Mozambique: Cashew industry will not collapse, says minister
Mozambican Agriculture Minister Celso Correia on Wednesday denied that the cashew processing industry will collapse merely because the Singapore-based Olam Group has decided to pull out of the cashew market.
Last week, Olam issued a statement saying that it will close its Mozambican cashew processing factories, justifying this decision on the grounds of “global trends in the cashew nut markets and recurrent difficulties in obtaining sufficient good quality raw material”.
Olam added that it will also end its support for small scale cashew producers.
OLAM is the largest single player in the Mozambican cashew processing industry. Its statement gave few details – but it is no secret that in 2020, the sales and prices of cashew nuts fell sharply, a phenomenon blamed on the Covid-19 pandemic. One of the main markets for Mozambican cashews, China, cut back its imports. Other cashew producers, such as Vietnam and Ghana are facing similar problems.
On a visit to the “Condor Anacardium” processing plant, in Macia district, in the southern province of Gaza, Correia told reporters that the government has received no official communication from Olam, and so was taken by surprise when the news of Olam’s intended departure from Mozambique appeared in the press.
But this was not the first time Olam had abandoned a Mozambican industry. Correia recalled that some years ago Olam had owned cotton gins, but then abandoned them, just as it intends to abandon its cashew plants.
But, just as the cotton industry did not collapse, he said, so the cashew industry will not fall apart just because Olam is pulling out.
ndeed, the statistics on cashew production, Correia continued, indicate that the industry is growing. To date, in the 2020-2021 marketing campaign, peasant farmers have sold 130,000 tonnes of raw cashew nuts. The Minister was hopeful that this year, the producers will exceed the 150,000 tonnes of nuts sold in the 2019-2020 campaign.
He predicted that the income of peasant cashew famers will rise, and did not see any risk of the cashew sector collapsing in the near future.
Correia added that the government respects Olam’s decision, although the government should review its relations with the company “because it is important to develop sustainable relations which look at the country in the medium and long term”.
Nonetheless, Correia wanted Olam to remain in Mozambique and to play a significant role in the import-export business. He noted that Olam imports about 30 per cent of the cooking oil consumed in Mozambique, which is refined locally and subsidised by the government.
Correia’s visit to the Condor Anacardium factory was intended to launch a bank guarantee fund, of about 1.5 million US dollars, made available by the government to help cashew companies seek bank finance at reasonable interest rates in order to finance their operations.
The fund is open to all cashew companies. It will allow Condor to breathe more easily, because it has been facing problems of liquidity arising from the high prices aid to farmers for the raw nuts and the low prices practiced on the international market for processed cashew kernels.
Condor managers told Correia that the legal framework for the sector should be revised to make it more profitable to process the nuts in Mozambique. Correia agreed, but stressed that the basis for the industry consists of the peasants who grow the nuts. They must see their income grow, at the same time as the processing factories make a profit and expand their investment.
There are 17 cashew processing plants in Mozambique, but only ten are currently operational. Condor’s factory in Macia is regarded as one of the most modern. It employs about 700 people and can produce about 35,000 tonnes of processed kernels a year.