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Tanzania’s cashew price saga could cause global ripple effect

22.11.2018
Being one of the major producers of cashew nut in the continent, one would have expected a boom in the sector. On the contrary, the Tanzanian government has been battling with multiple challenges in the sector which ranged from the low production recorded previously to prices and profitability of the sector to the local farmers in particular and the state in general. Consequently, the biggest blow recently recorded in the sector, will not only pose challenges to the country but may however spread to the worldwide market.

The cashew nut sector in Tanzania is constantly being plunged into several impasses despite the efforts put in by the administration to save the sector. After effectively recovering from a decline in production in the past years due to socio-economic factors like inefficient market and the cashew powdery mildew disease, the rise in prices provided a suitable environment for farmers fight the biological constraints.

Despite this, the inability of the government to lay down competitive prices still persists. This was the major factor which had led to the 2013 riot by farmers after traders began paying less for the crop than the agreed amount. A fresh cry was again sent out by farmers early November 2018 when traders offered lower prices than expected. This forced the governments’ quick intervention, issuing a 94 percent increase in the prices to protect farmers from low prices.

This situation led to a fuss in the country especially when the President, John Magufuli announced that the state will buy all the nuts produced if traders failed to comply.

The cashew nut dispute could cause global shortage

Tanzania remains one of the largest cashew nut producing country and one of the leading cashew grower following Nigeria, Côte d’Ivoire and Guinea-Bissau. But very little of what is harvested is processed locally, as a larger quantity of the product amounting to about 90% is exported to India and recently Vietnam also started purchasing the nut from Tanzania.

Hence, if trader failed to purchase the crops from farmer, it may completely disrupt the supply chain which may imply that the crop may not reach the global markets due to reduced export. Hence, the export revenue derived from the product could fall drastically this year, and this could affect the economy due to the fact that the cashew nut exports appears to be major foreign-currency earner for Tanzania.

Two ministers were sacked by the president due to their inability to effectively handle to crisis.

With the ever growing cashew market in Africa, especially with plans by Pepsi India to use cashew juice in its fruit drinks there is a promising revenue amelioration for farmers. Hence, Tanzania will have to quickly manage its price disagreement challenges in the sector so as to better prepare for the upcoming investments.

Article from AFRIC Editorial.

 

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