BHIZIMUSI

Kenya & South Africa: A Tale Of Two Nuts

H2M8XM A fair trade macadamia nut grower holds freshly harvested nuts in Kirinyaga County, Kenya.

Much has been made in recent years of ensuring that Africa retains more of the benefits of the raw materials it produces.

Discussion has ranged from bauxite and diamond mining on to fruit and cereal production. Some governments have sought to block the export of unprocessed agricultural commodities but this can have unintended consequences.

Kenya has run into difficulties with its ban on the export of shelled cashews but South Africa’s success with macadamia processing suggests that domestic processing is achievable. Kenyan cashew producers have blamed the massive fall in exports over the past few years on the government’s ban on the process of unshelled cashews that was introduced in 2009.

Total annual exports fell from 835 tonnes in 2013 to 485 tonnes in 2015. However, it has been reported in Kenya that some farmers feel that traders have been offering very low prices for raw cashews in order to increase the profitability of processing.

It has also been suggested that the prices paid have fallen so far that some farmers have dug up their cashew trees and switched to other crops. The International Nut and Dried Fruit Council Foundation (INC) Kenya representative, Mbugua Nugi, said of the ban: “Its genesis and intention was and still remains to encourage more value addition through processing of raw cashew within Kenya’s borders and support the economy by providing jobs and more foreign exchange earnings.”

Under its Vision 2030 for the national economy, the government wants to turn the country from a primary producer into an exporter of manufactured and processed goods. Nairobi is trying to counter the problem by offering subsidised seedlings.

Similar problems have occurred in other parts of Africa, where the influence of middlemen is blamed for distortions in the market. Many cashews are exported to Kerala in India for processing in the hundreds of factories located there, so the Indian and Kerala state governments have offered to help tackle the problem.

In June, India’s Ministry of External Affairs organised a meeting in Kerala between representatives of Indian factories and Africa’s main cashew producers: Gambia, Madagascar, Kenya, Tanzania, Mozambique, Togo and Mali. Delegates discussed how to avoid the use of middlemen entirely.

The Kerala state government has proposed direct purchase of cashews and the creation of an agency to assess the quality of the cashews produced. This could give too much power to Kerala but would avoid price manipulation by traders.

J Mercikuttiamma, the Kerala minister for cashew and fisheries, said: “We hope that procurement of greater quantum of raw cashew nuts from Africa will contribute to the welfare of cashew workers in Kerala and farmers in Africa. India and Africa should seek to emerge as key players in the global food industry. We should try to retain the value of our food products within our own domestic market, firms and workers.”

The development of cashew processing plants within Africa would give the continent more control over the sector. A plant currently being built in Nigeria’s Oyo State is expected to open by the end of this year but many other similar facilities are required in the rest of the continent if the continent’s relegation to the status of primary producer is to come to an end.

Macadamia success

By contrast, South Africa already processes most of the macadamia nuts it produces. This retains more of the nuts’ value within South Africa and creates thousands of jobs in processing plants.

The crop was only introduced into South Africa in the 1960s but the country overtook the birthplace of the macadamia tree, Australia, as the world’s biggest macadamia producer in 2014. The industry has boomed in South Africa over the past two decades, with the number of trees increasing from 1m in 1996 to 6.5m in 2016. Output is expected to continue rising quickly because of the number of new trees planted.

South Africa produced 48,000 tonnes of macadamia in 2015 out of total global output of 160,000 tonnes, generating R4bn ($307m) in revenue. Most production is exported to markets in North America, Western Europe and China.

South African producers have had great success in promoting macadamia consumption in China, which now buys 50% of South Africa’s entire crop. However, the growing appetite for macadamias in China has encouraged Chinese farmers to begin planting macadamia trees.

Source: A tale of two nuts – African Business Magazine