Cashew, as an example of Nigeria’s unrealised potential in agriculture

For years Nigeria has been a classic case study for the resource curse. Despite being blessed with some of the world’s most arable land, the country has gone from being self-sufficient, to import dependent – food wise.

Following a lengthy period of economic growth, Nigeria has slipped into a recession on the back of low oil prices and production challenges. Once again, Nigerians are realising that agriculture is a sure path to future sustained prosperity.

Cashew is one of the crops that can be used as a barometer for agricultural development in the tropics. SBM Intelligence carried out a study on the current state of the Nigerian cashew industry, with a view to highlighting some of the challenges facing the industry and opportunities present. The brief study which took place during the month of July, 2016 involved a review of existing literature from academia, governmental agencies, non-governmental organisations and industry associations and some field research to verify the data from two local government areas in Kogi State.

Key points from our study include the following:

• Despite serious discrepancies in available data, Nigeria appears to be Africa’s largest producer of raw cashew nuts (RCN).
• There are numerous challenges to the value chain, the most serious of which include: low yields at farm level, unrest, inequitable distribution of wealth across the supply chain, absence or non-implementation of well thought-out processes, and high cost of doing business.
• None of the farmers pay taxes to the government.
• The most important things that determine who farmers decide to sell their produce to are how quickly they get cash and proximity to their location. This speaks to two things – security and lack of preservation/transportation infrastructure.
• Most owners have been in business for around 20 to 23 years with the minimum being 14years and maximum being 25 years.
• Half of the farmers have above 100 Stands of Cashew with 30% having above 500.
• None of the farmers is younger than age 35, 80% of them are between 40 and 51. The youngest is 36 while the oldest is 62.
• Only 20% of the farmers have access to extension workers.
• On the average, middlemen are better educated than the farmers. Whereas farmers had people with Quranic and Primary education in the mix, the least education level of middlemen is secondary education. 70% of them have Tertiary education.
• Middlemen fall within the same age distribution as the farmers with median number of years in business falling lower than farmer median of 22 to 15 years for middlemen.
• 90% of middlemen we spoke to do not go on to process in Nigeria but simply repackage in jute bags and export. From the study, it appears that up to 50% of RCN produced in Nigeria are branded as produce of other West African countries (mainly Benin, Ghana or Ivory Coast) which they claim was the directive from buyers who are mainly foreigners. The major obstacles to local processing of nuts are high cost of RCN, power outages and seasonality of cashew which makes the processing plants dormant for more than half the year.
• The biggest concern to middlemen are the high cost of transport and road mishaps, speaking to a dearth of transport infrastructure to support the business.
• Unlike the farmers, all the middlemen responded that they pay tax to the government.
• Data collection in the past has not been regarded with the importance it needs, leading to improper planning and loss of revenues.

Download the report (19 pages)