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November 28, 2010

Kenya cashew nut farmers brace for losses amid export ban

by Githua Kihara

Kilifi farmers are bracing themselves for substantial losses as the cashew nut harvest gets under way following government delays to provide alternative marketing channels after banning raw exports last year.

Farmers incurred heavy losses last season due to the ban that pushed them into middlemen’s hands, leading to a price collapse.

According to market analysts, exports accounted for more than half of raw cashew nut sales.

The ban was intended to attract investors to set up cashew nut processing units in the country, but the low volumes of nuts produced meant a factory of viable capacity could not be established. Kenya produces only 11,000 tonnes per year.

According to Kenya Cashew Nuts Processors and Exporters Association chairman Samuel Varghese, processors have shifted to Tanzania and West Africa where there is abundant supply of nuts and little local value addition.

The government, however, was betting on Kenya’s high quality nuts attracting processors keen to supplement their operations in Asia with a premium product.

A task force that recommended the ban also proposed that the National Cereals and Produce Board (NCBP) become a buyer of last resort and market regulator as is the case with maize and wheat.

No funds were channelled to NCPB for this task, giving middlemen a field day as they bought the nuts at Sh20 per kilogramme, about a third of the price prevailing before the ban.

“The government must this time round move swiftly to protect farmers from fluctuating prices,” Lake Kenyatta Farmers Co-operative Society chairman Patrick Gikaru said.

The society buys nuts from its 4,000 members, at Sh37 per kilogramme, and delivers about 10 tonnes to processors in Central Kenya.

Farmers in leading cashew nut producing areas of Lamu and Kilifi are still holding some nuts from the previous harvest.

In May, an effort by the government to cushion farmers through a three-month export window flopped when exporters said they had enough stocks from the previous season’s bumper harvest.

Business Daily Africa

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