Business News of 2014-02-04

Cashew association pleads for govt intervention

The Ghana Cashew Industry Association has petitioned the Ministry of Trade and Industry to initiate talks with the government of Cote d’ Ivoire to pave way for the resumption of cashew importation from that country through the borders than the ports.

The petition had become necessary because cashew processing companies in the country have complained about the impact the ban on cashew imports from the ports alone was having on the cost of their operations.

The association said almost all the factories that processed cashew have been sited in the Brong Ahafo Region which was closer to the border between Ghana and Cote d’ Ivoire and noted that with the ban, they were forced to use the ports and then transport the products by road.

The Acting President of the Association, Mr Winfred Osei Owusu said players in the industry were prepared to negotiate with Cote d’Ivoire to permit importation of the nuts through the country’s borders.

Industry in Ghana

Currently, Ghana produces about 50,000 tons of cashews per year which was far less than the industry’s demand of about 200,000 metric ton per year.

As such, industries in Ghana depended on producers in Cote d’ Ivoire to supplement the industry’s demand for processing and export.

With its solid infrastructure and business environment, the industry has the potential of attracting more investors into its fold.

However, players feared the ban on boarder trading of the nuts from Cote d’Ivoire would have a toll on it activities since Ghana was not in the position to feed the industry in the short-term.

Ban on imports

Late last year, the government of Cote d’Ivoire announced a ban on the 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 of San Pedro

It is not clear what might have necessitated the ban but some analysts have described it as a retaliatory measure by the government of Cote d’ Ivoire.

Ghana earlier had stopped the importation of rice through the borders, limiting such imports from Cote d’ Ivoire through the ports of Tema and Takoraid to check smuggling among other things.

Ghana had since lifted the ban and it was expected that Cote d’ Ivoire would reciprocate the gesture to open up the borders for the cashew importers to explore instead of the ports which was becoming too expensive.

Effect of the ban

Speaking to the Graphic Business after a meeting with the Minister of Trade and Industry, Mr Haruna Iddrisu, Mr Osei Owusu said the situation would lead to the collapse of the industry if the issue was not solved.

“The situation would be worsen because investors will not invests because there is no raw materials and the country will also lose foreign exchange”.

The Executive Secretary of the association, Ms Yayra Amedzro said the cashew industry would be heavily affected because they depended solely on Cote d’Ivoire to augment export and processing.

She indicated that it was key for industry to move the nuts through the boarders since all the processing centres were in the Brong Ahafo Region, adding “The directive to export the nuts through the port is not comfortable and cost effective for us”.

Ms Amedzro hoped that the country and Cote d’ Ivoire could come to an agreement on some trade modalities that would benefits both countries.

Ghana as a hub

Ghana is fast becoming a hub for cashew processing in West Africa as large processing firms have set up in the Brong Ahafo Region and other companies have plans to set up in the region.

Presently, there are over 12 large and small scale processing companies in the country with over 27,000 mt 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.

This means installed processing capacity will exceed the current production levels of Raw Cashew Nuts (RCN) in Ghana which stands between 40,000mt and 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.

It was not clear if 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.

It is expected that the pledge made by the sector minister to intervene will receive immediate action to the benefit of the country and the association.