Business News of 2013-12-16

Cashew processing in Ghana under threat

Ivorian authorities’ ban on exports of raw cashew nuts through Ivorian borders is expected to impact the business of processing companies in the country.

According to cashew processors in Ghana, restricting exports through the sea ports alone will affect the cost of their operations and also push up the price of their processed cashew for the local and exports markets.

The acting President of the Cashew Industry Association of Ghana, Mr Winfred Osei Owusu, told the Daily Graphic that the processors had their factories strategically pitched in major producing towns in the Brong Ahafo Region.

“We did this because of the proximity to supply sources of the raw cashew nuts, as well as the import through the borders of Cote d’Ivoire and Burkina Faso to supplement the quantity of the crop produced in Ghana; and so if we have to import through the sea ports, our cost will go up because we will have to transport the nuts all the way from the Takoradi and Tema ports to the Brong Ahafo Region at an extra cost,” he said.

Mr Owusu was of the view that should that happen, the finished products from Ghana would become more expensive on the local and international market, thereby making them uncompetitive.

Ban on imports

Early this month, the government of Cote d’Ivoire announced a ban on export of raw cashew nuts (RCN) and cotton through its border posts.

The ban had already been announced in 2012. However, some cashew processing companies in Ghana were given some concessions to import through the borders. The Ivorian government had through the announcement stated its resolve to carry on with the ban without any privileges, of which Ghana would be affected.

According to the association, the notice of the ban cited by GCIA indicated that imports could only be done either through the sea ports of Abidjan and San Pedro.

Ghana as a hub

Mr Owusu said Ghana was fast becoming a hub for cashew processing in West Africa, as large processing firms had been set up in the Brong Ahafo Region and other companies had plans of setting up their processing plants in the region.

“Presently, there are over twelve (12) large and small-scale processing companies in the country, with over 27,000mt processing capacity. Early next year, the largest processor in Brazil will open its 35,000mt plant, bringing the total processing capacity to more than 60,000mt.

That means installed processing capacity would exceed the current production levels of RCN in Ghana, which stood between 40,000mt to 50,000mt, according to MoFA. Ghana also exports an average of 150,000mt of RCN annually.

The cashew industry in Ghana, thus, relies heavily on RCN imports from Cote d’Ivoire, Burkina Faso and Togo to supplement its processing and export volumes, with Cote d’Ivoire being the largest import source.

He said the investors were capitalising on a number of factors to choose Ghana as a hub, chief among them being the relative stability and conducive business environment, as well as the enormous potential for the crop production in the country.

“These are the attributes, and we need not do anything that will get them to lose interest in the country,” he said.

Exporters to India and other parts of the world also trade intensively through Ghana’s port every year.

Ghana also serves as the headquarters of the African Cashew Alliance; an association of African and international businesses with an interest in promoting a globally competitive African cashew industry with nearly 200 member companies representing all aspects of the cashew value chain, including producers, processors, traders, and international buyers.

Also, the African Cashew Initiative (ACI), a German International Cooperation-(GIZ) led cashew project funded by the Bill and Melinda Gates Foundation and the German government in five African countries including Ghana, is headquartered in Ghana.

Interventions

Mr Owusu said the immediate intervention was for the government to urgently release the stimulus package for the players in the sector to up production capacity from current 50,000mt to about 200,000mt in the next 5 to 10 years.

“Once this is done, we will not have to depend so much on other countries to beef up the quantities required by the processors and traders in the country.”

Meanwhile, he said the association intended to engage the government to intervene on its behalf by opening dialogue with the Ivorian government on establishing some cross border trading modalities that would benefit both countries, instead of implementing the outright ban of cross border trade of RCN.

“We recognise the trade ministry's recent activism and support for the industry, especially at the level of the minister. I believe that given the minster's commitment, the association can work with him and the ministry to weather the storm and create a strong income-generating and rural-transformational industry," says Mr Owusu.

Stimulus package

Subsequently, the association has called on the government to urgently release the stimulus package announced for players in the sector to enable them to produce the crop in larger quantities for local consumption and export.