Tanzanian Cashew Farmers Hard Hit

Mohamed Suleiman has climbed precariously into his cashew trees for years to gingerly prune and care for them. But the branches are not nearly as difficult to negotiate as economic liberalization and globalization.

In less than a year, prices have plunged, production has slumped and earnings are down.

“Although the prices are going down, I have not given up yet,” the 37-year-old says at his small farm near Kibaha, 25 miles west of Dar es Salaam, the capital. “I don’t have any other job . . . cashew-nut farming is my lifeline.”

Cashew prices have plummeted 50% to around 23 cents a pound this year from the 40 to 45 cents they brought during the 1999-2000 season. Cashews were Tanzania’s top foreign exchange earner last year, bringing in $90.2 million for 121,207 tons sold.

What a difference a year can make. Officials had forecast that Tanzanian farmers would sell 132,000 tons of nuts this season, but only 70,000 tons were purchased, says Chachage Seithy Chachage, an independent commodities researcher.

Chachage contends the crisis in the cashew market is due to inadequate regulation since the government moved to open up Tanzania’s economy.

Tanzania liberalized the cashew market in 1994 after production fell to a low of 17,000 tons during the 1989-90 season. The reforms allowed buyers to deal directly with farmers for the first time. The Cashew Nut Board of Tanzania, once a government monopoly for purchasing, was reduced to an industry regulator.

But Chachage says there were only 82 buyers the last two seasons, and they appear to be colluding among themselves to keep prices down.

“It is corruption in the name of liberalization. Liberalization does not mean there are no rules to be followed. . . . The fact is, you cannot leave agriculture unprotected,” he says.

The result has been falling prices, but even worse is widely fluctuating demand for cashews, Chachage says.

“Farmers attribute the price slump to chaotic markets rather than free markets after liberalization,” the researcher says. “What they wanted were reliable markets even if prices fluctuated.”

Most East African cashew nuts are exported to India, where they are roasted and then shelled by hand before being shipped to the United States, the largest importer, and to Europe. Cashew oil contains acids used in a number of industrial products, such as paints, plastics and aromatic hydrocarbons.

To increase earnings, Tanzania could process the nuts before exporting them, Chachage says. But the government has so far refused to privatize its 12 nut factories, discouraging processors.

The government has sought new markets and begun selling cashews to Vietnam, but 40,000 tons of nuts remain unsold, a cashew board official says.

Suleiman, the farmer, complains that the cashew board has not paid him for the nuts he sold the board in January. Private buyers pay higher prices on delivery, but they don’t buy on a reliable schedule, he says.

The unpredictability of the market makes life difficult for farmers.

The Mtwara region, 180 miles south of Dar es Salaam, produces 90% of Tanzania’s cashews. Many farmers there abandoned other crops after the 1999-2000 boom in cashews, and now they have been left destitute by the market collapse, Chachage says.

Juma Kindamba, a farmer from Mtwara, processes his cashews and sells them on the streets of Dar es Salaam.

Showing a handful of kernels worth the equivalent of one U.S. cent, he says, “This way I make more money than selling to the board, but very slowly.”