Ivory Coast, now the world’s top cocoa and cashew nut producer, has the potential to produce 1 million tonnes of cashews a year but rising prices, new taxes and huge demand in the booming agricultural industry have given rise to a black market.
The West African country overtook India in 2015 to become the world’s top cashew producer, and is expected to reach its forecast of 725,000 tonnes this year, Reuters reported.
President Alassane Ouattara has his eyes on a bigger prize — to have 100 percent of cashews processed inside the country by 2020, which would mean more jobs and money flowing into the economy, according to BBC.
Local cashew producers in Ivory Coast receive tax incentives to add value to nut production inside the country.
But exports have slumped as high taxes and the lure of greater profits push farmers to sell their output in neighboring countries through smugglers, AFP reported, according to TimesofIndia.
New taxes on exporters amount to 45 CFA francs (about 8 cents US) per kilogram, Reuters reported. Some traders circumvent the new taxes by shipping Ivorian cashews into neighboring countries.
“The smuggling is continuing,” an Abidjan-based exporter told Reuters. “(The government) has been able to constrict the flow into Ghana, but now it’s going into Burkina Faso. They’re shipping out of Accra (Ghana) and Lome (Togo).”
The exporter said he expected to see around 40,000 tonnes of nuts illegally exported this season. The taxes don’t apply to companies with local processing facilities.
Local buyers in Northern Ivory Coast, heart of cashew-growing country, confirmed the trafficking.
“We are aware that there is contraband towards the border with Burkina Faso where some people are sending cashews on moto-tricycles,” said Korhogo-based buyer Abdoulaye Cisse as workers dried nuts in front of his warehouse.
“We are hearing that sellers over there are earning 100 CFA francs ($0.17 US) (per kilogram) more than here,” he added.
Ivory Coast’s government set a minimum of 350 CFA francs ($0.60 US) per kilogram for the 2016 marketing season, up from 275 CFA francs ($0.47) in 2015. But buyers said they are paying between 500 and 550 CFA ($0.86 to $0.94 US) francs per kilogram to secure stocks, Reuters reported.
“We’re under pressure from our (exporter) clients,” local buyer Meyeregue Soro said. “Unless you pay 500 CFA francs ($0.86) per kilogram, the farmers won’t even look at you.”
Thousands of farmers in the country’s north have abandoned cotton, the area’s traditional cash crop, in favor of cashews.
Ivory Coast has been encouraging more cashew processing at home to gain added value, with plans to increase subsidies to processors from 5 percent to 30 percent or even 40 percent in coming years, TimesofIndia reported.
The cashew industry employs 1.5 million people directly and indirectly in Ivory Coast.
Cashews have become a relative bargain among tree nuts such as pistachios and walnuts, Bloomberg reported. The global cashew market in 2014 was valued at $4.69 billion, compared with $7.33 billion for pistachios, $6.45 billion for walnuts, and $8.32 billion for almonds, according to the International Nut & Dried Fruit Council.
Almonds scored record prices over the past two years during the prolonged drought in top-producing California. The value of Ivory Coast’s cashew shipments rose almost 50 percent in 2015.
“Cashew nuts are now the cheapest tree nuts on the market,” said Pierre Ricau, an agriculture market analyst at the nonprofit N’Kalô Market Intelligence Services of Rongead, in a Bloomberg interview.
“The market has undergone huge change,” said Rita Weidinger, executive director at Ghana-based African Cashew Initiative. Donors and private companies work through the initiative to reduce poverty in Benin, Burkina Faso, Côte d’Ivoire, Ghana and Mozambique. “The production cannot keep up, meaning there is limited stock available.” Bloomberg reported:
Cashews aren’t native to Ivory Coast. Trees were imported in the 1960s to reforest the arid northern provinces to prevent the encroaching Sahara desert. They were mostly ignored as a commercial crop until the 1990s, when impoverished northern farmers sought alternatives to soil-damaging crops like cotton and yams. Cocoa is grown mostly in the south.
Expansion of the cashew industry has aided economic recovery following a decade-long civil war that divided a rebel-held north from the government-controlled south.
“Cashews give hope to the north,” Malamine Sanogo, head of the industry regulator, the Cashew & Cotton Council, said in an interview from Abidjan. “Everybody recognizes that living conditions have improved.”
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