IMPROVING CASHEW VALUE CHAIN PRODUCTIVITY THROUGH CASHEW POLICIES IN AFRICA

Posted on  August 5, 2020  by  Pnafrica

The ways in which governments manage the cashew sector are as diverse as the numerous cashew-producing countries themselves on the African continent. The sector is characterised by a very high degree of heterogeneity and numerous, often not very well organised, actors. Cashew has been grown in numerous countries in West and East Africa for several decades and the value chain is playing an increasingly important role in African economies.

Because production involves millions of farmers, local processing is a job engine, especially for women and young people. As an export crop, cashew brings important foreign exchange to the countries and links them to the international market, especially with Asian countries, thus promoting South-South economic relations. In addition, cashew is particularly adaptable to climate change and can thus make a green contribution to the resilience of the countries.

All these factors explain why cashew also plays an important political role and has thus landed on the political agenda of many governments. How they promote the sector varies from country to country. The degree of regulation and political support is the result of a combination of different factors: national preferences, institutional history and established systems in the regulation of agricultural sectors, private sector interests, degree of organisation of the actors and last but not least the influence of technical and financial partners.

First of all, the cashew sectors are organised differently in various countries. In some countries, there are independent, politically mandated cashew regulatory authorities. This is for example the case in the Côte d'Ivoire with the Cotton and Cashew Council CCA. In other countries, the sector is organised in departments of the Ministries of Agriculture or Trade or is part of a multi-crop authority, such as in Ghana with the newly created Ghana Tree Crop Development Authority.

As the cashew sector plays an important role economically, ecologically, and socially, African governments are trying to strengthen it through various policies in trade promotion, organisation of farmers and processors, investment in local processing, sustainable and climate-resilient cultivation, among others.

For example, states are increasingly using the instrument of taxation to reinvest in the sector and make it sustainable. This is done, for example, by levying export taxes on RCN, most of which are then reinvested in the sector by the respective regulatory institutions or ministries to support extension services, research, infrastructure, quality assurance and many other services. In West Africa, countries such as Côte d'Ivoire, Benin, and Burkina Faso levy such a tax, which is then reinvested according to different keys.

 

However, such an instrument is not without criticism and challenges. On the one hand, such a tax increases the costs for exporters, which is not always welcome by private sector actors, especially in the currently challenging market, and on the other hand, the questions of efficient reinvestment arise. There is a risk that such revenues could sink into the general state budget, and unfortunately, this is partly the case. A good, strong organisation of producers, processors and other actors is needed to accompany this and also to demand and implement it if necessary. Therefore, good governance is essential to speak about the success of such a policy. This governance must be transparent and accountable.

It is the common goal of most African cashew producing countries to strengthen local value creation. More than 90% of the cashew nuts produced in Africa are still exported raw and processed in Asia. To promote local processing and thus job creation, different countries have different policy packages in place. Among other things, policy instruments that can be mentioned here include Subsidies per locally processed kernel, tax exemption on kernel exports, tax exemption and facilitation of imports of processing machinery and technology, access to government guarantees and financing programmes, support for quality control, preferential conditions in tax-free zones, programmes to link farmers and local processors. These and many more are aimed at strengthening local processing. In Côte d'Ivoire, the largest cashew producer in the world, the political will to promote local processing is very strong and most of the policy instruments described here can be found there.

Another area that is strongly supported by governments is that of research. Targeted research on planting material, cultivation techniques, climate change mitigation, processing techniques and by-product use can greatly improve the value chain in the countries concerned. Some countries have therefore founded their own cashew research institutes or have placed cashew in existing research hubs. The Cocoa Research Institute, Ghana (CRIG) for example, plays a pioneering role in cashew research in the sub region and contributes greatly to the transfer of knowledge.

The strong operationalization of the Consultative International Cashew Council (CICC) and active participation of cashew-producing countries will help to cushion the sector against the effect of crisis like the COVID-19 outbreak and associated trade restrictions. It would also enable countries to compare notes on benefits and challenges with their existing policies, to ensure that more robust policies are formulated and implemented for the growth of the sector.

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