Constraints to adding Value to Small-scale Cashew Farming in Nigeria

Financial Constraints to adding Value to Small-scale Cashew Farming in Nigeria

Author: Irobiko Chimezie Kingsley

 

Introduction

Cashew is one of Nigeria’s major foreign exchange earners (Ogbeh., 2016). It’s among 13 other strategic export products and is considered as one of the major five agro-industrial crops from the country (Adeigbe et al., 2015).

The Federal Ministry of Agriculture and Rural Development identified cashew as one of the important industrial raw materials with high demand in the food, beverage and confectionary industries. The agricultural product therefore has a significant role to play in Nigeria’s economic diversification goals necessitated by a decline in global oil prices. Unfortunately, Adeyemi (2018) notes that Nigerian farmers and government earn less from cashew farmingbecause it is currently sold as unprocessed crops in global markets.

Unlike the oil and gas sector, which is restricted to a small part of the country and offers employment to a tiny percentage of Nigerians across its value chains, agriculture can be transformed into the mainstay of Nigeria’s economy as a far-reaching source of livelihood to over 70% Nigerians (Manyong., 2013). According to Oni (2015), agriculture offers employment to over 60% of the populace. It also contributes up to 42% of annual GDP through export trades of value-chain commodities like cashewnut which is grown in all 36 states of Nigeria. Cashew is one of the Nigeria’s highest foreign exchange earner – second only to cocoa.

In 2013, cashew earned around $110 million from exports, which was documented as 10% of all agricultural exports. 120,000 metric tons were produced in 2014, 150,000 metric tons (2015), 175,000 (2016), 220,000 (2017) and 242,000 metric tons expected in 2018. In 2016, cashew exports raked in a total of N47 billion (Adeyemi., 2018). With Nigeria’s foreign reserve less than $30 billion, and its currency value on a free fall, the timing is apt for a bolder look at the non-oil sector to unlock its huge potentials through export drive. Cashew farming, which has been overshadowed by the petroleum economy for decades (Ohler., 1979), is currently shouldering the country’s broader agricultural strategies aimed at repositioning the economy for growth and sustainable development. Inspiration for this economic objective is drawn from India, Brazil, Vietnam, Malaysia, Mozambique, Tanzania and Ghana, which are major producers and exporters of cashewnut.

Although Nigeria is one of a 10-country group of top Raw Cashew Nut (RCN) producers, very little efforts have been made to add value and optimise profits from the high-income earner despite its huge potentials as a pivot for socio-economic change (Mgbenka R. N. & Mbah E. N., 2016). Nigeria therefore needs a strategic roadmap for economic diversification. This can be achieved in the area of farm-level support to farmers for quality standards, food safety, market restructuring and promotion, with further assistance offered to the cashew industry through research and development (R&D), advocacy, public-private sector groups and information gathering (Azam-Ali & Judge., 2000).

This research examines the financial setbacks experienced by small-scale cashew farmers in adding value to the drought-resistant cash crop, with recommendations offered to reverse its attendant colossal waste of manpower and financial resources. In addition, the study aims at finding alternative ways through which the Nigerian government can diversify its monolithic economy which solely depends on oil and gas for sustenance—notwithstanding the natural resource’ fading viability.

 

Literature Review

Lots of literature exist on cashew farming and its economic achievements in Asia, South America and Africa, among others. In the years preceding 1970 and shortly before oil was discovered in Oloibiri, agriculture enjoyed a preeminent position. However, the oil boom and corruption instilled laziness and thus increasing the poverty line of most Nigerians till date, with less over 50% of arable farm lands still utilized (Manyong., op cit.). This trend and many other constraints faced by the National Cashew Association of Nigerian (NCAN), in the words of Fawehinmi (2016), is “driving farmers nuts.” A few of the literatures are hereby reviewed.

In his analysis of the gap between net income earnings of cashew nuts farmers who he categorized as those that add value and others who don’t, J. O. Lawal et al (2016) identified a (P<0.5) gap of $487.26 for the first group and $306.29 for the second, also noting a benefit cost ration of 1:2:30, the literature failed to highlight financial constraints as the main reason for farmers’ failure to process their farm produce.

Oni (2015) highlighted agriculture’s contribution of 20% Gross Domestic Product and approximately 60% employment in 2014. He acknowledged the recent decline of oil revenues and Nigerian government’s effort to revive agriculture through its Agricultural Transformation Agenda (ATA). However, he bemoaned the under-utilization of Nigeria’s agricultural sector for employment opportunties, desertification and foreign exchange, adding that cashew industry which rose from 0.09% (1970-1975) to 5.2% (2001-2007), has only about 75% of cashew nuts processed for the local markets only. In furtherance, he noted that price of cashew kernels varies between $5 – $14 in the international market, where Nigeria bargains as an unprocessed exporter to the UK, US, India etc.

Mitchell and Mori (1987) noted that commercial cashew seedlings were first introduced in Nigeria from Brazil around 1950, with formal studies by Cocoa Research Institute of Nigeria (CRIN) starting in 1972 after knowledge was gained on cashew’s economic importance. The duo reckoned that Nigeria’s year 2000 drop to 35.6% in output, from a previous 67.5% in the 70’s which positioned it a top global producer, was a result of not adding value to cashew nut farming but did not identify the high and discriminatory taxes on agricultural produce from Nigeria as a factor.

According to Azam and Judge (2001), Nigeria’s raw nuts prices are discounted by 20 to 30% in the world market when compared to those of neighbouring countries. The scholars maintained that Vietnam, India and Indonesia discovered the potentials of value-addition to cashew farming and applied effective agricultural strategies which skyrocketed earning from a meagre 26.8% to 49.5% in the same period. Nonetheless, the writers did not show proofs that the data from Nigeria and other countries were collated from well-documented official and unofficial sources thus sparking criticisms from analysts.

While J. O. Lawal, again, argued that most harvesters consume a large part of cashew apple due to inadequate value-adding incentives or markets for farm the produce, Abogan et al (2014) argued that their findings show high level of unproductive in the non-oil sector, particularly cashew farming which, despite the various agricultural strategies, policies and reform programmes, have failed to make meaningful contributions near expectations from stakeholders (Ogusina and Lucas., 2008).

On the backdrop of these shortcomings to cashew farming in Nigeria, this study therefore aims of identifying the real value of producing, storing and processing cashew nuts for foreign exports in compliance with international standards.