Ghana cashew nut production and farmers are likely to be hit with low sells as the coronavirus pandemic impacts severely on the economy of main buyers.
China, which imports around 10 percent of global cashew nut production for consumption from Ghana, Ivory Coast and some other countries through Vietnam, is facing challenges of getting access to the nuts as Vietnam delays in selling off its existing cashew nuts stock to China due to the impact of the novel coronavirus infections.
If the situation persists, then Ghana’s Non-Traditional Export (NTEs) earnings are likely to reduce significantly this year as cashew is the largest NTEs earner after processed cocoa. Ghana’s 2018 NTEs statistics which saw a significant growth performance of 10 percent over 2017 was largely due to a 43.84 percent increase in exports of cashew nuts, mainly exported to Vietnam, from US$262.95 million in 2017 to US$378.21 million in 2018. The increase in the value of cashew exports alone to Vietnam amounted to US$115.26 million.
“Since Vietnam processes cashew to the tertiary level, some of the impact will be felt in the sector. However, measures are being looked at in order to curtail any possible major impact”, Director of Projects at Ghana Export Promotion Authority (GEPA), Mr. Alexandar Dadzawa has indicated, adding that, “It wouldn’t be immediate, but it also depends on the intensity in the respective countries.”
The price of cashew has witnessed a sharp dive for the past few months on the world market as producers and traders rush to sell existing stocks as results of the devastating coronavirus pandemic. This has resulted in the slowdown of cashew trade as Vietnam begins looking for alternative markets aside China, since this year’s crop was ready for bulk shipments in February from both Ghana and the Ivory Coast.
In effect, trade experts have insisted that if Vietnam expects a slow market in China, the country will also be slow to buy raw cashew from Ghana. Vietnam has recorded more than 35 cases of the coronavirus after new infections from Europe.
Since Ghana’s NTEs sector recorded a blip in 2016, recording earnings of US$2.46 billion as compared to 2015 figure of US$2.52 billion, earnings in every year since then have seen a marginal increase over the previous year. For instance, the sector recorded US$2.56 billion, US$2.813 billion in 2017 and 2018 respectively.
With the impact of the coronavirus disease that has impacted heavily on international trade forcing many countries to issue business and trade restrictions, it is anticipated that the entire earnings in the NTEs sector will seriously be affected, most especially goods meant for export outside the continent.
Producers of cashew nut in West Africa are poised to become a dominant force in the global cashew value chain. In recent years, there have been a significant increase in the number of domestic processors investing in mechanized processing to improve quality, reduce costs of production and reduce the export of raw cashew, which currently stands at 90 percent of total export.
Consequently, cashew nut has been experiencing unfavourable market price, losing about 75 percent of its market price from 2018 till date.
Currently, a bag of raw cashew nuts (100kg) which was quoted at GH¢800 during the peak period in the 2018 season, has lost significant value to GH¢200 per the same bag, this is about 75% reduction in price.
The market situation is causing dissatisfaction among farmers in the main cashew growing areas of the country’s middle belt as it is not prudent for them to trade at the current price considering the high labour cost of picking the nuts as well as carting it to sales points.
“Buyers have expressed concern about the high moisture content of the raw cashew nut (RCN) and ‘low’ grade of the nuts”, Solomon Ameyaw, Secretary of Tain Cashew Union said to journalists at Seikwa in the Tain district of Bono Region. He noted that the buyers always hide behind flimsy reasons to manipulate the market.
“They raised these issues last year and farmers have taken it upon themselves to dry the nuts before selling, but it has not changed the posture of buyers,” Ameyaw said.
He said the buyers, mostly exporters, have the leeway to skew prices to the disadvantage of ‘helpless farmers’ due to the free market system. He attributed the cashew market manipulation to lack of a regulatory body to ensure fairness in the commodity trade, urging the government to fast-track establishment of the Tree and Industrial Crops Development Authority to salvage the situation.
Cashew cultivation in Ghana is largely a smallholder activity with the majority of farmers having an average farm size of between 0.8 – 2.5ha. More than 60,000 smallholder farmers are engaged in cashew cultivation in the country.
The government’s major objective in the crops sector project is to enhance the competitiveness and profitability of crops through access to improved technological packages for increased productivity and ensure sustainable management of the environment in crop production systems.
President Akufo-Addo, during his tour of the Ahafo and Bono East Regions, announced that the Ministry of Food and Agriculture (MoFA) has completed its framing of the much-awaited tree and Industrial Crops Development Authority. The draft bill, he said, is expected to be laid in Parliament soon.
The proposed Authority will among others have the mandate to accelerate the production and marketing of tree crops including cashew, mango, rubber, oil palm and coffee. This is expected to enhance the country’s earnings from non-traditional exports.
Mr. Ameyaw also appealed to the government to ensure thorough implementation of the 10-year cashew development plan. According to him, implementers of the cashew blueprint “are sleeping on the job. Not much is happening in the area of grafting and distribution of seedlings to farmers so as to expand production”.
Cashews are in demand the world over and the market is growing. In days gone by, African countries used to export their raw cashew nuts and so forego the substantial income that can be generated by processing them. Nowadays there is more and more local processing going on.
Source: Adnan Adams Mohammed