More Volume, Less Control: Tanzania’s Cashew Growth Tests Its Own System

Tanzania’s Cashew Boom Looks Convincing, But Can the System Keep Up?

Tanzania’s cashew sector is widely framed as one of Africa’s clearest growth stories.
Industry reports point to expanding production, rising export earnings, and a central auction system that has lifted farm-gate prices to record levels.

On the surface, the narrative is simple: more volume, better prices, stronger farmer outcomes.

But beneath the headline growth lies a more complex structure.
Production targets continue to overshoot historical performance, most value still leaves the country unprocessed, and price formation now depends heavily on a single auction mechanism operating under increasingly variable weather conditions.

As Tanzania moves deeper into the 2025/26 season, the question is no longer whether the sector can grow, but whether it can absorb that growth without creating new points of stress.

Why Tanzania Is Framed as Cashew’s Next Growth Engine

Industry reports estimate Tanzania’s cashew market value will rise from roughly USD 648 million in 2026 to around USD 806 million by 2031, implying annual growth of approximately 4.5% (Mordor Intelligence).

Market commentary attributes this outlook to three main factors:

• Production ambition: Government plans have repeatedly targeted rapid output expansion, with long-term aspirations previously reaching toward one million tons.
• Timing advantage: Tanzania’s harvest window (October–January) falls outside peak seasons in India and West Africa, giving its raw cashew nuts access to off-season demand and, historically, firmer prices (Research and Markets).
• Market reform: The introduction of a centralized auction system through the Cashewnut Board of Tanzania (CBT) and the Tanzania Mercantile Exchange (TMX) in 2024/25 is widely credited with improving price transparency and boosting farm-gate prices (Food Business Africa).

At the same time, most industry analyses acknowledge a persistent structural weakness: despite policy efforts, Tanzania still exports the vast majority of its cashews raw, limiting domestic value capture (SSRN).

Rising Targets, Uneven Execution

Primary production data paints a more uneven picture than the growth narrative suggests.

Official and industry-linked sources indicate:

• 2023/24 production reached approximately 310,000 tons, following subsidy-driven expansion (Cashewnut Board of Tanzania).
• 2024/25 output rose sharply to around 408,600 tons, a roughly 34% year-on-year increase, but still well below the government’s earlier forecast of nearly 600,000 tons.
• 2025/26 targets have now been set at 700,000 tons, implying another ~33% increase over the most recent confirmed harvest (Cashewnut Board of Tanzania).

This pattern (ambitious targets followed by partial execution) has become structural rather than exceptional.
While production has clearly stepped up compared to earlier years, historical baselines suggest that policy goals consistently run ahead of operational capacity.

From a market perspective, this gap matters. Targets influence trader expectations, auction behaviour, and price formation long before actual volumes materialise.

Auctions Changed Pricing and Rewired Risk

Tanzania’s cashew trade is now organised almost entirely around a mandatory auction system, administered by the CBT in partnership with the TMX.

Under this system:

• Farmers deliver graded raw cashew nuts to cooperative warehouses.
• Licensed domestic and international buyers bid through an online auction platform.
• All transactions clear at market-determined prices, with payment security enforced through warehouse receipts (TMX Guidelines).

The impact has been immediate.
During the first auction weeks of 2024/25, farm-gate prices reportedly doubled compared to prior seasons, reaching roughly TSh 4,000 per kilogram versus TSh 1,500–2,500 previously.

Structurally, auctions deliver clear benefits:

• Transparent price discovery
• Reduced middleman dominance
• Faster, more reliable farmer payments

But they also introduce new dependencies.

Local processors, facing high operating costs, often struggle to compete with export buyers bidding at international parity. Technical disruptions, logistics delays, and weekly price volatility add further friction. In effect, the auction system has strengthened price signals, while concentrating risk within a single market mechanism.

More Cashews, Little Value Capture

Despite years of policy focus, Tanzania’s processing capacity remains limited.

Most estimates indicate that 85–90% of cashews are still exported raw, with domestic processing historically confined to low double-digit percentages (REPOA).
Even optimistic government statements suggesting a temporary rise in local processing during 2024/25 remain contested by industry observers.

Structural constraints are well documented:

• Installed capacity has lagged production growth, with historical processing capacity estimated at roughly 42,000 tons per year, a fraction of current output.
• Cost pressures are among the highest globally, driven by energy prices, financing costs, and handling inefficiencies.
• Technology and skills gaps limit yield, consistency, and competitiveness versus processors in Vietnam and India.
• Policy trade-offs, such as export levies on raw nuts, have at times reduced farm-gate prices without triggering sustained investment in processing.

The result is a familiar paradox: Tanzania produces more cashews each year, yet captures only a small share of downstream value.

Climate Shapes Quality, Not Just Volume

Cashew production in Tanzania is often described as climate-resilient, but historical data suggests a more nuanced reality. While the cashew tree can tolerate dry conditions better than many perennial crops, output stability depends heavily on the timing and distribution of rainfall and temperature, not merely on annual totals.

Southern producing regions such as Mtwara and Lindi follow a narrow climatic rhythm: a defined rainy season that supports nut development, followed by a prolonged dry period critical for flowering, nut set, and harvest quality. When this sequence holds, Tanzania typically delivers large, uniform crops. When it does not, the impact is felt less in headline volume and more in quality dispersion.

Historical episodes underline this sensitivity. Periods of unseasonal rainfall or extended cool spells during flowering have repeatedly led to blossom loss, pest pressure, and uneven kernel development, even in seasons where total production remained relatively high. Conversely, excessively dry conditions can reduce nut size and kernel recovery rates, lowering auction values despite stable volumes.

This matters structurally because Tanzania’s cashew market is now tightly linked to auction-based price discovery. Quality variations driven by weather are transmitted almost immediately into prices, rather than being absorbed quietly through bilateral contracts or long-term supply agreements. In effect, climate variability amplifies price volatility rather than simply reducing output.

Looking forward, climate risk in Tanzania’s cashew sector is less about catastrophic crop failure and more about consistency. As cultivation expands and production targets rise, year-to-year weather variability is likely to translate into wider spreads between top-grade and lower-grade lots, reinforcing the importance of timing, grading discipline, and risk management across the supply chain.

Why This Matters

For traders

• Auction prices will increasingly reflect quality dispersion, not just headline volumes.
• Timing risk around weekly auctions matters more than seasonal averages.

For processors

• Competition for raw nuts at auction limits margin visibility.
• Local processing economics remain fragile unless cost structures change materially.

For industrial buyers

• Tanzania offers volume growth, but supply consistency depends on weather timing and auction dynamics.
• Origin diversification remains a risk-management necessity, not a luxury.

What to Watch Next

• Auction price behaviour as larger volumes enter the TMX system later in the season
• Weather patterns during flowering and harvest windows in southern regions
• Export shipment data to assess whether volume targets translate into actual flows
• Policy signals around processing incentives and auction rules

Conclusion

Tanzania’s cashew sector is growing, but it is growing into its own constraints.

Auctions have improved transparency and farmer pricing, yet they also expose the system to sharper volatility. Production targets continue to rise faster than processing capacity, while weather variability increasingly affects quality rather than volume alone.

The result is a market that looks strong in aggregate, but requires careful navigation at the transaction level.

Link:https://rotterdamcommodity.com/more-volume-less-control-tanzanias-cashew...