Despite Ghana’s cashew processors having a combined capability of 60,000 metric tonnes, agri-processors suffer from a deficit of raw inputs, leaving only two of Ghana’s twelve cashew nut processors in operation as of May 2016 – or in some cases, completely idle.
Brazil-based USIBRAS, which has a US$35 million factory in Ghana and an installed capacity of 35,000 metric tonnes per annum – making it the largest such facility in West Africa – is operating at just 25% capacity, due to the fact that the majority of the country’s crop is exported.
Mim Cashew, a privately-owned Ghanaian firm and the only other processor still in operation, is also operating below its annual capacity of 7,000MT.
Overall, reports indicate that utilization of domestic cashew processing capacity stands at just 7%.
Ten other registered processing companies, including Ghana Nuts, have ceased operations entirely, with KONA Agro Processing the most recent closure coming in April.
The challenge processors currently face is not a result of bad harvests or low crop production volumes.
According to the African Cashew Alliance, an estimated 75,000 smallholder farmers in Ghana (with an average of 2.5ha of land) produce approximately 70,000 metric tonnes of raw cashews each year.
However, local firms face competition from bulk exporters, who sell the cashews on to foreign processors at a higher price than is competitive for most domestic processors, who face higher operating costs for power, transport and labour.
As a result, over the course of the past decade, domestic processors have turned to importing nuts from neighbouring Côte d’Ivoire, in some cases – as with Mim Cashew – relying on imports for as much as half of their total input.
However, in late 2013 the Ivorian government passed a directive banning the transportation of locally-produced cashew nuts across land borders.
This meant that Ghanaian processors, many of whom were located in the eastern parts of Brong Ahafo near the Ivorian border, had to import their raw products through the Ports of Tema and Takoradi, in turn leading to a spike in import costs – something that was further exacerbated by the depreciation of the cedi in 2015.
The broader impact of the sector’s decline on Ghana’s export revenues has been significant.
ComCashew, an initiative aiming at strengthening global competitiveness of Africa’s cashew sector, estimates that Ghana loses $25.5 million annually by exporting its raw nuts.
In response to the decline of the sector’s downstream capacity, the Ghanaian government temporarily banned exportation of cashews between March 14 and May 31 2016, hoping to generate more revenue and employment across the value chain.
Furthermore, by the end of June the Ministries of Food & Agriculture and Trade & Industry are expected to announce a joint master plan for the sector, to boost processing utilisation to 75% by 2025.
Source: Asoko Insight