Nigerian Cashew Farmers Are Going Nuts
If nothing else, most Nigerians agree that Nigeria needs to diversify its economy. The problem is that no one ever really explains, in practical terms, what this diversification will look like if it is achieved. The difficult and even painful route to get to this diversified economy is never discussed either.
I’ve been using the hashtag #CabalAlert (on twitter) to chronicle the rent-seeking behaviour of Nigerians when they come together under some association usually to demand some kind of ‘intervention’ (read: money) or a bailout from the government. But I find one particular cabal tolerable — The National Cashew Association of Nigerian (NCAN). Even when they ask for the government to give them money, they tell real life stories of how cashew farmers are doing in Nigeria.
Here’s one example from last October:
The National Cashew Association of Nigeria, NCAN, told the News Agency of Nigeria on Sunday in Lagos that the current global market trends showed an increase in demand for cashew.
The association’s spokesperson, Sotonye Anga, said that this was due to Good Agricultural Practice and improvement introduced to farmers in 2014.
“We are glad to witness the prosperity of cashew farmers in Nigeria. It goes a great deal to show that NCAN is working and in collaboration with government and our development partners.
“The current global market trends show an increasing and strong demand for cashew and Nigeria will continue to deliver its quota and remain relevant in the cashew world.
“I therefore, urge our cashew farmers nationwide to be serious with the cashew business and be committed to GAP and quality improvement protocols so as to get the cash in cashew.
There was also this:
Some cashew farmers in Umoni Village, Ofu Local Government Area in Kogi said on telephone that they were happy with the development as their lives had become better.
A cashew farmer, Samuel Haruna, said he was able to roof his family house with the sales he recorded from the 2015 cashew season.
Mr. Haruna, who had been in the cashew business for more than 20 years, said he never really made profit from selling raw cashew nuts as much as he made in 2015 season.
“I was able to buy 14 bundles of roofing zinc to roof my family house. I have been involved in cashew farming for 20years and I never had it this good.
“This 2015 cashew season was really good for me and for my people, I realised good money from the sale of cashew.
“We cashew farmers from Umoni village are very happy; we are pleased with the activities of NCAN and all the efforts at improving cashew farmer’s livelihood.
“This year I made good money from my cashew farm for the first time. Not just me but other cashew farmers made good money too,” he said.
A 30-year-old cashew farmer, Joel Thomas, said that he bought a jeep from the sale of cashew recently.
Another cashew farmer, also from Umoni Village, Ibrahima Sule, said he bought a Toyota car from the sale of cashew in 2015.
A 35-year-old, Isaac Idanyi, said he was able to build a four-bedroom flat from the sale of cashew nuts.
As much as it is true that the farmers have benefitted from an international boom in cashew nut prices, you still have to take part in the game to stand a chance of winning anything. These guys have been able to grow and export the nuts and earned a decent income in ways that have transformed their lives.
As with most things in Nigeria, whatever success that is managed is often in spite of government’s efforts rather than because of it. The NCAN President, Pastor Tola Faseru, is in the papers today complaining about how difficult it is to get their cashew nuts out of Nigeria:
The past year was tough for agricultural products shippers — no thanks to delays in shipment.
One group that was badly hit was cashew exporters, many of who could not get their produce shipped in time to Vietnam and India through the seaports.
President, National Cashew Association of Nigeria (NCAN), Pastor Tola Faseru, recalled that last year, cashew exports at the seaports were delayed for weeks — if not months.
Faseru added that cashew cargo were left sitting, undelivered at the ports for months. He recalled that there were cases cashew cargo, remained in transit for 90 days.
By the time the produce arrived their destinations, Faseru said they had lost their usefulness. Ultimately, that means farmers and exporters receive a lower price for their produce or had them rejected by importers. He criticised the shipping lines for making cargoes undergo longer waits before moving them abroad.
First of all, it is important to note why Nigeria is exporting cashew nuts to Vietnam and India — that is where they get processed and then exported to Europe and America. I don’t need to tell you who makes more money out of this. Here is a Reuters story from February 2015:
Vietnam, the world’s top cashew nut exporter, has imported a record 769,000 tonnes of the raw nuts in 2014 for processing for export, a surge of 59.3 percent from a year ago, the Vietnam News reported, quoting the Vietnam Cashew Association.
Of the imported volume, 106,700 tonnes came from Nigeria, or nearly 90 percent of the African nation’s annual output, the report said.
Vietnam’s cashew nut exports in 2014 jumped 16.9 percent to 305,000 tonnes from the previous year, government data showed.
You can then see how this plays out in Europe:
Even among African countries that export directly to Europe, Nigeria is a laggard:
Recently, I was at the supermarket near where I live and I spent a good few minutes looking for anything that had a Made in Nigeria label on it. I didn't find any. But I found these:
There were loads of cashew nuts from Vietnam as well. This was painful for me to see because the nuts themselves could have originated in Nigeria meaning that out of the £2.99 selling price of a bag of cashew nuts, the Nigerian farmer will be lucky to get 50p.
You’ll be amazed at the mundane reasons why Nigerian cashews get exported raw to Vietnam for processing. The shelling of the nuts requires a fair bit of skill because if the nut is chipped in the process of shelling it, the value diminishes significantly. Believe it or not, finding Nigerians skilled at shelling cashew nuts is not as easy as you think. That is what happens when your human capital has been thoroughly debased over many years.
Everything that Harvard’s Professor Ricardo Hausmann writes is worth a read. But something he wrote in November last year is particularly important. An economy that imports things (or exports mainly crude oil), is very different from one that makes and exports various things. What this means is that an economy built around exporting crude oil and then importing other products cannot turn into an exporting economy just like that. Making that change requires hard work and deliberate effort.
The needs of export activities are often quite distinct. The specific rules, infrastructure, skills, and technological mastery that export activities require tend to be different from those needed for the non-tradable activities that usually generate the bulk of a place’s employment. While diversification into new areas is always challenging, it is particularly difficult for tradable activities, which have to face foreign competition from the start. By contrast, pioneers in non-tradable activities start with a captive market. Moreover, exporters need particularly strong connections to knowhow found elsewhere on the planet, thus making them more sensitive to foreign investment, migration, and international professional links.
To survive and thrive, societies need to pay special attention to those activities that produce goods and services they can sell to non-residents. Indeed, the need to act on new export opportunities and remove obstacles to success is probably the central lesson from the East Asian and Irish growth miracles.
That, in a nutshell, is what diversification means. Exports require different types of infrastructure. That is what the NCAN President is complaining about. When you read that article and you see the mess going on at Apapa, you can clearly see that there is nothing about Nigeria that makes it ready to export anything.
Some exporters suffered so much losses having to withdrawn their shipments from being exports because they stayed longer in the ports. One of them was the Country Manager, 3F Nigeria IPEX Limited, Karamvir Singh,who said his organisation had many containers of cashew withdrawn from the ports when the shipping line couldn’t move them in time.
Shipping delays, according to him, cost agricultural shippers million in lost revenue between February through August and there is the potential for more losses this year, if they are not able to move the produce in time to their destinations in Asia.
Oil prices have collapsed and Nigeria is now reeling. It is almost as if the country only knows how to live with high crude prices. Yet, it is guaranteed that prices will collapse every few years. Moreover, Nigeria does not have a say on international oil prices or the development of the technology that makes it possible to extract and refine oil. The country is at the mercy of myriad exogenous factors.
At the very least, this suggests that the country needs to find something else to do where it has more control of its own destiny. But simply shouting ‘diversification’ from morning to night will not magically make it happen. Exporting requires infrastructure, skills and a new way of thinking from policymakers. It is hard but it is necessary.
I’m sorry if you read almost 2,000 words to the end waiting for a solution to this problem. There really is none. Transforming the Nigerian economy is hard work. If anyone says its easy, they’re lying through their teeth.
But think of the possibilities — Isaac Idanyi built a 4 bedroom house from selling raw cashew nuts.
If you know of a better way to fight poverty, let’s hear it.
UPDATE 12th March 2016
Saw the above photo on Instagram posted by Segun Awolowo, the CEO of Nigerian Export Promotion Council (NEPC). The figures on the board behind him caught my eye.
So Nigeria exported 150,000MT of raw cashew nuts (mostly to Vietnam) and earned $253m in the process. But over in Vietnam…
HCM CITY (VNS) — Viet Nam’s cashew exports were worth US$1.1 billion in the first half of the year, a year-on-year increase of 28.2 per cent, according to the Viet Nam Cashew Association (Vinacas).
Speaking at a meeting in HCM City yesterday, Vinacas chairman Nguyen Duc Thanh said the average export price in the period was higher than a year earlier as prolonged drought in many countries pushed up the prices of many kinds of nuts, including cashew. Vietnamese exports rose by only 14 per cent in volume terms in the period.
The US, China and the Netherlands remained Viet Nam’s largest buyers, accounting for 35.57 per cent, 14.66 per cent and 10.49 per cent of purchases.
Thanh said stocks of nuts, including cashew, in North America and Europe had been low in the first six months, while global demand for the nuts had increased strongly.
This offers good prospects for the cashew industry this year, he said.
The industry is expected to earn $2.2 billion from export of 300,000 tonnes of cashew nut and another $200,000 — $300,000 from export of cashew shell oil, he said
That’s some pretty sobering value transformation right there. If we assume they exported the same amount (150,000MT) in half the year as Nigeria exported in the whole — Vietnam earned more than 4 times what Nigeria did from cashew exports.
Nigeria has so much work to do.
FF
