Traders raise fears over ban on raw cashew nut exports

The government will officially announce the ban in a gazette notice to be published next week, the Minister for Agriculture, Mr William Ruto, said.

But exporters of raw cashew nuts said the move would lock out many buyers and push down farm gate prices.

Some farmers also expressed similar sentiments while local processors see this as an opportunity to bunch enough raw materials for processing cashew nuts products for unsatisfied local and international market.

According to Ruto, it is only the government through the National Cereals and Produce Board (NCPB) that will be allowed to buy the nuts directly from the farmers and sell it to the local processors.

This will lock out middlemen who buy nuts on behalf of the exporters and currently command over 50 per cent of the market share.

This was one of the proposals given by the team led by Mr John Mumba, a former managing director of the now defunct Kilifi Cashew Nuts Factory, as a way to revive the industry.

The task force was also to propose a regulatory framework for the industry.

A farmer in Kilifi, Mr Josephat Mwandengu, said middlemen provided more buyers and had improved farm gate prices.

“If the government can pay us Sh55 per kilogramme as we currently receive from some brokers, we shall not have any problem with the minister’s directive,” Mwandengu said.

Kenya Nuts Ltd and the Equatorial Nut Processors (ENP), both located in Central province— well over 500 kilometres from the Coast — are the main processors in the country.  

Mr Mwandengu said the two processors had difficulty reaching all nut farmers in the region compared to middlemen who transverse cashew nut- producing areas on hired trucks.

Kenya Nuts officials said exporters manipulate prices due to the high profit margin they get from exports to India.

“If the local processors are driven out of the market by these prices, exporters reduce them drastically to the detriment of the farmers,” the Kenya Nuts field officer, Mr James Ndegwa, said.

The Kenya Cashew Nuts Processors and Exporters Association chairman, Mr Samuel Varghase, said the biggest losers from the ban will be farmers since reduced number of commodity buyers will lead to uncompetitive farm gate prices.

“If the ban is effected, exporters have to look for alternatives,” Varghase.

Other exporting companies include Emke Commodities, Export Trading, Donal International and Jumba international, who registered companies in Tanzania recently when the government sent signals that it would ban export of raw cashew nuts, according to Varghase.

Although the Tanzania cashew nuts are smaller in size compared to those from Kenya, the exporters will have access to over 130,000 tonnes of nuts produced, compared to the 10,000 available in Kenya.

“If exporters move to Tanzania, farmers will lose income since the government has not established enough value addition and processing units in the country,” Mr Alex Mwangeka a Kenya Chamber of Commerce official said in an earlier interview.

Mwangeka said the government should go beyond the ban and put in place a reliable road map towards rehabilitation of the sector. 

Two more players, Wonder Nut and Millennium Management Ltd-—that has acquired former Kilifi Cashew Nuts, are the latest players buying cashew nuts from farmers but they are cannot get enough nuts.

Production has been falling, reaching its lowest record of 10,000 tonnes last year compared to 14,000 metric tonnes three years ago, statistics from the Ministry of Agriculture indicates.

The income generated by cashew nuts has also declined from $3.75 million to $3.25 during the same period.

The industry is estimated to have a potential of 150,000 metric tonnes per year, according to the experts.

Agriculture Business Development programme and the Agriculture ministry initiated a value addition pilot project in Kilifi, Mr George Mazuri Yaa, an ABD Coordinator in Coast region said.