The Trade and Industry Ministry, Mr. Ekwow Spio-Garbrah, says government is weighing strategic options to streamline and protect the cashew industry from collapsing, and for that reason banning foreigners from buying and exporting raw cashew nuts could be a possible choice.
He said: “Though no firm decision has been taken yet, there are so many regulations on the table that government and relevant stakeholders are reflecting on to put the industry on track — including a ban on foreigners from trading in cashew. As long as Ghanaians can do what foreigners are doing, then one has to wonder why we should allow foreigners to those things for us”.
Foreigners are largely involved in the cashew trade (buying and export); they also play intermediary role between farmers and processors. In the Brong Ahafo Region, for instance, local agents for foreigners are scattered in areas like Techiman, Drobo, Sampa and Wenchi doing business on their behalf.
The Trade Minister added: “As enshrined in the country’s investment code which protects some sectors of the economy as a preserve for Ghanaian investors, it would not be out of place for government to enact additional laws to also protect other fragile and developing sectors like the cashew and oil palm”.
Mr. Spio-Garbrah disclosed this when addressing the media after touring Kona Agro-processing Company Ltd. — a cashew processing plant at Awisa near Wenchi in the Brong Ahafo Region. The company is one of many cashew processing outfits struggling to stay afloat due to operational challenges.
The cashew industry is current going through a plethora of challenges; thwarting efforts of industry players to harness its huge underexplored economic potentials. The worst-affected of all industry players are processors: of the 13 processing companies in the country, only two are currently in business.
Among the chain of challenges inundating the industry, inadequate supply of raw cashew nuts has been the most biting of all to processors — thus pushing eleven companies out of business. There is a supply deficit of raw cashew nuts in the face of increasing demand from processors and exporters. The total production of the commodity is hovering around a little over 50,000 metric tonnes as against installed processing capacity of over 65,000 metric tonnes, as well as an uncompromising export demand.
In March this year, the Trade and Industry Ministry placed an interim ban on the export of raw cashew nuts until June. The motive behind this directive was to protect the interest of processing companies, but it was greeted with an uproar — especially from farmers and exporters — which eventually compelled the ministry to lift the ban.
Touching on financial constraints, the Trade Minister entreated private industries to consider additional private equity partners to inject more capital into their business and share risks and profit. He stated that facilities like the Export Trade, Agricultural and Industrial Fund (EDIAF) do not have the resources to meet the demand from all industries.
“EDIAF only receives about GH¢10million per month from the export levy, but some companies have applied to the Fund requesting more than GH¢10million. There is no huge amount of money sitting there that can go to everybody, hence the need for private companies to explore other financing opportunities,” he explained.
Meanwhile, Raymond Taylor-Managing Director of Kona Agro-processing Company, in an interview reiterated the need for government to show the utmost commitment to development of the cashew industry so as to unlock the untapped economic potentials, especially in the processing sector.
He said: “The business environment for producing, processing and trading in raw cashew nuts (RCN) is still marked by the general constraints that businesses face in Ghana: including electricity and water shortages, lack of availability and access to finance amongst others. These factors seem to weigh particularly heavily on the processing segment of the value chain. These challenges notwithstanding, cashew processing remains a profitable venture if adequately supported.
“Processing 40,000MT of RCN in Ghana creates 8,000 jobs in rural areas with a combined monthly income of US$685,000 paid to predominantly women (80 – 90%). Exports of 40,000MT of raw cashew nuts at US$900/MT will result in revenue of US$36,000,000. However, processing 40,000MT of RCN yields approximately 9,000MT of kernel which at a price of US$7,000/MT results in import revenues of US$63,000,000 — a difference of US$27,000,000. Approximately US$8.2million will be paid as wages into the rural economy yearly.
“Ghana is close to both the European and US markets, and with the increasing requirement for traceability in the food supply chain most buyers are reaching out to West Africa to source cashew kernels directly. The distance travelled is shorter and the carbon footprint is much smaller,” he noted. – B&FT
