What to expect as cashew trading goes online again in Tanzania

Dar es Salaam. The Tanzanian government has announced the reinstatement of online cashew trading to tackle cartels, boost farmer earnings, and increase transparency in the cashew industry.

The major transformation in cashew trading was announced in Parliament last week as the ministry of Agriculture tabled the Sh1.249 trillion 2024/25 financial year budget.

Responding to concerns from legislators who debated his budget, the docket’s minister, Mr Hussein Bashe, said effectively from the 2024/25 trading season, cashews would be traded online.

He said the decision had been reached after a team of investigators formed by the ministry to assess the crop found cartels among buyers, therefore adversely affecting crop prices and farmers’ earnings.

He said a three-month probe at the district level revealed that unscrupulous individuals earned over Sh20 billion in the 2023/24 financial year alone on cartel incidents.

Shedding light on the incidents, Mr Bashe said buyers and cooperative officials were involved in the acts by allowing bidders to submit envelopes with two bid forms in them.

“Honourable Speaker, one of the forms consists of the company’s offer and the second remains unwritten. However, bid box keys remain with the district cooperative officer and his counterpart leader,” he said.

“These officials meet at midnight and open the bid box. They go through the bids and contact buyers under the dirty game and fix prices using the unwritten form submitted in the envelope for the company to win the auction,” he added.

He said the collusion guarantees cooperative leaders an average of Sh40 and Sh50 per kilo in personal gain.

Mr Bashe assured the Parliament that through the probe team, enough evidence had been collected, insisting that there was a need for a major transformation in the crop trading system for the benefit of farmers.

He said the online trading system has significantly improved the price of cocoa to nearly Sh30,000 per kilogramme and that of coffee to Sh7,000 from the previous Sh700 to Sh800 respectively.

"Nothing was done in these crops than system changes because it allows cooperative leaders to be involved in theft that cannot be successful without their involvement,” he said.

Speaking exclusively to The Citizen, the Cashew Nut Board of Tanzania (CBT) Director General Francis Alfred said the decision to trade raw cashew nuts (RCN) through the online system would reduce costs incurred by the buyers and increase the scope of purchasers as well as competition.

He said the system would allow for the setting of base prices and increase farmers' participation and decision-making processes, therefore strengthening their powers.

“The system is crucial because it widens the scope of buyers, increases competition, and reduces costs of buyer participation. The saved money could be added to the bidding for them to offer better prices and benefit cashew farmers,” he said.

Furthermore, he said cashew production has increased globally from the previous one million tonnes per season to five million tonnes, hence demanding a direct and transparent trading system.

“The introduction of base prices aims at discouraging cartels,” he said, declining to provide more details.

For his part, the Tanzania Mercantile Exchange (TMX) chief executive officer, Mr Godfrey Malekano said online cashew trading would prevent buyers from meeting and colluding at the expense of cashew farmers.

He said following the instruction given by the ministry, TMX and CBT were now in preparation to ensure the system operates in the 2024/25 trading season.

We are going to have offices at the CBT headquarters in Mtwara and another sub-office in Lindi town where large television screens will be installed to allow citizens to closely monitor the online trading process.

“We are planning to broaden the follow-up through smartphones,” he said disclosing that plans were afoot to reach as many buyers as possible in the TMX’s efforts to ensure they play a price stimulation role.

“The online system, quality, and quantity assurance guaranteed by CBT and the Tanzania Cooperative Development Commission (TCDC) will also guarantee buyers to get the produce in standards stipulated in the catalogues,” he said.

Regarding the system’s achievement, Mr Malekano said it has boosted the price of coffee pods in the Kagera Region from an average of Sh700 to Sh800 per kilo to a whopping Sh3,000 per kilogramme, significantly contributing to reported smuggling.

He said the price of cocoa in the Mvomero District Council, Morogoro Region, strengthened from an average of Sh1,500 and Sh2,000 at the farm gate price per kilo to Sh4,500.

According to him, the last auction has enabled the crop to record a staggering price of Sh29,950 per kilogramme. Furthermore, he said the system’s transparency is expected to efficiently address the challenge of cartels and provide intervention rooms to responsible institutions.

Mr Malekano said following the sensitivity of the matter, TMX was planning to engage ethical organs to closely monitor the process, ensure no cartel incidents take place and attract competitive prices for the benefit of farmers.

“Foreign buyers will be invited to participate in the process, therefore appropriately challenge domestic buyers in offering better prices,” he said, pledging transparency, competitiveness, and engagement in the 2024/25 season.

Levies scrapped

In Parliament, Mr Bashe said out of 310,000 tonnes of cashews produced in the 2023/24 season, Sh14 billion was paid to the local government authorities (LGAs) in terms of cess, while another Sh6 billion was a levy paid to CBT.

He said the Tanzania Agricultural Research Institute (Tari) received Sh6 million, Sh24 billion was paid to cooperatives, Sh26 billion remunerated for crop development, Sh12 billion to other public institutions, and Sh96 billion was paid as an export levy, amounting to Sh186 billion.

“All this money is taken from farmers. We are supposed to make reforms. Since the government is providing inputs’ subsidies, we are supposed to reform the cashew trading system and increase the level to which farmers benefit,” he told the August House.

He announced the scrapping of Sh50 additional levies paid to the wards, districts, and regions at Sh20, Sh20, and Sh10, per kilo respectively as they hurt farmers.

Price Challenge

The CBT boss said despite the decrease in prices as compared to the global trend, Tanzania's cashews were last season traded at slightly better prices as compared to its neighbours.

For instance, he said last season, Mozambique sold RCN at an average of Sh1,350 per kilo, while Tanzania garnered an average of Sh1,874 per kilogramme.

“Despite this achievement, Tanzanian farmers are not satisfied. Therefore, the online trading system aims to increase efficiency and improve prices. Buyers will no longer be required to travel to cashew trading regions to lodge bid envelopes,” he said.

The 2024/25 season

Mr Alfred said his office has started the distribution of subsidised cashew inputs for the 2024/25 season to farmers starting with those whose produce matures earlier.

“Farmers who have lodged deceitful information during the registration process shouldn’t appear for the inputs collections because their details will be verified,” he cautioned, noting that the distribution will be done in phases.

“We have more powder sulphur and liquid inputs than what we demand for the 2024/25 season. The government will continue addressing challenges facing the sector for industry’s prosperity,” he added.

2024/25 production target

Mr Alfred said after recording over a 60 percent surge in cashew production from 189,000 tonnes recorded in 2022/23 to 310,000 tonnes in 2023/24, Tanzania forecasts 550,000 tonnes of RCN in the 2024/25 season.

“To realise this endeavour, CBT is making efforts to ensure appropriate and efficient use of inputs next production season,” he said.