News Analysis: 2023 Nigeria Cashew Trading Outlook reports positive for local cashew processing industry
Nigeria is a major and growing player in the cashew industry, ranking among top countries globally for sourcing cashew.
Nigeria produces about 300,000 metric tons of raw cashew nuts (RCN) every year making her the second largest producer of this nut in Africa after Ivory Coast with an estimated annual production of over 800,000 metric tonnes.
The Nigerian harvest season starts in late January and it is followed by trading – buying and selling- of the RCN by local buying agents, local processors and RCN exporters.
In 2022, Nigeria exported over $250 million worth of raw cashew nut according to the Federal Government.
Cashew export in raw form is Nigeria’s second largest non-oil export product in revenue terms according to NBS statistics.
The Nigeria Agribusiness Register, a food and agribusiness ecosystem enabler project which provides market information and market intelligence services amongst other investment related services across several commodity markets including cashew markets, held its Cashew Market Outlook Report for 2023 on Thursday, Feb. 23.
The report was presented by Mr Roland Oroh, a cashew sector analyst and Founder and Director of the Agribusiness Register.
The presentation which was virtual, was attended by stakeholders from farmers associations, government representatives, research and development institutions.
Also, donor funded projects supporting the cashew sector, trading and exporting companies, local buying agents, financial institutions, and others from outside the country attended the event.
The high point of the presentation was the official launch and media presentation of the Nigeria Cashew Technical Assistance Facility (NiCTAF), a new product from the Agribusiness Register to offer technical services to increase RCN production and processing and brand development of kernels of Nigerian origin to the international market, amongst other services.
The Nigeria Agribusiness Register is the agribusiness investment facilitation arm of Commodities Development Initiative (CDI).
The register is an ecosystem, Agricultural value chain facilitation, enabler project supporting food and agribusiness investments in Nigeria and West Africa to scale with investment and business development services including market information and market intelligence services.
According to Oroh, Nigeria is estimated to have a good crop in 2023 following good weather conditions in most of the key production zones namely Kogi, Kwara, Ogbomosho and some parts of the eastern region.
The quality of RCN is also reported to be good quality with kernel outturn report (KOR) of 48-50 Ibs.
Following the flag-off and commencement of trading for the year by the National Cashew Association of Nigeria (NCAN) in Benin City, Edo, on Jan. 24, 2023, price of RCN kicked off at around N400 per kilogram (wet form).
The outlook report observes a consistent price increase since inception of the trading season with current prices in the N510-N600 per kilogram range.
A five-year market opening price behavior shows a similar pattern and trend indicative of much speculative buying which is characteristic of most commodities trading in Nigeria.
The report also presents a new development in the international RCN arena: Vietnam in the last two years has consistently procured large volumes of RCN from Cambodia, a neighboring country.
The report estimates this trend to continue for the foreseeable future.
In 2021 and 2022, Vietnam imports over one billion dollar worth of RCN from Cambodia respectively.
In January 2023, the Cashew Association of Cambodia (CAC) estimated the country to have a bumper harvest of 1 million metric tons and expects to sell 98 per cent of its harvest to Vietnam from February.
This has implications for RCN trading in Nigeria and indeed across the West African region which looks up to Vietnamese traders.
Vietnam has been a major off taker of Nigerian RCN in the last 10 years.
One of the main conclusions from the Outlook Presentation is that Nigerian cashew stakeholders should avoid too much speculative buying with the expectation that the Vietnamese and Indian buyers will be coming in droves to buy later in the year.
This may not happen as expected.
From market intelligence gathered, Vietnam is now buying large volumes from Cambodia for cost, and proximity reasons which translate to shorter supply chain and speed to market for their kernels.
In addition, Vietnam is not expanding her processing capacity any longer, according to local industry sources.
India, another major buyer of Nigerian RCN is projected to have a difficult cashew year in 2023 as a result of high domestic cost of processing, sluggish international demand for kernels and rising price of RCN procured from West Africa due to high energy costs caused by the Russian Ukraine war.
Local traders and cashew stakeholders in Nigeria are advised against too much speculative trading and to put a new focus on market information and intelligence to inform trading decisions.
On the development side, several value chain developments by development partners are currently on-going to increase RCN production and processing in Nigeria.
Moving forward, Oroh recommends that these initiatives be driven by market realities and close market intelligence and monitoring of Nigeria’s competitors both within the region and in Asia, to make these initiatives successful.
The report, however, recognises that this is a good time for the local cashew processing industry in Nigeria to increase processing capacity and take advantage of the reduced procurements of RCN from Asia to strengthen local processing and production of kernel for export, assuming affordable financing could be made available to local processors. (NANFEATURES)
**If used, please credit the writer and the News Agency of Nigeria (NAN)
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