Exporting Cashew Kernels to the U.S. Market
By Roland Oroh
Cashew grows successfully in the Eastern, Western as well as Middle belt and Northern states of Nigeria. The distribution and cultivation is virtually in all agro-ecological zones including the semi-arid areas. By 1995, total hectares of land under cultivation was estimated at 40,000 with about 60% of the holdings owned by smallholders; another 30% are available in the wild, while a meager 10% is in large and medium size commercial plantation sector. By 2000, there were indications that total hectarage had increased significantly to about 100,000 ha due to the involvement of some state governments in cashew cultivation. This expansion is a direct result of the cashew production expansion programme of their various ADPs, NALDA and Tree Crop Units (TCUs). Annual harvest is estimated at about 60,000 - 80,000 MT. Harvesting begins usually from early January (in the middle belt zones) and early February (in the eastern areas) to late May or early June, spanning about 16 - 18 weeks. The major cashew producing states are Kogi, Kwara, Oyo, Cross River, Abia, Nassarawa, Ogun, Ondo, Osun, and Plateau states.
The main product of the cashew tree is the nut, which is attached to a pear-shaped false fruit called the cashew apple. The nut, considered as the most valuable is composed of a thick shell (coriaceous epicarp); a testa membrane; a receptacle of a caustic liquid called CNSL; a skin that covers the kernel and finally the edible kernel. In its raw form, the kernel is soft, white and meaty. When roasted, it changes color and taste and turns from creamy white into a golden hue and the mellow pulp becomes crisp. Salted, it appears to the palate as the most delicious nut, eaten as snacks, while the broken ones are used in the confectionary, bakery and chocolate industries. Lately, many cashew recipes have been developed and are gaining popularity among housewives all over the world. The kernels contain 21% of vegetable proteins; nutritionally they stand at par with milk, eggs and meat. It also contains a high concentration of much needed amino acids in right proportions, which has been found to be rare in nuts. The nuts have been discovered to contain 47% fat, but 82% of this fat is unsaturated fatty acids; unsaturated fat eliminates the possibility of, and actually lowers, the cholesterol level in blood. The most prominent vitamins in cashew are vitamins A, D, and E. These vitamins help assimilate the fats and increase the immunity level. Additionally, the kernels are rich source of minerals like calcium, phosphorous and iron. They also protect the human nervous system.
The overall market for cashew nuts has increased as consumers increasingly become aware of its health benefits. Consequently, as more and more people in the developed countries join the bandwagon of health conscious shoppers, cashew industry in the developing world is bound to witness steady growth. This is because primary production and early stage processing of cashew is restricted to the tropics.
Worldwide, 160,000 MT of kernels are traded annually with a retail value estimated at over $2billion. Of the total world supply, 110,000 MT are traded annually in the international markets while the remaining is consumed in the emerging markets of producing countries especially India, and lately China. By far the United States is the single largest importer (60%) in the world; though some of these imports are re- exported to other countries. According to trade sources, interest in cashews have been linked to efforts aimed at promoting cashew consumption by several interest groups in both producing and consuming nations. For instance, The Association of Food Industries (AFI), based in the U.S. began a promotional programme for cashew in the late 90's funded by India, Brazil and US cashew interests for increasing cashew consumption under the auspices of the International Nut Council (INC), Reus, Spain. Under this programme, the health benefits of cashews were brought to the notice of discerning consumers in the US and all over the world, and consequently, cashew may have assumed a supreme position among edible nuts. Increased consumption in the United States may also have been encouraged by the recent actions of the big supermarket chains, which previously would have a very large mark-up most of the year, and the resulting high prices did not help cashew consumption; promotions for the most part were limited to the fall months. However, recent trends are that, retailers are getting much more aggressive in their pricing with smaller mark-up and promotions throughout the year. This has increased consumption by making cashew nuts affordable to the middle and even lower middle class. On the whole, consumption is expected to maintain an increasing trend occasioned by falling retail prices and promotional backup.
A historical analysis of data indicates that new comers are seizing share of the US market from traditional suppliers. For in stance, the United States imported 3,318,000 and 2,827,000 (50 Ib net weight) cartons of kernels in 2000 and 1999 respectively. Among suppliers, India, a traditional supplier recorded 1,740,000 in 2000 - a 9% decline from the 1,910,000 cartons supplied in 1999. Brazil came second with 983,000 cartons in 2000. However, Vietnam and Mozambique, new entrants to the lucrative US market made significant inroads. While Vietnam supplied 145,000 cartons in 1999, she witnessed a phenomenal increase of 176% in 2000 with 401,000 exported. Mozambique also increased her supply from 79,000 cartons in 1999 to 119,000 cartons the following year- a 50% increase. This trend has continued in other markets; Vietnam presently captures about 70% of the Australian kernels market; where India has suffered the most decline, moving from having 80% of the market to itself in 1995 to approximately 50% in 1999; and 20% in 2000. Consequently, Vietnam has been active in sourcing raw nuts from other countries to feed her processing plants; reportedly bought as much as 40% of the 2003 Nigerian raw cashew nut harvest. The emergence of countries like Vietnam and Mozambique in the kernels market is an eye opener for Nigeria and other African producers.
In Nigeria, only one or two processors are known to be supplying kernels to the US market through brokers, and output is at best very marginal; less than 4,000 cartons annually. From all indications market openings exist for cashew kernels in the US market and prospective investors in the private and public sectors should take advantage of this to set up small and medium- scale processing plants to earn foreign exchange. A new entrant could begin by processing and supplying a 20ft container load per month; these 700 cartons of kernels would generate between $50,000 - $60,000 depending on the size and quantity of whole nuts. With the re - capitalization of banks, I believe they will be better placed to offer credits to processors to stock raw nuts for up to three months. This has been the bane of processors.
Prospective investors shall be assisted in preparation of feasibility studies and advice in selecting equipments for processing. They would also be assisted with marketing support for the kernels from their processing plants when operational. Interested investors should contact the writer for more information.
Roland Oroh is a market analyst and SME development consultant.
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