MARKETING CASHEW PRESENTATION BY YAYRA AMEDZRO WEST AFRICAN MARKETS LINK DECEMBER 10 2009
BACKGROUND Cashew nuts are used for several food items all over the world. From snacks to cooking oil, in candies and pastries and in alcoholic and soft drinks. In Ghana the Cashew trade is organized around two main products. The Raw Cashew Nuts (RCN) and the Cashew Kernels as export products. Ghana is said to export over 90% of its cashews raw and less than 10% is processed locally.
BACKGROUND CONT.
The Cashew Trade is characterized by several issues from harvesting, pricing to quality and availability of nuts among others. The questions still remain whether the farmer gets his efforts worth for the product he sells annually? Or if the buyer gets his monies worth? Or if the final consumer should be paying more than she is paying for that box of delicious cashew nuts?
CASHEW SUPPLY CHANNEL
PRODUCTION AND SUPPLY
According to the West African Trade Hub; - West Africa produced an estimated 645,00mt - Ghana’s production was estimated at 27,000mt and exported an estimated 56,000mt
THE CASHEW TRADE The marketing aspect of cashew goes through a number of stages. The exporter makes; A Search for buyers Contracts and Payment Instruments are established. Quality issues are dealt with coupled with other challenges
THE SEARCH FOR BUYERS On the internet (Trade Portals, Company Websites etc) Through trade facilitating bodies such as the West African Trade Hub Reference from Friends and Business Associates. At Trade Shows and Conferences
THE SEARCH CONT. Some traders visit buyers’ countries and offices Some buyers also have agents in Ghana through whom they operate
THE CONTRACT In establishing contracts for cashew trade, the parties take the following among other things into consideration Quality Price Quantity Payment Terms Delivery periods Destination
Contract Cont. Quality is an important determinant of price in the cashew trade. For RCN the buyer will be expecting some of the following specifications; Nut Counts Out Turns Oil Content Moisture and Admixture
Contract Cont. The Kernels must also have the following specs; - Crop Year - Moisture Content - Grades - Standard weights - Vacuum Packed
QUALITY The quality of cashew nut depends on two factors: – free from disease and pest attack – proper post harvest handling (during drying and storage of nuts). Correct grading of nuts and quality control are important for maintaining a country's reputation as – an exporter of high quality nuts – And to ensure that farmers are offered good price
PRICING Cashew pricing at the farm gates and village markets is largely determined by buyers. Farmers are unable to negotiate prices with traders who come to their village. They can only decide whether or not to sell at the price offered. Averagely farm gate price for cashew per kilogram in the 2009 seasons was 50p
PRICING CONT. The good news is that farmers can attain better prices if they are willing to take certain measures. Some of these measures are; Forming Cooperatives where there are none Product aggregation and proper grading. Improve post harvest handling by proper drying and storing. Willingness to understand the quality issues and be able to carry out their own quality tests.
SO WHO BUYS OUR CASHEWS More than 90% of the RCN produced in Ghana is sold to international buyers; India and Vietnam are the main recipients of the RCN. Most of these buyers visit the country during the season to buy and export. Some exporters also export directly to the buyers’ countries under various trade terms and agreements.
THE KERNELS • • • •
•
Ghana is said to have an estimated processing capacity of 2,157mt. The Country boasts of only a few medium-large scale processing plants Kernels from small-scale processing plants are sold to local Roasters. Roasters in turn roast and sell them in super markets and gas shops and recently in traffic in the cities. Ghana’s kernel future is bright since the consumption of cashew is gradually increasing.
CHALLENGES
Insufficient market and price information Lack of institutional framework Inefficient marketing channels for raw nuts Lack of credit to smallholder farmers Insufficient knowledge coupled with poor technology and information transfer Weak farmer organizations or groups Low farm gate prices Low nut and kernel quality
THE FUTURE
The future of cashew in Ghana is PROCESSING, that is – improving local processing to a point where no raw cashew nuts leave the borders of Ghana. – that will trigger increase in raw nut production.
The future Cont.
Fostering development of medium and large scale farms by offering technical assistance and financial incentives in high potential areas.
To strengthen extension services through training in specific need areas.
Educating farmers through training of various technologies and skills in cashew production.
The Future Cont. Strategic marketing initiatives to be considered include – Assisting farmers to form associations under which they could access information, extension services, markets, and credit.
– Linking processors of raw nuts to international markets for kernels.
- The use of third party certifying bodies to bridge the quality gaps between the farmer and the buyer
PROCESSING Offering
incentives to processors such as exemptions of duty for imports and tax holidays.
CONCLUSION Cashew is becoming more and more popular all over the world and consumers are willing to pay a littler more for every pack of cashew consumed for the benefit of the farmer. The key objectives to consider for the future are to Increase and improve production, processing and access to markets alongside certifications and traceability.
We in WAML look forward to the day when all of Ghana’s Cashew will be processed in Ghana; where the increased benefits of processing will be felt by all players along the Cashew Value Chain.
THANK YOU