in lower production efficiencies; the use of obsolete processing machines; poor processing infrastructure and transportation system also play a part in the soaring cost of processing.
The result of the high cost of local processing is that, a large proportion of Ghana’s cashew has had to be exported in its raw form, cutting off important job opportunities and income along the value chain.
But yet another thorny issue confronting the industry is the pricing of raw cashew nuts (RCN). The price of RCN is not, and cannot be arbitrarily fixed or dictated as certain local buyers erroneously agitate for, as though Ghana were the sole producer of cashew for the rest of the world! RCN pricing is decided globally, based on the dynamics of supply and demand as influenced by large RCN origins like Guinea Bissau and the Ivory Coast and large processing countries like Vietnam and India.
The way forward
Some operators have pointed to subsidization of the local price of RCN to enable processors procure more and keep in business. But one may wonder whether this is the wisest way to go! It is the view of many observers of the industry, that it will be a disastrous disincentive to the sub-sector to attempt to subsidize the pricing of raw cashew nuts in order to beef up processing while the existing processing infrastructure is known to be moribund and uncompetitive.
To drive the sub-sector forward, the major challenge confronting us and the government, it appears, is to ensure that processors lagging behind are supported to be efficient so as to be able match up with other processing locations in the country. Indeed for the cashew industry to grow expeditiously, care ought to be taken so that the country does not fall for the temptation of mollifying certain influential players along the chain by imposing lower prices for raw cashew nuts or even imposing undue taxes on raw cashew exports.
Why? The answer is simple. Because either way, it is the most important cog in the cashew value chain – the farmer - who will suffer. If prices are artificially imposed for instance, farmers and entire cashew farming communities cannot realize desired benefits from their labour and would naturally turn to other avenues for more rewarding means of livelihood. Eventually, our cashew sub-sector could be wiped out altogether, along with its prospects for job creation, sustainability of farmer livelihood and the handsome receipts we are already making in foreign exchange earnings for Ghana.
The farmer’s know-how, capabilities and well-being remain fundamental to the quest for building a truly competitive sub-regional hub for cashew production in Ghana and to ensure that the farmer gets the maximum benefit from his business and engender further investment in crop growth, it is imperative that we allow the industry to function in an non-restrictive field and encourage stakeholders to adopt and apply progressive market-sensitive modules.