<p></p><p>Having been introduced in West Africa in the early 1960s to combat desertification and soil erosion, the cashew tree has rapidly transformed over the decades into a veritable cash crop for many countries in the region. While the progress of the African harvest is supported by growing world demand, there is still a long way to go in terms of processing with higher added value, despite the efforts made. In an interview with the Ecofin Agency, Jim Fitzpatrick, world expert in cashew nuts, talks about the challenges linked to the transformation of raw materials on the African continent.</p> <p>Agence Ecofin: Despite the progress of the African harvest, the continent still remains a small thumb in terms of processing, compared to Asian countries like India or Vietnam which process on average more than 1.5 million tonnes of nuts per year. How to explain such a delay of African countries? </p> <p>Jim Fitzpatrick : Progress has been made in recent years with the reduction of many barriers. First, the introduction of semi-mechanized transformation has facilitated the entry into the market of companies capable of raising funds and managing the transformation, even if the process was difficult and many mistakes were made. during the initial construction and the purchase of equipment abroad.</p> <p>More recently, the implementation of incentive policies, fiscal or otherwise, by the governments of certain countries, notably Côte d'Ivoire, to facilitate market access for processors has had a real impact. This is not to say, however, that the policies in the cashew sector are flawless. There are still a number of countries whose policies are counterproductive when it comes to processing cashews.</p> <p>"There are still a number of countries whose policies are counterproductive in terms of cashew processing." The main challenges for the new processors remain factory management, good product safety practices, working capital to buy the raw material during the harvest period, storage capacities throughout the year. and marketing.</p> <p>"Progress has been made in recent years with the reduction of many barriers."</p> <p>Processors often complain about the lack of information available in the market, but fail to realize that the essential first step is to do their own research to find out the needs and requirements of buyers. They often focus on the wrong buyers, simply because they haven't come into contact with enough potential customers and therefore don't understand the pros and cons of these key decisions. You have to know your client well, get involved early and build relationships.</p> <p>“The lack of confidence of commercial banks in the cashew processing activity is a formidable obstacle that must be tackled."</p> <p>Good customer relationships, the ability to make forward sales and the ability to sell all grades of quality raw cashews can play a role in validation or rejection in obtaining trade finance lines. In this sense, the lack of confidence of commercial banks in the activity of cashew nut processing is a formidable obstacle which must be tackled.</p> <p>AE: Some analysts believe that the low demand for cashew nuts on the continent limits the progress of processing and sometimes leaves local players in this segment at the mercy of buyers outside the African continent. Do you agree?</p> <p>Jim Fitzpatrick : There is no doubt that strong local demand is an important lever for the development of processing. But it is far from essential. When we take the case of Vietnam, which is the largest cashew processor in the world, it has very little domestic demand. However, that didn't stop it from processing nearly 2 million tonnes of cashews in 2019.</p> <p>“When we take the case of Vietnam, which is the largest cashew processor in the world, it has very little domestic demand. However, that did not stop him from processing nearly 2 million tonnes of cashew nuts in 2019. ”</p> <p>It should be emphasized that the development of the internal market and therefore of local consumption is a slow process. Cashews are a luxury product of a high price and are not part of the traditional snacking or confectionery sectors in Africa, as is the case in India for example. Measures have been taken to stimulate domestic demand in Nigeria and the Ivory Coast. The countries of North Africa are also consumers of cashew nuts and a growth in demand has been observed in Morocco, Tanzania and Egypt, even if this starts from a still weak base. West African countries are close to important consumer markets in Europe and the United States, which gives them a certain advantage over their Asian competitors. This geographic proximity can compensate for the absence of an internal market in the medium term, provided that other essential parameters are taken into account such as food safety, product quality and good management of facilities.</p> <p>AE: What are the most effective means that can be deployed by African countries to boost the transformation of their harvest and generate additional public revenue while creating jobs?</p> <p>Jim Fitzpatrick : It is essential to create an economic environment conducive to investment in agricultural processing. This can possibly be stimulated by intermediate government strategies for incubating new businesses. Proper regulation, based on the needs of the sector and firmly anchored in the realities of the market, would greatly contribute to achieving this objective.</p> <p>“With regard to raw nuts, the free circulation of the product will regulate what is already happening illegally."</p> <p>Building a relationship of trust in the cashew value chain, by facilitating dialogue and establishing links with training and input suppliers, could reduce contract infidelity and allow entrepreneurs to make better decisions. To succeed in the challenge of transformation, an integrated value chain, characterized by dialogue and transparency, could be decisive. It may sound like a dream, but it can be achieved by taking the best approach and being patient.</p> <p><b> AE: The launch of the African Continental Free Trade Zone (ZLECAf) suggests many commercial opportunities in various sectors of the economy. How can this initiative energize the cashew industry on the continent?</b></p> <p>Jim Fitzpatrick : In my opinion, the ZLECAf cannot really impact the almond market. With regard to raw nuts, the free circulation of the product will regulate what is already happening illegally.</p> <p>“In my opinion, the ZLECAf cannot really impact the almond market. With regard to raw nuts, the free circulation of the product will regulate what is already happening illegally. " This poses a threat to countries with good production, but a poor risk profile for investors, such as in Guinea-Bissau for example.</p> <p> “Measures have been taken to stimulate domestic demand in Nigeria and the Ivory Coast. " With the free movement of goods and people, raw nuts will be able to cross land borders and then be valued in neighboring states. AE: In 2018/2019, the Tanzanian government bought the entire nut harvest from producers because traders did not meet the guaranteed minimum price. As this measure was not successful, the authorities decided not to intervene in the process this season. Is such an interventionist approach by public authorities likely to deter foreign investment in the processing industry on the continent?</p> <p>Jim Fitzpatrick: Since the introduction of the auction system over a decade ago, traders can no longer buy cashew directly from farmers. The difference last year was that the government, frustrated by low auction offers, paid a price that was not likely to allow traders to break even, let alone make a profit. . He then sold the product at reduced prices to traders. The last auction went smoothly, with over 200,000 tonnes sold and farmers obtained reasonable prices. In 2018/2019, the official auction calendar for direct purchase could not have been worse in the context of the market. However, we must remember that farmers got very good prices that year and are the most vulnerable members of the value chain. “However, we have to remember that farmers got very good prices that year and are the most vulnerable members of the value chain. " The lessons to be learned are that direct intervention to support a declining market does not work and that the success of government intervention requires a good understanding of the market. In the end, the government took a hit and the farmers did well - maybe not as bad as some people thought at the time.</p> <p> <b>AE: In view of Cambodia's efforts to increase its production and export more raw nuts to Vietnam, some observers fear that the Asian country will eventually become a serious competitor for West African countries like the Côte d ' Ivory. Do you share such predictions?</b></p> <p>Jim Fitzpatrick : I don't think the African continent should worry about Cambodia. And I don't know of any analyst who shares this point of view. The Cambodia issue is surprising, as it seems to support deliberate misinformation. Cambodia is already a viable and prosperous supplier for Vietnam. It has been for many years. Yes, Cambodian production is increasing. But the reality is that if we compare it to that of African countries, in terms of available volume, it would only rank fifth behind Côte d'Ivoire, Nigeria, Tanzania and Guinea-Bissau. “Yes, Cambodian production is increasing. But the reality is that if we compare it to that of African countries, in terms of available volume, it would only be in fifth place behind Côte d'Ivoire, Nigeria, Tanzania and Guinea-Bissau ”.</p><br><p></p>