Stakeholders in the Nigerian Cashew Nuts Sector have pointed at the lack of investment and interests of financial institutions in the sector as responsible for the price drop in cashew nut exports. The cashew nuts sector is threatened by the 34% global market price crash.
Reason For The 34% Price Drop.
The 2018 crash of product prices in the global market has hugely impacted on the Nigerian cashew sector. This crash has forced many exporters to hold excess stocks of raw cashew nuts. The stocks were bought at a time when prices were more favourable.
Speaking at a Cashew Investment and Exhibition Forum held in Lagos on Wednesday, the Executive Director and Chief Executive Officer, Nigerian Export Promotion Council (NEPC), Mr Segun Awolowo, who was represented by Mr. William Ezeagu stated that the programme was informed by the insistent price sinking of raw cashew nuts that had, in turn, given rise to a supply glut in producing countries like Nigeria.
Mr. William Ezeagu, the Director, Product Development Department of the agency stressed the need for increased investment in cashew nut processing, saying that it will add value to the cashew nut value chain.
Statistics Of Cashew Nuts Production In Nigeria – Year-On-Year.
Reports from the export promotion council showed that price of raw cashew nuts fell by 50% from N600,000 ($1,666) per metric tonne in April 2018 to about N300,000 ($833) in July of the same year. The report further stated that currently, cashew nuts sell for about N397,606 ($1,100) per metric tonne, indicating a 34% drop year-on-year from the figure recorded in 2018.
“Nigeria, one of the world’s major exporters of raw cashew nuts, currently lacks processors. It is important to invest in processing to create more jobs. Raw cashew nuts export is a major opportunity for Nigeria. Consequentially, 50% processing will create about 9,000 jobs with a chain of economic multiplier effects,” Mr. William Ezeagu added.
The forum witnessed the gathering of relevant stakeholders in the sector: cashew processors, intending processors and exporting companies planning to venture into cashew processing as well as the germane government ministries, departments and agencies that have a role to play in the cashew value chain. Also, development financial institutions were not left out on the invitation to lend support to willing investors in the cashew processing business.
The Major Challenge Encountered In The Raw Cashew Nuts Sector.
The Managing Director, African Cashew Alliance, Ernest Mintah, said, “Although Africa produced 55% of global raw cashew nuts, only 5% processing happened on the continent.” He further stated that jobs meant to be created in Africa were being taken to countries where the processing was being done.
Mintah lamented the lack of investment and interest from financial institutions in the sector which he described as capital intensive. According to him, this has led to the low cash crop processing and export activities. He added that at least $2 million was necessary to start a cashew processing business and most banks in Africa were not willing to give out a huge amount of money on a long-term basis.
The Vice Chairman, National Cashew Association of Nigeria (NCAN), Garba kontagora, said, “Sensitisation was needed to educate operators and farmers about good agricultural practices in the sector, saying that some farmers harvested cashews from trees before they were ripened and even used chemicals to force them to ripen.
Impact Of The Drop In The Cashew Nuts Sector And Agriculture To Nigeria’s GDP?
According to the 2018 GDP reports released by the NBS, the agricultural sector contributed about 25.13% to the GDP. Additionally, the crop production subdivision of the agricultural sector contributed about 90% to the figure.
The coming together of relevant investors and interested stakeholders in the sector can help bolster the domestic production, processing and exports of these cash crops. These are potential generators of foreign portfolios (FP).
The constant inflow of foreign portfolio increases our foreign reserves, which will in turn be used to stabilize the forex market as well as the investors and exporters window (I&E window) to boost the confidence of players in that market.
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