cashew marketing trade developments and experience a case study in
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Cashew Marketing, Trade DevelopmentsCashew Marketing, Trade Developmentsand Experience: A Case Study in Easternand Experience: A Case Study in Eastern
and Southern Africa.and Southern Africa.
Project Executing AgencyProject Executing Agency
Regional Cashew Improvement Network for Eastern and SouthernRegional Cashew Improvement Network for Eastern and Southern
Africa (RECINESA)Africa (RECINESA)Naliendele Agricultural Research InstituteNaliendele Agricultural Research Institute
P. O. Box 509, Telephone +255 73 2934035; Fax +255 73 2934103P. O. Box 509, Telephone +255 73 2934035; Fax +255 73 2934103
EE--mailmailutafiti@iwayafrica.comutafiti@iwayafrica.com
MTWARAMTWARATanzaniaTanzania
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Cashew Apple & NutCashew Apple & Nut
Developing appleDeveloping apple
Developing nutDeveloping nut
Mature Cashew TreeMature Cashew Tree
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Mature cashew nutsMature cashew nuts
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Outline of the presentationOutline of the presentation
1.0 Background
2.0 Marketing Constraints2.1 Production and supply of raw cashew nuts
2.2 Market agents and channels for raw cashew nuts
2.3 Marketing of kernels
2.4 Pricing movements
2.5 Marketing costs and margins2.6 Quality control
3.0 Recommendations
3.1 Major problems, constraints and limitations3.2 Strategic positioning and future prospects
3.3 Strategies put in place to increase productioninclude:
3.4 Policy recommendations
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1.01.0 BackgroundBackground
CFC provides financial assistance to developingcountries for poverty alleviation through commodity-
focused developments. RECINESA one of them, Tanzania, Malawi, Uganda, Kenya,
Mozambique, Madagascar and Ethiopia
Overall objective of the Network is to:
raise the incomes and living standards of resource-poorfarmers therefore contribute to increased household incomes
improvement in production and marketing of cashew nuts
In LDCs, exports of cashew nuts and citrus fruitsincreased by 7.2% and 11.8% respectively between1995 and 1999
Cashew nuts are the largest single export item for
LDCs, having accounted for 53% of the total LDCex orts of fresh and dried fruit and nut in value over
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2.02.0 Marketing ConstraintsMarketing Constraints Cashew nut development in Eastern and Southern
Africa is hindered by a number of constraints: -
Low production levels of farmers Ineffective marketing, pricing and taxation policies
Low and fluctuating market prices of raw nuts hencediscouraging smallholder farmers to increase production of
nuts Lack of standards which are harmonized with international
standards
Weak institutional framework
Declining cashew production.
However, efforts have been initiated recently in order torevamp the cashew industry and improve its marketing
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2.12.1 Production and supply ofProduction and supply of
raw cashew nutsraw cashew nuts Production structure, supply of cashew nuts
varies between different countries in theNetwork
Production decreased in all countries to lowestlevels in the 1970s and 1980s largely because of
the presence of the Powdery Mildew Disease (PMD)
ageing of trees
and poor agronomic practices
On average, around 100,000 MT of casheware produced annually in Tanzania
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2.12.1 Production and supply ofProduction and supply of
raw cashew nuts (cont.)raw cashew nuts (cont.) In Mozambique a peak was reached in 1972 of 216,000
MT, since 1977 the decline has been steep, nowMozambique produces as little as 15 to 20% of the
levels obtained in 1972.
In Malawi national annual prod. of the crop is currentlyless than 100 MT. Decline in production has been linked
to market failures and the consequent lack of care for
the trees by farmers In Kenya, cashew production capacity is currently
estimated at 10,000 MT whereas the total processing
capacity is about 18,000 MT
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2.2 Market agents and. ar et agents an
channels for raw cashewchannels for raw cashewnutsnuts
In all countries in the Network, cashew nut marketing
structures have changed over the years due to changesin the overall macro-economic policies.
Market liberalization policies in the region have putemphasis on separation of the governments from
business.
private companies were given permission to buy andexport raw cashew nuts or process them within the
countries and export kernels to foreign markets. (Let us examine some examples of the marketing
systems)
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2.2 Market agents and. ar et agents an
channels for raw cashewchannels for raw cashewnuts (Cont.)nuts (Cont.)
At present cashew nuts are purchased primarily using a
network of agents who go to the field to buy nuts for thelarge exporters
At village level, buyers, (whether employees ofexporters, their agents or smaller buying companies),
deal with agents of buyers either at designated buyingpoints or other places
Cashew nuts are being bought at all sorts of buying
posts such as primary society offices, village godowns,in the shops, and at farmers' residences
After bulking, cashew nuts are then transported to mainprocessing or export points. Direct purchases fromfarmers account for more than a half of all purchases
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Exports(Raw nuts)
Exports(kernel)
Localconsumers
Exports(raw nuts)
LocalConsumer
Export(kernels)
Farmer
Village trader
Buying companys
Staff/trucks
Experienced
Company
RetailerRetailer
Local
processor
Less experienced
Company
Local
Processor
Buying agent
Village
Cooperative
Society
Figure 1 Marketing channels for cashew nuts inTanzania
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Figure 2 Marketing channels for cashewnutsin Mozambique
Farmers
Informal Traders
(Lojas & Ambulantes)
Commission
Agents/traders
Informal Cross-border trade
Small/MediumScale processors
Commission
agents/traders inneighbouring
countries
Indian Buyers &
Exporters inNeighbouring
Countries
Indian
Buyers/Exporters
Indian Processors
European/USABlenders/Roasters
European/USAConsumers
AIA
Local Consumers
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Figure 3 Marketing channels for cashewnuts inKenya
Bicycle Traders
Kiosks
Brokers
Big Traders
Export (Raw Nuts)
Local Processors &Blenders
DomesticConsumers ExportKernels
Farmers
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Figure 4 Warehouse receipt system for cashewFigure 4 Warehouse receipt system for cashew
marketing in Tanzania (Adopted in 2007)marketing in Tanzania (Adopted in 2007)
Payment Agreement
Loan Receipt
InformationProduce Receipts
Owner Financial
Institutions
Warehouse Custodian
Market
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2.32.3 Marketing of kernelsMarketing of kernels Most kernels that are processed in the region are
exported to different markets with some limited
domestic marketing of kernels. Locally consumed nuts are mostly obtained from the
smallholder cottage type of processors
For the local supplies there are two main problems
poor packaging
labelling and roasting
One big weakness has been lack of market research or
consumer surveys in the Network countries tounderstand the actual domestic, regional orinternational demand for kernels
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2.42.4 Pricing movementsPricing movements Both national and international prices for cashew nuts
depict a wide range of variability prices offered by licensed cashew nut buyers are almost
always higher than those offered by marketing agents
In all countries, processors face competition fromtraders of raw nuts who offer relatively better prices
In countries like Mozambique and Tanzania,governments propose minimum indicative farm-gate
prices based on the international cashew nut price forthat year during each buying season after consultationswith stakeholders.
Most often, indicative prices are, however, are often notadhered
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2.42.4 Pricing movementsPricing movements Farmers are unable to negotiated prices with
traders who come to their village. They can onlydecide whether or not to sell at the price offered
The pricing of raw nuts also hinge on the trade-
off between exporting or processing the nutslocally
For example, during 2004 Kenyan traders exporting
raw nuts offered Kshs 60/kg against Kshs 30-40/kgoffered by processors
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2.52.5 Marketing costs andMarketing costs and
marginsmargins Assessment on whether the pricing mechanisms are
fair or not can be done by looking into thedistribution of returns to different participants in themarketing chain compared to the costs they incur inthe marketing process
In Tanzania, on aggregate, the farm gate pricesrepresented some 71 % of FOB prices for the periodbetween 1991/92 to 2003/04. However, traders benefit
more than farmers in the cashew transactions andearnings to farmers seem to be lower whenproduction costs are deducted from the farm-gateprice
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2.62.6 Quality controlQuality control The quality of cashew nut depends on two factors:
free from disease and pest attack
proper post harvest handling (during drying and storage of nuts).
Correct grading of nuts and quality control are important formaintaining a country's reputation as
an exporter of high quality nuts
And to ensure that farmers are offered good price
In the marketing system for kernels in the respective countries,
quality control is strengthened by the national bureaus of standards
However, quality control is sometimes difficult because of a numberof factors including:
the use of non-standard weights and measures
failure of cooperative unions to increase farmers' bargaining power
unsatisfactory performance of extension staff regarding quality
lack of mechanisms for rewarding farmers producing high quality
cashew nuts.
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2.62.6 Quality control (cont.)Quality control (cont.)
Traders also sell as standard grade on the internationalmarket nuts that are really under grade and buy as undergrade from farmers' nuts that are really standard grade
Farmers also have their share of the blame because theycould mix standard grades with under grades, soak nutsin water or put stones in nuts to increase weights.
Also quality control for kernels has not yet been wellcoordinated and neither are there stringent requirementsfor packaging finished products except when one sells inlocal supermarkets or overseas markets
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3.0 RECOMMENDATIONS3.0 RECOMMENDATIONS
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3.13.1 Major problems, constraintsMajor problems, constraints
and limitationsand limitations The cashew nut industry has suffered from a number of constraints
socio-economic, bio-physical and technical, which are directly or
indirectly linked to production and marketing The major constraints that have a direct bearing on marketing of
cashew nuts include:1. Insufficient market and price information
2. Lack of institutional framework3. Inefficient marketing channels for raw nuts
4. Lack of credit to smallholder farmers
5. Insufficient knowledge coupled with poor technology and information transfer
6. Weak farmer organisations or groups
7. Low farm gate prices
8. Low nut and kernel quality
9. Sub-optimal domestic consumption of kernels in the region
10. Unsustainable funding of Research and Development
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3.23.2 Strategic positioning andStrategic positioning and
future prospectsfuture prospects The Network member countries seem to have
high potential for the growth of the cashewsector and each country has set a number ofstrategic options to exploit this potential.
The main strategies aim at increasing production
improving domestic processing
and connecting local processors to markets
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3.2.1. I3.2.1. Increasing production Include
Using improved planting materials
improving husbandry practices
rehabilitation and upgrading of abandoned cashew orchards introducing the crop in new areas that have shown some
potential for growing the crop.
Fostering development of medium and large scale farms
by offering technical assistance and financial incentivesin high potential areas
To strengthen extension services through training of
subject matter specialists or local councillors. Educating farmers through training of various
technologies and skills of cashew production.
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3.2.2 Im3.2.2 Improving domesticproving domestic
processingprocessing Measures to enhance domestic cashew nuts processing
include:
Encouraging investment in cashew production and processingby removing barriers to investment imposing surcharges onexports of raw nuts in order to give priority to selling of raw nutsto local processors.
Streamlining of registration of companies and offering incentivesto processors such as exemptions of duty for imports and taxholidays.
Strategic marketing initiatives are:
Assisting farmers to form associations under which they couldaccess information and extension services, markets, and credit.
Linking processors of raw nuts to international markets forkernels.
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3.3 Policy Recommendations3.3 Policy Recommendations
A number of problems still persist in the sector in theregion. To alleviate these bottlenecks, two sets ofrecommendations are put forward: -
those focusing on increasing production and quality attributes those dealing with strategic marketing decisions
1. Encouragement of farmer groups/associations
2. To encourage progress towards better cashew qualitystarting from the field
3. Strengthening of legislative bodies where they alreadyexist and foster their institutionalization in countrieswhere they do not exist
4. To improve quality of research, there is an urgent needto secure sustainable funding for research and
development activities
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Ladies and gentlemenLadies and gentlemenThank for ListeningThank for Listening
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