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Tanzania: Cashew nut industry getting chilled by lousy divestiture

Source: IPP Media October 28, 2008

Government's intentions to the enhance role of private sector in cashewnut industry to facilitate boosting productivity of value-added nuts for export in global markets remain a gross let down.

From early 1990s, the government, at various dates, sold off to private investors a dozen of its ailing cashwe nut processing plants, hoping new private owners would recapitalise them, eventually enabling the country to export value-added cashewnuts to international markets.

However, to-date, official sources say most of the privatised plants are still in ruins, as new owners claim have failed to secure sufficient capital to undertake major repairs of the factories.

The Executive Director of Cashewnuts Board of Tanzania (CBT) Benno Mhagama told this paper in a recent interview that government`s good efforts to ensure that entire cashew nuts` exports consignments are processed are becoming hard to be realised as most of the processing industries are out of order, more than fifteen years after their divestiture.

He lamented that for the time being, most of the factory owners are experiencing difficulties in getting fresh capital for undertaking rehabilitation of the old plants, some still equipped with outdated technologies.

Currently, existing factories processing capacity stands at 30,000 tonnes of cashew nuts produced per year, out of the more than 100,000 tonnes expected annual national output, he said.
Cashew nuts still remain the third important export crop for the country which still retains its position as the fourth biggest cashew nut producer in the world.

Cashew is the main cash crop produced along the coast. The harvesting season in the Coast Region is from October to January. The nuts are predominantly grown by small-holders.

Mtwara, Lindi, Coast and Dar es Salaam regions are leading producers.

However, he expressed optimism that rehabilitation of three factories would be complete by end of this year; those ones at Linini, Masasi, and Nachingwea.

According to Mhagama, if factories were operating at just 50 percent of their installed capacities, then Tanzania would be able to process entire cahew nut crop.

In addition, two recent developments, discovery of natural gas at Mnazi Bay and introduction of warehouse receipt system are seen by analysts as potential new drivers for the industry.

Mining of the gas deposits would be harnessed to produce 300MW of electricity to help more plants run smoothly.

Under the Warehouse Receipt System in Mtwara Region, the CBT has announced that a farmer would be paid 70 percent of first grade cashew nuts whose price per kilogramme should be 675/-.

On the other hand, farmers would receive 100 percent for second grade with prices amounting to 540/- per kilogramme and second payment would follow once cashew nuts have been auctioned.

Because of persistent lack of processing cashew nuts factories at home, raw exports of the crop are often shipped to India, processed over there and then re-exported to lucrative markets in the US and EU.

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