Dar es Salaam. Local cashew processors in are now grappling with inadequate supply of raw cashew nuts (RCNs) as raw material for their firms.
However, they still hope that the government would fulfil its promise to protect domestic investment.
Speaking to The Citizen, Akros Company Limited director John Joseph said there were fears that most domestic processors would close shop over inadequate supply of raw materials due to high price in cashew auctions compared to ability of individual companies.
He noted that already an investor, who had ambitions of expanding his firm’s processing capacity to 30,000 tonnes from 2,400 tonnes annually, has closed shop over lack of raw materials, expressing worries that his firm would probably follow suit.
“We told the government that we can’t buy billions of tonnes of RCN in order to meet annual processing demands for our companies. We requested for special treatment in procurement of raw material amounting to 50,000 tonnes-which is our processing capacity,” he said.
He said this year, his company did not buy raw cashew nuts due to high prices, noting that therefore no domestic or foreign clients would be serviced.
According to him, last season the government pledged to offer special treatment to domestic processors during cashew auctions by purchasing a bulk of cashews and selling them in small amounts to local processors, something which didn’t happen. He said Sh16,340 was required to process 4.3 kilo of RCN to produce a kilo of processed kennels.
“Unfortunately, processed cashews (kennels) is sold at $6.5 which is equivalent to Sh15,000. However, price for agricultural crops are subject to abrupt volatility,” he noted.
“People revived old factories, some of them secured loans for investment from financial institutions following encouraging statements from the government. November last year, I was denied a Sh150 million loan due to unreliability of the business especially in getting raw materials,” he added.
Mr Joseph said he required Sh4.5 billion to buy 1,200 tonnes of RCN which is enough for annual processing, noting that, however, financial institutions can only give loans enough to cover 100 tonnes which is a monthly requirement.
The chairman of domestic cashew processors, Mr Salum Mkemi, said challenges facing domestic processors has forced them to procure RCN which is unsuitable for export, mostly from Coast Region in order for their factories to operate.
He said the government’s process to assist domestic processors wasn’t an easy to go job and that it required legal issues to be sorted out first.
“The government could see how export levy would help to close the cost gap in order to protect and promote local processing without also affecting farmers revenue and prosperity,” he said.
Mr Mkemi said Tanzania had high quality and valuable cashews which is mixed by low quality product from western Africa in order to make their factories operate annually.
“We can’t compete with foreign buyers because while they are allowed to import cashews from different countries, importation is restricted in Tanzania,” he said.
Last year, government leaders promised to assist local processors by setting aside the amount of RCN that will meet their demands.
“For a long time we have failed to run our factories due to failure of local processors to compete for raw materials, lack of modern processing equipment and enough storage facilities. We have therefore decided to give privilege to enable domestic processors to get raw material for them to operate throughout the year,” Agriculture minister Japhet Hasunga was quoted on September 20, 2019 as telling the media.
Reacting to domestic processor’s concerns, Mr Hasunga said the ministry of Industry and Trade was finalizing preparing policy to protect local processors in the country.
“It was difficult for us to do something this season. But, presence of the policy will enable set plans next season. This season, they had to buy raw materials during the auctions like any other buyers,” he said.
According to him, Tanzania has 30 cashew processing firms, 18 of them have a capacity to process 50,000 tonnes and employ 67,000 Tanzanians.