A $200m loan from the World Bank is set to improve the efficiency and profitability of Côte d’Ivoire’s cashew industry, while the government is stepping up efforts to tackle the illegal smuggling of crops.
In April 2018 the World Bank approved its loan as part of the $285.5m Cashew Value Chain Competitiveness Project (CVCCP), which – including $85.5m from local partners – intends to maximise the segment’s earning potential. The project, which is expected to benefit 225,000 farmers and generate 12,000 direct jobs over a five-year period, aims to boost on-farm productivity through research, seedling development and technology transfer, along with works on roads and transport infrastructure in production areas.
Improved governance and organisation of the cashew value chain should also help with efforts to strengthen the competitiveness of the country’s small-scale farmers, as the World Bank has noted that the market is hindered by a disjointed regulatory scheme. To this end, the programme aims to streamline regulations governing the purchase, sale and trade of cashew nuts. “Foreign collaboration is contributing to improving crop productivity and is reinforcing the competitiveness of Ivorian agricultural goods on the international market,” Pierre Billon, director-general of SIFCA, an Abidjan-headquartered agribusiness group, told OBG.
Domestic Processing
An essential part of the plan also involves bolstering processing capacity. As the world’s largest exporter and second-largest producer of cashew nuts, Côte d’Ivoire accounted for 23% of global production in 2017, with 711,000 tonnes. However, limited infrastructure means that less than 7% of the total product grown domestically are processed there, according to the World Bank.
The CVCCP aims to develop and encourage private investment in storage and processing infrastructure, and boost access to investment capital and new trade markets. On this note, President Alassane Ouattara has pushed for 100% of cashew nuts to be processed domestically by 2025, with officials previously exempting operators from export taxes and introducing a series of tax holidays and incentives to boost investment. This could help in reducing the industry’s carbon footprint and transport costs, while creating growth opportunities for local processors and small and medium-sized enterprises. In addition, a pivot towards local processing could provide Côte d’Ivoire with the opportunity to export directly to European and US markets.
Combatting Smuggling
The increased funding as part of the CVCCP comes as officials step up efforts to combat crop smuggling, which has affected the growth of the cashew industry and the broader agriculture sector in recent years. In May 2018 the government increased penalties applied to agricultural smugglers, who could now face up to 10 years in prison and fines of CFA50m (€75,000).
This builds upon measures that were launched in February 2018 by Conseil Coton Anacarde – the state body responsible for the regulation, monitoring and development of the cotton and cashew industries – intended to better monitor and stamp out illegal agricultural transportation.
An estimated 100,000 tonnes of cashew nuts were smuggled out of the country in 2017, which is equivalent to approximately 14% of total production. Meanwhile, Bamba Adama, chairman of the National Federation of Cashew Producers of Côte d’Ivoire, told local press that by mid-April 2018, only 40% of the year’s cashew nut stock had been sold, compared to 80-90% during the same period in 2017, with concerns that producers were smuggling crops into neighbouring countries where cashews are sold for a significantly higher rate. While in Côte d’Ivoire cashews sell for roughly CFA500 (€0.75) per kg, the nuts sell for around CFA900 (€1.35) and CF1000 (€1.50) in Burkina Faso and Guinea-Bissau, respectively.
Read More from OBG
