Global cashew market and Global cashew market and Opportunities for NigeriaOpportunities for Nigeria

Cashew SeminarCashew Seminar

LokojaLokoja, Nigeria, Nigeria

10 & 11 July 200710 & 11 July 2007

Cilia de CockCilia de Cock

African Cashew Alliance SecretariatAfrican Cashew Alliance Secretariat

West Africa Trade Hub West Africa Trade Hub –– USAID fundedUSAID funded

World production of cashews 2005World production of cashews 2005

North FebNorth Feb--JuneJune

South (SeptSouth (Sept--Jan) of Prev. YrJan) of Prev. Yr

11,86011,860(4,240)(4,240)16,10016,100001,6101,610TOTALTOTAL10010000100100(415)(415)425425W. AfricaW. Africa

3,8103,810(40)(40)3,8503,8508585300300VietnamVietnam

5,4005,400(4,000)(4,000)9,4009,400580580360360IndiaIndia

5050005050(110)(110)115115Indonesia+Indonesia+CombCombodiaodia, Thailand, Thailand

25025000250250(140)(140)165165E. AfricaE. Africa

2,2502,250(200)(200)2,4502,45000245245BrazilBrazil

ExportExport((‘‘000 000 ctnctn ))

DomesticDomestic((‘‘000 ctn)000 ctn)

ProductionProduction((‘‘000 000 ctn ))

IMP/EXPIMP/EXP(MT (MT ‘‘000)000)

ProductionProduction(MT (MT ‘‘000)000)

OriginOrigin

…….and in 2006.and in 2006

North (FebNorth (Feb--Jun)Jun)

South (SeptSouth (Sept--Jan) of Prev. YrJan) of Prev. Yr

11,50011,500(5,350)(5,350)16,85016,850001,6751,675TOTALTOTAL5050005050(440)(440)445445W. AfricaW. Africa

4,2004,200(50)(50)4,2504,2509090325325VietnamVietnam

5,0005,000(4,900)(4,900)9,9009,900580580410410IndiaIndia

5050005050(90)(90)9595Indonesia +Indonesia +

10010000100100(140)(140)150150E. AfricaE. Africa

2,1002,100(400)(400)2,5002,50000250250BrazilBrazil

ExportExport((‘‘000 ctn)000 ctn)

DomesticDomestic((‘‘000 ctn)000 ctn)

ProductionProduction((‘‘000 000 ctn ))

IMP/EXPIMP/EXP(MT (MT ‘‘000)000)

ProductionProduction(MT (MT ‘‘000)000)

OriginOrigin

2007 Production Outlook2007 Production Outlook

�� No major weather issues No major weather issues

�� BrazilBrazil•• Larger and earlier than last seasonLarger and earlier than last season•• Excellent quality and kernel sizeExcellent quality and kernel size

�� VietnamVietnam•• Larger and earlier than last seasonLarger and earlier than last season•• Quality improvedQuality improved

�� Balance of producing areas report Balance of producing areas report ““normalnormal”” crops with crops with some increasessome increases

Expectations for 2007Expectations for 2007

North FebNorth Feb--JuneJune

South (SeptSouth (Sept--Jan) of Prev. YrJan) of Prev. Yr

12,58012,580(5370)(5370)16,15016,150001,7201,720TOTALTOTAL5050005050(460)(460)465465W. AfricaW. Africa

3,8003,800(50)(50)3,8503,850100100350350VietnamVietnam

5,9505,950(4,900)(4,900)10,85010,850610610475475IndiaIndia

5050005050(110)(110)115115Indonesia +Indonesia +

15015000150150(140)(140)155155E. AfricaE. Africa

2,5802,580(420)(420)3,0003,00000300300BrazilBrazil

ExportExport((‘‘000 ctn000 ctn

DomesticDomestic((‘‘000 ctn)000 ctn)

ProductionProduction((‘‘000 000 ctn ))

IMP/EXPIMP/EXP(MT (MT ‘‘000)000)

ProductionProduction(MT (MT ‘‘000)000)

OriginOrigin

25.00 mil ctns25.00 mil ctns16.7516.75Equiv KernelsEquiv Kernels2,500,0002,500,0001,675,0001,675,000TOTALTOTAL

2828700,000700,0003636600,000600,000AfricaAfrica

0606150,000150,000040475,00075,000Other AsiaOther Asia

2424600,000600,0002121350,000350,000VietnamVietnam

1414350,000350,0001515250,000250,000BrazilBrazil

2828700,000700,0002424400,000400,000IndiaIndia

ShareShare20102010ShareShare20052005

STC KAJU INDIA 2006 – Sept ‘06

PRODUCTION FORECASTPRODUCTION FORECAST(Trade Estimates(Trade Estimates--Round Figures)Round Figures)

Plantings suggest 50% increase over 5 Plantings suggest 50% increase over 5 yearsyears

Consumer marketsConsumer markets

Indian Cashew Exports

0

10

20

30

40

50

60

70

2002 2003 2004 2005 2006

1,0

00 M

T

Others Europe N.A.

Source: Trade

World Cashew Usage

North America

50%

Europe29%

Asia / Other21%

N.A. continues to be the major user.....

African cashew industryAfrican cashew industry

�� Production in two seasons:Production in two seasons:•• East Africa (with Brazil): SeptEast Africa (with Brazil): Sept--JanJan

•• West Africa (with India & Vietnam): Jan West Africa (with India & Vietnam): Jan ––JuneJune

�� >2.6 >2.6 mlnmln cashew producers with average cashew producers with average plantation of 1plantation of 1--3 ha3 ha

�� Yield of 2Yield of 2--4kg per tree 4kg per tree vsvs 1010--20 kg per 20 kg per tree in India/Vietnam plantationstree in India/Vietnam plantations

Production per countryProduction per country

3,0003,000Guinea Guinea -- CC

3,0003,000MaliMali

5,0005,000BurkinaBurkina

5,0005,000KenyaKenya

15,00015,000GhanaGhana

5,000 5,000 TogoTogo

15,00015,000SenegalSenegal

45,00045,000BeninBenin

65,00065,000MozambiqueMozambique

75,00075,000NigeriaNigeria

100,000100,000TanzaniaTanzania

100,000100,000Guinea BissauGuinea Bissau

200,000200,000Cote dCote d’’IvoireIvoire

MT production MT production CountryCountry

Factors at the national level that influence Factors at the national level that influence raw nut prices at farm levelraw nut prices at farm level

�� TaxesTaxes

�� Port chargesPort charges

�� FreightsFreights

�� Transport costs Transport costs •• from country to warehousefrom country to warehouse

•• from warehouse to the portfrom warehouse to the port

�� Nr of actors in the value chainNr of actors in the value chain•• In Guinea Bissau farmers receives 40% of FOB price, In Guinea Bissau farmers receives 40% of FOB price,

in Cote din Cote d’’Ivoire and Benin 50% and in Tanzania 60%.Ivoire and Benin 50% and in Tanzania 60%.

Comparison of costsComparison of costs

12910.52197.595 to 100Gambia

16606897.595 to 100Senegal (Gambia)

13403697.595 to 100Senegal (Zig)

72.502547.545 to 50Ghana

90.503357.555 to 60Benin

134314062.555 to 70Ivory Coast

87.504047.545 to 50Nigeria

24782.557107.595 to 120Guinea Bissau

costfreightper 20' - $/ton

totaltaxfobbing avgfreight

Assumed with 1USD = 500 f cfa

International factors that influence International factors that influence pricingpricing

�� QualityQuality•• KOR, nut countKOR, nut count•• PackagingPackaging•• Humidity (drying, packaging, storing)Humidity (drying, packaging, storing)•• PeelabilityPeelability

�� International kernel price International kernel price –– consumption levels consumption levels (reputation of cashew & health)(reputation of cashew & health)

�� Exchange level USD Exchange level USD –– cfacfa�� Freight & portFreight & port�� Increasing level of production world wideIncreasing level of production world wide

KOR and Nut countKOR and Nut count

�� Kernel Outturn Ratio:Kernel Outturn Ratio:•• Number of pounds of nutmeat/kernels per 80 Number of pounds of nutmeat/kernels per 80

kg of raw nuts (range from 43 (low) to 54 kg of raw nuts (range from 43 (low) to 54 (high)(high)

�� Nut countNut count•• Number of whole cashews per kg of kernels Number of whole cashews per kg of kernels

(high number: small nuts, low number: large (high number: small nuts, low number: large nuts)nuts)

Kernel prices WW320 Kernel prices WW320 –– high/lowhigh/low

Cashew Prices 1993-2005

0

0.5

1

1.5

2

2.5

3

3.51

99

3

19

96

19

97

19

99

20

00

20

01

20

02

20

03

20

04

20

05

FOB

Indi

a U

SD

/pou

nd

high

low

USD/CFA exchange rate 2001USD/CFA exchange rate 2001-- 20072007

CFA/USD Exchange rate 2001-2007

0100200300400500600700800

2001

2002

2003

2004

2005

2006

2007

USD/CFA

�The USD has lost +/- 30% of its value in the last 5 years

�350 cfa per kg of raw nuts in 2002 with same conditions is 245 cfa per kg today because of exchange rate

Raw Cashew Prices USD/MT FOBRaw Cashew Prices USD/MT FOB

6656037581216Tanzania

7015187371143Senegal

470412642809Nigeria

5475546511041Mozambique

5996217151068Kenya

579505817944Ivory Coast

6716738881063Indonesia

75757210401155Guinea Bissau

6201007Guinea

619476800934Ghana

6885398871071Gambia

625643827Burkina Faso

599523848965Benin

2002/032001/022000/011999/001999-2000:

good kernel prices and exchange rate.

2001-2003:

kernel prices drop and in 2003 USD loses value

Being competitive: best practicesBeing competitive: best practices

�� Organization of supply Organization of supply

�� Quality Quality •• drying of all nuts (humidity < 8.50%)drying of all nuts (humidity < 8.50%)

•• no mix with old stocksno mix with old stocks

•• Packing in jute bagsPacking in jute bags

�� Competitive shipping lines (freight) and Competitive shipping lines (freight) and port services/chargesport services/charges

ProcessingProcessing

3,8603,86071,40071,400Total Total

Guinea Conakry Guinea Conakry

MaliMali

8080TogoTogo

150150SenegalSenegal

8080500500GhanaGhana

900900BurkinaBurkina

80801,5001,500BeninBenin

5005002,5002,500Guinea BissauGuinea Bissau

5005005,0005,000Cote dCote d’’IvoireIvoire

5,0005,000KenyaKenya

15,00015,000TanzaniaTanzania

2,5002,50016,00016,000NigeriaNigeria

25,00025,000MozambiqueMozambique

Processing (domestic)Processing (domestic)Processing (export)Processing (export)CountryCountry

Critical success factorsCritical success factors

�� Sufficient size of factory (> 1,000 MT facilities) or Sufficient size of factory (> 1,000 MT facilities) or link to domestic market or large processor for link to domestic market or large processor for salessales

�� Meet quality requirements (grading, infestation, Meet quality requirements (grading, infestation, certification HACCP/ISO)certification HACCP/ISO)

�� Financing of raw material (minimum 1,000 MT at Financing of raw material (minimum 1,000 MT at 250 USD = or USD 250,000)250 USD = or USD 250,000)

�� Infrastructure, power supplyInfrastructure, power supply�� Productivity of staff at minimum wagesProductivity of staff at minimum wages�� Quality of raw nutsQuality of raw nuts�� Shipping costsShipping costs

Government intervention Government intervention (examples)(examples)

IndiaIndia

�� Ban on the export of the raw nuts (high tax rate)Ban on the export of the raw nuts (high tax rate)

�� Grants in Grants in favorfavor of the improvement of the quality of the of the improvement of the quality of the cashew kernelscashew kernels•• Subsidy for equipment required for export of cashew in Subsidy for equipment required for export of cashew in

consumer packsconsumer packs

•• Subsidy for equipment for improvement in processing cashewSubsidy for equipment for improvement in processing cashew

•• Subsidy for getting certification (ISO, HACCPSubsidy for getting certification (ISO, HACCP……))

•• Subsidy for adopting flexiSubsidy for adopting flexi--pouch vacuum packing systemspouch vacuum packing systems

�� The rate of subsidy would be 25% of the investment with a The rate of subsidy would be 25% of the investment with a maximum of Indian maximum of Indian RoupiesRoupies 800,000 (USD 17,500)800,000 (USD 17,500)

�� ““Duty entitlement pass book schemeDuty entitlement pass book scheme””: 1% incentive for : 1% incentive for exportexport

�� Incentives for the export of all agricultural products is of Incentives for the export of all agricultural products is of 5%5%

Government interventionGovernment interventionTanzaniaTanzania

�� Memorandum of understanding between the Government of Memorandum of understanding between the Government of the United Republic of Tanzania and cashew nut processors the United Republic of Tanzania and cashew nut processors on promoting cashew nut processing in Tanzania. on promoting cashew nut processing in Tanzania. •• Date of effect October 1, 2005Date of effect October 1, 2005

•• Implementing an 8.5 % Industry Development levy on the Implementing an 8.5 % Industry Development levy on the export of raw cashew nut, based on FOB valueexport of raw cashew nut, based on FOB value

•• Cashew nut processors agree to process up to 80,000 tons of Cashew nut processors agree to process up to 80,000 tons of cashew nut by 2009/10cashew nut by 2009/10

�� Reduced prices for infrastructuresReduced prices for infrastructures

�� Active administrative supportActive administrative support

�� Tax exemption on the imports of processing equipmentTax exemption on the imports of processing equipment

�� Work legislation consider the cashew processing as an Work legislation consider the cashew processing as an seasonal and agricultural activityseasonal and agricultural activity

�� Some tax exemption at the village levelSome tax exemption at the village level

Nigeria Nigeria –– 75,000 MT processing 75,000 MT processing capacitycapacity

�� Creating at least 22,500 direct jobsCreating at least 22,500 direct jobs

�� Generating a minimum additional value of Generating a minimum additional value of US$ 30,000,000 (3.7 billion naira)US$ 30,000,000 (3.7 billion naira)

�� Arresting migration of rural population into Arresting migration of rural population into big cities by geographically spreading out big cities by geographically spreading out the unitsthe units

�� Increasing purchasing power and tax Increasing purchasing power and tax revenuesrevenues

Need for the industryNeed for the industry

�� Access to capital (working capital, Access to capital (working capital,

investments)investments)

�� Good quality raw nutsGood quality raw nuts

�� Technical assistance centers for training to Technical assistance centers for training to

staffstaff

�� Duty free imports of processing equipmentDuty free imports of processing equipment

�� Access to marketsAccess to markets

�� Improvement of reputation of Nigerian Improvement of reputation of Nigerian

cashewscashews

Role of ACA Role of ACA

�� Production:Production:

•• Facilitate initiatives on raw nut quality Facilitate initiatives on raw nut quality –– link link

with international experts and partnerswith international experts and partners

�� Processing:Processing:

•• Regional cashew consumption studyRegional cashew consumption study

•• Link to cashew kernel buyersLink to cashew kernel buyers

•• Exchange with other cashew processors Exchange with other cashew processors

(technical expertise, etc)(technical expertise, etc)

�� Access to informationAccess to information

•• Website, newsletters, linking to expertiseWebsite, newsletters, linking to expertise

Thank youThank you

Contact:Contact:

Cilia de CockCilia de CockAfrican Cashew Alliance SecretariatAfrican Cashew Alliance Secretariat

West Africa Trade HubWest Africa Trade Hub

www.africancashewalliance.orgwww.africancashewalliance.orgwww.watradehub.com/accrawww.watradehub.com/accra

info@africancashewalliance.orginfo@africancashewalliance.orginfo@watradehub.cominfo@watradehub.com

TelnrTelnr +233 (0) 21 781608+233 (0) 21 781608