How Mozambican cashew nut shippers got cracking

A complex supply chain which starts with a million shippers – each with less than 100 kilograms of fragile and time-sensitive freight – is needed to fill snack bowls and add an essential ingredient to curries and stir fries around the world, the Mozambican cashew nut. A combination of civil war, ageing and ailing trees and policy missteps resulted in the virtual collapse of the industry that once accounted for around 240 000 tons, or 30% of global cashew nut production. By 1990/91Mozambique’s share of world exports had fallen to 2.8%, or just 22 000 tons. It was around this time that international agencies and businesses started intervening, and production has grown back to 100 000 tons. USAID describes the Mozambican cashew industry as a pyramid. At its base are a million farmers with an estimated 18 million trees in the country’s northeastern regions, which have poor roads and little logistics infrastructure. On the plus side, Mozambique has natural advantages, according to John Sutton, the Sir John Hicks Professor of Economics at the London School of Economics. It begins marketing nuts in the October– December period, when the rest of the world is not producing. The main market for raw cashew nuts is India, followed by Vietnam and Singapore. The most important destinations for processed cashew nuts are the United States, the European Union, South Africa and, more recently, Saudi Arabia and Lebanon. Total annual exports are valued at around US$70 million. Logistical challenges start at source, with the average annual yields of trees being only 1-3 kg, according to aid agencies. One of the first interventions was by the Dutch development agency SNV, which in 2002 started working with the farmers and government to replace 40-year-old trees and to expand the area under production. Another important step was to address the cashew nut value chain. At that time the market was dominated by two to three middle-men. They controlled the prices and the logistics chain, which created losses of 5% or more through poor handling. Cashew nuts are brittle, and “brokens” have relatively little market value. American NGO CLUSA (Co-operative League of the United States) started empowering the farmers by helping them to form co-operatives. These provide producers with greater bargaining power, and from a logistics perspective help consolidate loads. Finance for modernisation and investment in processing plants is being provided through the African Cashew initiative (ACi), which created a Cashew Matching Fund to accelerate the development of the cashew industry by allowing public and private investments to benefit farm productivity and farmer income. A key element of the initiative is to increase transparency along the value chain through the use of laptops and smartphones. Productivity has increased by an average of 30%, according to ACi. Mozambican farmers are also benefiting from the Fairtrade initiative. Nuts are packaged by Liberation Foods in the UK and distributed through retailers Tesco and Sainsbury’s under their own brands, as well as through Waitrose, Traidcraft, Oxfam and Greencity Wholefoods under the Liberation brand. Thousands of jobs are again being sustained at source by the processing of nuts in Mozambique. A series of policy mistakes first saw 98% of the crop being exported raw to India after the government – on the recommendation of the World Bank – lifted all restrictions on the export of raw product. Indian processors could pay more than the Mozambican factories, and by 2000 the last one had closed. Processors returned to the market in 2002 using more modern equipment and with technical support from TechnoServe (USAID). This rebirth of the industry is supported by the government’s INCAJU initiative, an integrated strategy based on cooperation between the private sector, government, non-governmental organisations and communities. Government funding is provided for the purchase of fungicides and pesticides for the treatment of cashew trees, and for the establishment of processing plants. In addition, a surcharge of 18% of the FOB price is imposed on raw cashew exports. Some 20% of revenues from the surcharge are allocated to the development programme of the local industry. Exports of raw cashews are also banned from October to December. INSERT Co-operatives provide producers with greater bargaining power, and from a logistics perspective help consolidate loads. CAPTION Cashew nuts and peanuts on sale in the main Maputo market.