Tanzania government decides to buy cashew nuts stock as dealers cry foul

TANZANIA – Tanzanian President John Magufuli has officially announced that the government would buy all cashew nuts from farmers at about US$1.44 (3,300 Tanzanian shillings) a kilogram.

This was after private buyers were reluctant to buy the crop due to disagreement in purchase prices.

To support implementation of the directive, President Magufuli directed the Tanzania Agriculture Development Bank to immediately release money for buying the nuts, also ordering the army to ferry bought cashew nuts from farmers.

“I am appealing to cashew nuts farmers to be patient.

“The government will buy their cashew nuts and seek a reliable market,” the president said.

Cashew nut dealers said the decision by the president to buy the crop from farmers would affect them financially as their families depend on it.

“Many people get temporary employments during cashew selling seasons, so the use of army will result into job losses,” said OM Agro co-director, Mr Mashaka Msumali.

“We planned to buy 5,000 tonnes of cashew nuts at US$1.35 (Sh3,100) per kilogram, but we are forced to scrap the plan after the President’s directive that we should not be involved in buying cashew nuts.”

Failed auctions

Both farmers and trade dealers have engaged in a long battle on the failed auctions of cashew nuts commodity as a result of changes in international prices.

The new buying season started early this month but no trading took place due to a boycott, leading to fears that the disruption would affect the country’s foreign exchange earnings.

The current cashew nuts buying season witnessed low prices of the crop during a handful of auctions held in cashew nuts growing regions across the country.

To solve the stalemate, traders had suggested various market plans as long-term resolution for cashew nut market.

The mechanisms included establishment of commodity reserve fund, reviving non-operational industries, creating an evaluation body and enabling farmers to be part of management in companies.

Following this stand-off, the government issued a four-day ultimatum to 35 private firms to buy cashew nuts to state in writing the amount of cashew nuts that they intended to buy this season.

Despite an agreement between the government and cashew nut buyers to buy the crop at US$1.31 (Tsh3,000), the buying of cashew nuts in auctions continued to be at snail’s pace.

Global prices continue to fall

International prices for cashew nuts have dropped by nearly half since March 2017.

A drop in world prices have seen cashew farmers and exporters worldwide record a slump in sales even as Vietnamese exporters try to get out of contracts.

Ivory Coast which is one of the world’s leading cashew nut producer saw a slowdown on demand for its produce, especially after consumers in the United States and Saudi Arabia objected to high prices.

Vietnamese processors, who buy 70% of Ivory Coast’s production have seen their margin erode.

Speaking to the parliament about the cashew saga, Majaliwa said that the government was seeking markets for cashew nuts abroad.

“The government is holding talks with various countries that can offer handsome prices for our cashew nuts.”

According to him, during the previous season, 300,000 tonnes of cashew nuts were harvested and that 200,000 tonnes of the crop are expected to be harvested during the current season.

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