How cashew farmers lose N99 billion to global glut, Apapa gridlocks
• Experts list ways to mop up nuts for local utilisation
Cashew nut farmers in the country have lost approximately N99 billion since the commencement of production this year.
The farmers produce about 220,000 metric tonnes of cashew nuts yearly. In 2017 and 2018, a tonne was bought from them at the rate of N600,000. This year however, the cost plummeted to N150,000 per tonne. The figure implies that they lose N450,000 on every tonne sold. Multiplied by 220,000 metric tonnes, the farmers are set back by a staggering N90 billion.
The downward slope of the price curve will have negative impact on investments in cashew cultivation and plantations. Thousands of jobs might be lost, besides the dire financial implications for the farmers and the country.The socio-economic implications include increased poverty among farmers until the price appreciates; low return on investments for plantation investors; job losses in the value chains (from cultivation, aggregation, export and processing).
The Guardian’s investigation revealed that gridlocks in Apapa prevent containers of raw materials, including agricultural products, from leaving the port for various destinations in Europe, Asia and America, contributing significantly to low demand for the nuts.Two major ways the gridlocks affect products are: deterioration through re-absorption of moisture and inability of exporters to meet deadlines.
“One of the major reasons is that the road leading to our port is bad. The trailers take several weeks before they can get to the port. Most of exporters take short-term loans from the bank and are not able to meet up with either supply or repayment of loans,” said Dr Akin Oloniruha, a cashew breeding and plantation specialist at the Ahmadu Bello University College of Agriculture, Kabba, Kogi State.
“Last year, a tonne was N600,000. This year, it is about N130,000. This has a negative effect on farm expansion and tonnage to be produced in the future because many farmers would not plant cashew this year,” he explained.Stating another reason for the low demand and poor pricing, Oloniruha said farmers, either as a result of greed or lack of regulations, mix immature nuts with good ones, creating aversion for Nigeria’s stock in the international market.
The solution, he said, is for Nigeria to develop the capacity to process nuts locally. According to him, “This will reduce our exportation of raw materials and exposure of farmers to price fluctuations.”A major cashew nut aggregator in Ogbomoso, Oyo State, Mr. Isaac Alade, affirmed that the price per tonne of the nuts is between N130,000 and N150,000.
Some analysts however noted that the downturn could also be blamed on shrinking global demands and inability of exporters to meet up with orders from Vietnam, a major buyer of Nigerian nuts, and other countries.An expatriate director in one of the agro-allied conglomerates in Nigeria, who preferred anonymity, explained that processors in India and Vietnam who import cashew nuts from Africa were not given loans this year because they have not been able to offset the facilities for 2018.
“They have not repaid the loans they collected last year to the banks. So, the Vietnam banks are not giving additional loans to the importers who buy from Nigeria. Now that processors from especially Vietnam are not purchasing nuts from Africa, there is a big gap. That is the main cause,” he said.
Corroborating this point, a cashew nuts processor and managing director of Abod Success Ltd, based at Ogijo, Ikorodu, Lagos State, Mr. Tunde Odunuga, said over 90 per cent of Vietnam buyers could not buy from Africa this year because of their indebtedness to banks.
He however described the situation as an opportunity for processors to mop up nuts for local utilisation, urging the government to tackle the power challenge, so that many processors could spring up. This way, Nigeria could develop the industry, export the finished products and create greater wealth and job opportunities.
From 2011, cashew production figure grew from 100,000 metric tonne per year to about 220,000. This, according to the president of the National Cashew Association of Nigeria (NCAN), Tola Faheru, shows a significant shift in production figure motivated by encouraging international price.Experts therefore believe the situation should spur Nigeria to local industrialisation and that processors should break through due to lower prices as a result of reduced competition between export and local utilisation.