August 20, 2019
Cashew processing is small in Benin. The government is doing a lot of work to improve production and exports. But the transformation continues to suffer in the face of lack of funding and adequate measures.
Benin cashews - Images by IT
One of the challenges of the Beninese government is to make cashew nuts the second most profitable sector after cotton in order to boost the national economy. This ambition is reflected in the plurality of measures to increase the harvest. Once produced, cashew processing is weak in our country. Is practically leave for tale.
Out of a production of 130,000 tons, the country manages to transform only about 15,000 tons. Only three products add value to Benin cashew. This is the cashew balm that is sold on the international market; the hull that is used for heating; the juice of the cashew palm and the almond which is the oldest and the first finished product from the Benin cashew nut. This almond is exported to the United States, Europe, Japan, China and India. Unfortunately, prices are falling and the entire industry is suffering.
According to international specialist N'Kalô, prices of almond are not much better. This drop is the lowest since August 2014. "In Burkina Faso, Benin, Côte d'Ivoire and Ghana, demand is drying up, buyers are withdrawing and prices are falling frequently below the official minimum price. Prices have returned to the level of 2015, " says N'Kalô in his latest report.
Going in the same direction, Roland Riboux, President and CEO of Fludor Sa, Benin Chairman of the Council of Private Investors of Benin (CIPB), explains: "The reason is that the quantities once arrived in Vietnam or In India, the banks of these countries have found comparable to that at current prices, one could not get a profit margin from what they were selling in the US market and others. So the banks have stopped their funding. This means that many Vietnamese or Indian buyers are no longer buying.Those who had sold (particularly the West African intermediate exporters) had to go out there to take care of the cargo that arrived.Some quantities remained on the quao .
The weak demand for almonds and the financing problems of Asian processors, says N'Kalô. For lack of financing, processors reduce their purchases of raw nuts and, in order to continue turning, they sell their cashew almond stocks quickly, even if they accept extremely low prices and sell at a loss.
The strong hand of the public authorities solicited
"The challenge is to buy for 2 months and transform for 10 months. So you have to have solid financial and bank credit to build a large stock and then sell it gradually , " said Roland Riboux. The largest cashew processor, the latter fed many ambitions but the lack of support is changing the game.
"In principle, we are in a phase of ramping up. Since theoretically in 2016, 2017, we wanted to be at 6000 tons, 2018 at 12000 tons and 2019 at 18000 tons. But in reality last year we stopped at around 8000 tons because it was not profitable. We lost money on the processed cashew nut. This year we expect to reach 8000 tons. We must wait until the world market stabilizes before going further. So that we also have significant support from the state, which is not yet the case for the moment, " he informs.
The current rate of cashew nut processing in Benin is 10%. The challenge for the government is to reach at least 50% by 2021. And for that, we will have to get our hands dirty. As the Minister of Agriculture, Gaston Dossouhoui pointed out, "you do not get up one morning to grow, you need anticipation and dynamism. In order to better increase processing, processors cite Côte d'Ivoire as an example, which grants a subsidy of 400f per kilogram on the almond exported. That's 90 Fcfa on the raw nut. "If this could be the case here, it would help enormously and encourage to transform more,"advises Roland Riboux.
Benin at the school of Ivory Coast
Côte d'Ivoire is putting in place numerous strategies to enhance competitiveness in the transformation of this speculation in order to increase investment in this sector. Since 2014, the State of Côte d'Ivoire has adopted a package of measures, the most important of which are the warehouse receipt system, the subsidy for processing, the guarantee mechanism with banks and the project to promote the competitiveness of the cashew value chain.
In order to boost local transformation, notably through the entry of new investors, a platform for exchanges between the private and public sectors has been set up by the State to identify and promote incentives for investors. Better yet, to enhance the competitiveness and profitability of companies engaged in the processing of cashew nuts, Côte d'Ivoire last July introduced favorable tax incentives for investment.
These include: the subsidy for exported white almonds, financed by a portion of export taxes and the priority of supplying processors before any export. In addition, the Ivorian government recently signed eight agreements with industry to process 107,000 tons of cashew nuts over four years, which should enable the country to achieve at least 47% of cashew processed in 2022.
These agreements include, among other things, exemption from customs duty and VAT (Value Added Tax) on spare parts batches, depending on the investment zone. The beneficiary companies will have to increase the quantities of processed cashew nuts. This should make it possible to achieve a local transformation rate of at least 47%.
To this end, the Ivorian Minister of Economy and Finance, Adama Koné, assures that the government will guarantee favorable conditions for the application of the conventions. A range of incentives from which the Beninese government should be inspired. This will restore the crest of the cashew nut sector, the country's second most important export crop after cotton.
The supply of raw cashew nuts is plentiful and could be higher once the transformation has a significant rebound. Because, say, the demand creates the offer.
By Félicienne HOUESSOU
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