Cashew seed exportation: Here lies the goldmine

The Nigerian Export Promotion Council (NEPC), through its Executive Director/Chief Executive Officer, Mr Olusegun Awolowo, recently revealed that in spite of poor infrastructure, lack of finance and poor power supply among many challenges, Nigeria still ranks as a global leader in the export of seven agricultural produce.

Awolowo while speaking on provision of a seamless logistics service as a panacea for economic growth at a business seminar said high export products include yam, melon, kola nut, cassava, sorghum and shea nut amongst many others, adding that it is import to streamline the procedures and documentation of exports.

According to him, there are 22 steps to exporting goods and this lengthy and cumbersome procedure tends to add to the cost of doing business and if issue of procedures and documentations remained cumbersome, opportunities available in non-oil export will remain a mirage.

He explained that the dominance of oil revenue is changing around the world and attentions are being shifted to non-oil export, encouraging private investors to build export warehouses to serve as one stop shop for non-oil exports.

And part of the non oil export agricultural based opportunity options available in Nigeria and the southwest region is cashew seeds exportation. Indeed, it has been said that Nigeria became the largest producer of cashew in the year 2008 and maintained this lead even till 2010.

Mr Segun Awolowo, Executive Director/ Chief Executive Officer, Nigerian Export Promotion Council (NEPC)

Data available puts Nigeria as the sixth largest producer of cashew fruits with a yearly production of about 120, 000 tonnes. It is said that the industry is responsible for the provision of over 600, 000 jobs and a trade worth of N24bn, consequently becoming a major contributor to the economy especially the Gross Domestic Product (GDP). Annually, a cashew tree produces between 200 to 300 cashew nuts and Vietnam, Nigeria, India and Brazil are said to collectively account for more than 90% of all cashew kernel exports.

Cashew, which goes by the botanical name Anacardium occidentale, is a tropical and frost sensitive tree crop mostly valued for its nuts which are harvested once in a year. The tree which forms a large canopy and grows in fertile sandy loam soil thrives more in the southern part of Nigeria.

The major areas of cashew planting in Nigeria includes Oyo, Osun, Ondo, Ekiti and Ogun States in the Southwest part of the country, Enugu, Abia, Imo, Anambra, Ebonyi and Cross River States in the eastern part of the country, Kwara, Kogi, Nassarawa, Benue, Taraba, Niger and FCT in the Middle Belt and also Sokoto and Kebbi States in the North West part of the country. However, in order of importance, majority of export quality nuts are said to come from the Southwest followed by the Eastern parts of the country.

The Nigerian market is patronized mainly by Indians and Indonesian exporters with many Nigerians being middlemen that source for the nuts in large quantities though it is said to be in high demand in USA, Japan, Australia, Canada and some European and Middle East countries. And according to reports, the bulk of quality cashew nuts in the southwest come from Oyo state with Ogbomoso taking the lead due to its soil and the weather which is suitable for cashew nut production. Other towns include Iganna, Okeho and many parts of Ibarapa.

In Osun state, cashew can be found in Ife, Ido Osun, Ede and some parts of Ofatedo. In fact, cashew is a big business in Ife as the Federal Government in collaboration with the state government in 2016 inaugurated the cashew planting season at Ogudu village in Ile Ife as the first step in government’s plan to establish a cashew processing factory in the town in other to add value to the commodity.

The Minister of Agriculture, Chief Audu Ogbeh at the inauguration expressed his ministry’s plan to plant two million cashew trees every year for four years, adding that cashew had become the second most profitable commodity after cocoa

While flagging off the ceremony, the Osun State Governor, Ogbeni Rauf Aregbesola, stated that farming is the alternative to crude oil which can no longer sustain the country’s economy, adding that cashew is a cash and health- promoting crop and Osun state is willing to partner with investors to boost the agricultural sector.

A staff of Toks Investment loading cashew nuts in Iganna

The Ooni of Ife, Oba Adeyeye Enitan Ogunwusi while speaking at the event stated that the ongoing massive planting of cashew in the state was the beginning of a new dawn in the country’s agricultural revolution as the state is already set to rescue the nation from economic strangulation in the nearest future

And cashew is a high yield product which after 18 months of planting, a gives back over 50 per cent of what was planted but it also has a high decay level and during harvest, the cashew fruit usually called the apple is processed immediately as it is highly perishable and gets spoilt within few hours. This decay however has no bearing on the profit chain as what actually bring in profit are the seed and not the fruit itself. So during harvest, the fruit is eaten fresh nut more often processed into juice while the nuts are dried in the sun before they are bagged and stored for export and dried nuts may be kept for more than a year before being shelled or sold.

In the last 17 years, production of cashew nuts in Nigeria according to reports increased almost by 70 per cent. Statistics indicate that it rose by almost six-fold from 30 000 tonnes in 1990 to 176 000 tonnes in 2000. Before this period, it was relatively static at 25 000 tonnes for over a 25 year period from 1965.

Today, more people have recognized the potentials of cashew as a great export material that is economically viable but increase in production is still at low ebb as many farmers still focus more on food crops like yam and maize especially in the southwest states.

But in spite of the massive plantations in the Southwest states, the demand is still more than available supply, creating a vacuum that requires that more attention be given to the trade. The testimony of this was given by a social media user who described cashew nut farming as the best and most profitable agro investment in a write up he titled, ‘the Ogbomoso N5bn industry I didn’t know about’

And in his narration, he stated that sometimes in 2015, he got a call from someone to help him source for 400 metric tonnes of cashew nut from Ogbomoso and the person was ready to invest millions of naira so he decided to take him to major cashew nut dealers that he knew but he was surprised that while they thought the N80m naira they had was enough guarantee, they were surprised that even as they begged dealers, no one was ready to collect from them

“I discovered that my friend came late for the cashew search. I met some Indians that have been around since early January, in fact I saw two Indian guys that have been in Ogbomosho since late December for no other purpose but cashew. I went to a particular dealer and pleaded with him to help my friend get at least 100 tons, all the dealer said was sorry he can’t do anything for now but if we could wait for about two weeks more. I was like why two weeks? So he pointed in a direction towards the warehouse where I saw three Indians looking impatient and he said, ‘I collected 450 million from those guy for cashew nuts and until I’m through with them I can’t do anything for anyone.’

“After I drove away with my friend from the warehouse, it began to dawn on me that something has to be done as fast as possible, seeing now that demands are higher than the supply, my friend has been able to get about 100tonnes out of 400tonnes, and even the Indian guys who came to buy cashew nuts of 450million naira worth are yet to get their full supply, with many other buyers still on queue. This experience launched me into a deep quest to making diverse researches on the nuts. Though, I have always known Ogbomosho to have the best climate and soil for cashew cultivation in Nigeria,” he stated.

Another person that had spoken on the economic viability of cashew is the Chief Executive Officer of Universal Quest Nigeria and spokesperson of the National Cashew Association of Nigeria (NCAN), Mr. Sotonye Anga, a renowned face in commodity business and exporter of cashew nuts who publicly stated that there are more opportunities to make money   in cashew exports now due to the sharp rise in imported raw cashew nut prices from East Africa which has forced buyers to explore other opportunities.

According to Anga, with world price rising and expected to remain steady, life is changing for Nigerians who are ready to invest in cashew export, adding that it requires a minimum investment of about N1.5 million with a return that ranges between 10 to 30 percent per transaction.

He said that if the over than 24 states of the federation that has suitable soil and weather condition starts producing cashew, exporters can get enough supply, adding that cashew crop enjoys considerable patronage around the world

And on the challenges, Anga said going into cashew business is not an easy task for a beginner because of lot of issues especially the amount of capital one is willing to invest as when there is enough capital, one can export himself while it is also good for one to buy and supply export companies in Lagos and major shipping towns. And from his experience, a beginner needs to undergo some form of training or mentorship in order to understand cashew business.

In measurement, 13 bags of cashew make a tone while 30 tonnes make a truck or long trailer. And there is a consensus that cashew trading and export is a business that needs more investors especially in the area of utilizing the cashew apple which is usually allowed to waste while trying to get the seed. The apple could create another source of income if processed into juice. 90 per cent of the cashew apples are allowed to go to waste just to get the seeds while exporters also face challenge of meeting up with demands as part of the seeds that should be exported are roasted into nuts and sold cheaply by the roadside.

While stakeholders agree that there is need for government to support the Nigerian cashew processing sector with infusion of funds to add value to the products, the Chief Executive Officer of Centre for Trade and Export Development, Mr. Titi Ogunye, reiterated his organization’s readiness to train more Nigerians in cashew export, adding that they offer integrated support to new and existing exporters interested in sesame, cocoa, soybeans and other non oil exports.

Sample of cashew nuts for export

Cashew nuts are packaged using either of two materials; the jute or the polythene and the material used determines the price as cashew nuts in jute bags are more expensive than those packed in polythene bags and jute bags is the choice for exporters.

The prosperity in the cashew exportation business was confirmed recently by the president of the National Cashew Association of Nigeria (NCAN), Pastor Tola Faseru, when he stated that NCAN was glad to witness the prosperity of cashew farmers in Nigeria as shows that NCAN is working in collaboration with government and development partners.

“The current global market trends show an increasing and strong demand for cashew and Nigeria will continue to deliver its quota and remain relevant in the cashew world. I therefore, urge our cashew farmers nationwide to be serious with the cashew business and be committed to GAP and quality improvement protocols so as to get the cash in cashew,” he said.

The difficulty in getting cashew nuts out of Nigeria due to delay in shipment is however a cause of concern for the farmers as it cost agricultural shippers millions in lost revenue between.

And now that there is a continuous drop in oil prices with the prediction that there will be further collapse in prices of oil, stakeholders are advocating more engagement in cashew production and exportation as it is believed even among African countries that export directly to Europe, Nigeria is a still a laggard while the southwest with its arable land and massive cashew plantation is still not taking the business serious.

Stakeholders advocate that the southwest needs to find its feet in the cashew business which it has potentials to explore in order to become a determining factor in the economy of the nation.

‘South-West still needs to work on cashew cultivation’

Alhaji Idris Busari is the Chief Executive Officer of Markirisun Commodities Limited, a commodity trading company based in Ibadan, Oyo State, and Veguit Fruits and Vegetable stores. He talks about cashew exportation from his experience as an agent between cashew farmers and exporters

Idris Busari

How many years have you been into the business of cashew plantation?

I don’t have a cashew plantation of my own but I learnt about the produce from my father’s venture into the cultivation of cashew 18 years ago in Eruwa here in Oyo state

How are you involved in cashew exportation?

I do not export cashew just as I do not plant it. What I do is that act as a liaison between farmers and exporters. I source for the product from farmers and merchants and supply to exporters. It is a chain process.

Why do you sell to others and not export yourself?

I do that because it is capital intensive to export and without adequate finance, one cannot embark on the venture of cashew export.

Can it be a source of income generation and foreign exchange?

Yes. I will say a definite yes. It is a great source of income generation and foreign exchange. I remember my experience in 2011 when we were buying at the farm gate at 58,000 per ton of cashew nut and we were hoping to sell at 72,000 per ton delivered in Lagos. However, there was civil unrest in Ivory Coast, which is the largest cashew nut export in Africa and their sea ports was shutdown, this resulted in buyers rushing down to Nigeria to buy ours and it pushed the demand high and cashew nut price jumped up to 144,000 at farm gate and we were selling to Lagos for 160,000. Both traders and farmers had a boom and cash influx that trading season.

Can you grade the southwest region in terms of this business?

I have traded cashew nut from Eruwa, Ejigbo and Kwara but I can say that from my sourcing journey on cashew, the southwest still needs to work on its cultivation. From my experience Kwara and Nassarawa are the two states where I find with the largest quantity of cashew though the Southwest has a more suitable soil and weather

How capital intensive is the venture?

It is very capital intensive these days. Like this trading season, it started at 480,000 per tonne from farm gate and went up to 620,000. You can’t just buy one tonnne and expect to be profitable, you will need to buy much more; that means you will have to invest more.

Who can do the business?

This business might look very simple for anyone to start but to be successful at it one must be trained and mentored in the business.

How can people get required training?

Training in this industry is not class based but field based. To learn the trade, one most move with someone that knows the trade.

Challenges?

The challenges in the industry are more around poor infrastructure that increases your cost of transporting your produce and the dishonest practices of merchants selling lower grade for higher money and unwholesome practices of Produce Inspectors.

 What’s the turnover like?

If well planned, the turnover is very interesting. One can have a gross margin between five to 10 per cent on a tonne

‘The seed sale is lucrative’

Mr Tokunbo Oluwatobi Odubiyi, the Chief Executive of Toks Investment, is an old hand in cashew seed supply. He talks about how easy it is to make it in the business and the pitfalls

How long have you been in this business?

To God be the glory, I have been in this business for 20 years.

 Tokunbo Odubiyi

What aspect of the business are you in?

I have a cashew plantation; I plant and supply my product. I also help in sourcing for seeds for companies.

 Is your produce enough to meet your customer’s demands?

No, it is not enough. I get supplies from other farmers around here to meet up with the shortfall in demand; we have many cashew plantations here in Iganna and environs.

 You don’t do export?

No, I do not export. I sell my products locally to companies that produce nuts and cashew products

Where do you supply your product?

I supply to Lagos; there are companies where that buy from me regularly. My major customers are Amajaro, Holam and Wacot though there are others that also buy from me.

How capital intensive is the business?

It is very capital intensive. On our level, you will need lots of money. But averagely, to do this business, one should have like N100m because returns is based on how much you invest and companies do not buy in small quantities.

 Can one make it big in this business?

Yes. One can make it really big even in a short time if he has enough capital to operate

 Who can do the business?

Anyone can do the business once there is an experienced mentor. We have all mentored people at one time or the other while some even come for training.

 Challenges?

Lack of funds is a great challenge; many do not have enough to do the business. Also, more people should invest in cashew plantations and partner with those already in the business.

Source:http://tribuneonlineng.com/