Cashew has over the past six decades, developed from being grown to fight erosion and desertification into a very important economic and, in some situations, political commodity in Africa.

Due to its rich nutritional content and the many health benefits of consuming both the cashew apple and nuts, including its ability to fight Type II diabetes and also containing five times the vitamin C content of oranges, cashew is consumed all over the globe, especially in Europe and America.

Produced in most tropical regions across the globe, including in Brazil, India, Vietnam, and Indonesia, cashew is today contributing significantly to the economic growth of the over 14 cashew producing countries in Africa, playing a huge role in poverty reduction in these countries.

The Cashew industry, according to the African Cashew Alliance (ACA), serves as a source of employment to 2.5 million Africans, serving as the main source of income for about 1.8 million families in West Africa.

 As the world’s greatest producer of raw cashew nuts (RCNs), producing more than 2 million tons and exporting more than 85% of production, Africa benefits from cashew in the form of foreign exchange and revenue generation.

As a matter of fact, cashew has become the highest non-traditional export earner in African cashew producing countries like Ghana.

Unfortunately, despite the continuous growth in cashew production, local processing remains very low in Africa with less than 15% of production processed locally.

 A vast majority of RCN produced in Africa are exported to Vietnam and other Asian countries for processing. This has become a challenge and is restricting the growth of the cashew industry in Africa.

With these facts in mind, this article examines the African cashew industry in 2020 in the midst of a novel pandemic and looks into 2021, the strengths, weaknesses and opportunities.

2020 in retrospection: Winners and Losers

2019 ended with Africa producing a record 2million and 67thousand, 710 tons of raw cashew nuts, over 47 thousand more than the 2million and 20thousand, 610 tons produced the year before.

The ACA had estimated an increase by over 83 thousand in 2020. Local processing however declined with only about 10% of production processed locally.

The ACA, together with other stakeholders, had held various learning fora aimed at encouraging local processing to increase the competitiveness of the industry in Africa.

An important example of these fora was the Access to Finance Forum which the ACA organised in collaboration with Tecnoseme Benin, GIZ/ComCashew and Solidaridad and was held in Ghana and Benin to introduce stakeholders from the cashew and the oil palm value chains, especially processors, to available funding opportunities which will enable stakeholders to grow their businesses and processing capacity.

Also, by end of 2019 and early 2020, as the then President of the ACA, Florentino Nasnque, indicated in his end of year message, “more countries [had] signed onto the Consultative International Cashew Council (CICC)”, the international organization established on 18^th November 2016 with legal powers and financial autonomy to promote and regulate the production, processing and trading of cashew in Africa.

This, as he rightly said, meant governments were beginning to recognise the importance of the cashew industry and were “open to dialogue towards a favourable policy” and to “create consultative frameworks” towards a sustainable and viable cashew industry on the continent.

With all these positive measures in place in 2019, the cashew sector was expected to see significant growth in 2020, especially with local processing.

Indeed, as a Market Information Systems (MIS) expert, Jim Fitzpatrick, assessed, 2020 started on a more positive note, with strong demand throughout the world except in India.

 Farmers had almost finished selling RCNs stocked from the 2019 season and were about harvesting for the new season when the unexpected happened: the outbreak of the novel coronavirus disease 2019 (COVID 19).

As indicated in the article, Covid and Agric: Strengthening Africa’s cashew industry; the role of governments (read from ACA website), as of February 2020 when Africa started recording cases of Covid 19, the cashew season had not reached its peak.

At the time, most farmers were either preparing to harvest or had harvested and were waiting to sell.

The closure of boarders and restriction of movements meant those who harvested could not sell because there were no buyers and those who were yet to harvest were discouraged by the fall in prices.

The positive thing was that, though farmers’ income were affected, Africa’s production was generally not hugely affected as initially feared. Africa’s 2020 production exceeded the 2.1 million it produced in 2019.

Perhaps, the most important and significant factor that saved the situation at the time when the pandemic was at its peak and farmers becoming frustrated of the fall in prices and the absence of buyers was the incredible growth of processing in Vietnam. 

Vietnam increased its monthly RCN processing and exports of cashew kernel by 78% ,38% and 18% in February, March and April, respectively compared to same periods in 2019. Processing remained strong throughout the year.

The increase in processing meant that demand and import of raw cashew, particularly from Africa increased significantly.

Almost 70% of Cote d’ Ivoire’s RCNs were bought and exported to Vietnam. This brought great relief to farmers and prevented an estimated 200,000 to 300,000 tons of RCNs from going waste on farmers’ fields, homes and in poor storage facilities as was initially feared by the ACA.   

It is also important to mention that demand and consumption of cashew kernel remained strong throughout the year.

In fact, records from the ACA indicates that demand increased. In the United States, the largest import market for cashew in the world, 2020 ended with an incredible cashew import growth of 8%, the highest in ten years.

Demand, imports, and consumption of cashew in Europe also grew by 17%. In fact, according to Jim, the European cashew market was growing around 30-32 percent at a point in 2020. We will be examining, in a subsequent article, why this happened and why prices crushed even when demand was high.

For now, the point worth noting is that the pandemic did not affect demand and consumption of cashew in 2020.

And the increase in processing in Vietnam prevented an excess demand over supply situation. 

While Vietnam’s processing sector was more or less the “saviour” of the global raw cashew nut industry during a deadly pandemic by increasing its processing rate to meet increasing demand, the processing sector in Africa was hit hard by the situation in 2020.

With access to reliable financing being a challenge for cashew processors in Africa, causing almost all the over 50 cashew processing factories being underutilised, the pandemic further compounded this situation.

Local Processors had to spend out of budget to buy personal protective equipment to ensure the safety of workers.

They spent extra unbudgeted money on transporting workers to and fro work to keep them safe.

Also, the social distancing protocols meant these already underutilised factories had to put special measures in place, including laying off some workers, to ensure safety and lessen their financial burden.

With these extra financial expenses, President of the Association of Cashew Processors Ghana (ACPG), Marvin Nii Smith, believed this made it impossible for local processors to take advantage of the fall in prices of RCN to increase processing.

In fact, at a point in the year, according to the ACA, almost 70% of these factories had shut down. 2020 was simply a difficult year for processors in Africa.

To sum up the cashew industry in 2020, Jim Fitzpatrick believes while buyers and Vietnamese processors were winners in the year, producers and processors, especially those in Africa were losers.

He points out that the pandemic has also highlighted the weaknesses and risk in the global cashew value chain, especially an imperfect value chain, where RCNs are produced in Africa, shipped to Asia for processing and then to Europe and America for market, that needs to be improved.

Managing Director of the ACA, Ernest Mintah, believes 2020 also exposed the fact that, Africa was ill prepared, in terms of storage facilities to stock RCNs and in terms of policies that allow governments to set in to regulate prices and save the industry in situations like Covid.

He said the year ended with most local processing factories having inadequate funds to buy raw materials and to enable them to buy the necessary materials to allow them to adhere to Covid protocols.

Projecting into 2021 (Based on ACA Projections)

Despite the devastating impact Covid 19 is having on all aspects of livelihood and the huge impacts it is having on various sectors of world economies, especially in developing countries, the African Cashew Alliance (ACA) is optimistic that the cashew industry will remain strong, and less affected, in 2021.

They expect demand and consumption to remain strong in 2021 and an increase in production.

With Production, the ACA projects Africa to strengthen its grip on cashew production by remaining the world’s greatest cashew producing continent.

They project the continent to produce 54% of the 3.8 million tons projected global production of raw cashew, and thus exceed the over 2.1 million it produced in 2020.

India, Vietnam and Cambodia and Brazil are projected to produce 21%, 17% and 4% of global production, respectively.

Productions in Nigeria and Ghana are expected to be between 210,000 - 250,000 tons and 110,000 - 130,000 tons respectively, almost the same levels as last year.

The ACA adds, however, that in Nigeria, production may increase or decrease depending on farmgate prices.

They also anticipate that the new regulatory structures in Ghana, the Tree Crops Development Authority (TCDA) which now regulates cashew and five other tree crops, and the Cashew Council Ghana (CCG), a mother association of the various cashew value chain associations, will result in an increase in production in Ghana in the coming years.

Production in East Africa is, however, projected to be lower than expected especially in the two leading cashew producing countries in the subregion, Tanzania and Mozambique, as a result of changes in weather, the cyclone and the impact of security emergency in the subregion.

Production in Tanzania could fall to as low as 225,000 tons by the end of the year, according to ACA projections.

With processing, the ACA expects more investment into the cashew processing sector as an attempt to shorten the cashew supply chain by processing closer to origin.

This will enable local processors to adopt improved and mechanised systems.

Local processing is therefore expected to increase, especially in Cote d’ Ivoire, Nigeria and Benin.

Conclusion

In 2020, Vietnamese processors saved the global raw cashew nut industry, especially in Africa. The story could probably have been different had Vietnam not increased its processing capacity in 2020 and farmers, especially those in Africa, would have suffered the most.

Now more than ever, Africa needs to increase its processing capacity.

There is the need for African governments to prioritise local processing of cashew.

This ought to be done to strengthen the sector and to secure the source of income of over 3 million people, especially the over 2million farmers.

 Local processors, on their part, need to begin to think of innovative ways of increasing their processing capacities and open up for investment.