Nigerian Cashew Farmers Are Going Nuts – Feyi Fawehinmi

As with most things in Nigeria, whatever success that is managed is often in spite of government’s efforts rather than because of it. The NCAN President, Pastor Tola Faseru, is in the papers today complaining about how difficult it is to get their cashew nuts out of Nigeria:

The past year was tough for agricultural products shippers — no thanks to delays in shipment.

One group that was badly hit was cashew exporters, many of who could not get their produce shipped in time to Vietnam and India through the seaports.

President, National Cashew Association of Nigeria (NCAN), Pastor Tola Faseru, recalled that last year, cashew exports at the seaports were delayed for weeks — if not months.

Faseru added that cashew cargo were left sitting, undelivered at the ports for months. He recalled that there were cases cashew cargo, remained in transit for 90 days.

By the time the produce arrived their destinations, Faseru said they had lost their usefulness. Ultimately, that means farmers and exporters receive a lower price for their produce or had them rejected by importers. He criticised the shipping lines for making cargoes undergo longer waits before moving them abroad.

First of all, it is important to note why Nigeria is exporting cashew nuts to Vietnam and India — that is where they get processed and then exported to the UK and America. I don’t need to tell you who makes more money out of this. Here is a Reuters story from February 2015:

Vietnam, the world’s top cashew nut exporter, has imported a record 769,000 tonnes of the raw nuts in 2014 for processing for export, a surge of 59.3 percent from a year ago, the Vietnam News reported, quoting the Vietnam Cashew Association.

Of the imported volume, 106,700 tonnes came from Nigeria, or nearly 90 percent of the African nation’s annual output, the report said.

Vietnam’s cashew nut exports in 2014 jumped 16.9 percent to 305,000 tonnes from the previous year, government data showed.

You can see how this plays out in Europe:

 

Even among African countries that export directly to Europe, Nigeria is a laggard:

Recently, I was at the supermarket near where I live and I spent a good few minutes looking for anything that had a Made in Nigeria label on it. I didn’t find any. But I found these:

There were loads of cashew nuts from Vietnam as well. This was painful for me to see because the nuts themselves could have originated in Nigeria meaning that out of the £2.99 selling price of a bag of cashew nuts, the Nigerian farmer will be lucky to get 50p.

You’ll be amazed at the mundane reasons why Nigerian cashews get exported raw to Vietnam for processing. The shelling of the nuts requires a fair bit of skill because if the nut is chipped in the process of shelling it, the value diminishes significantly. Believe it or not, finding Nigerians skilled at shelling cashew nuts is not as easy as you think. That is what happens when your human capital has been thoroughly debased over many years.

Everything that Harvard’s Professor Ricardo Hausmann writes is worth a read. But something he wrote in November last year is particularly important. An economy that imports things (or exports mainly crude oil), isvery different from one that makes and exports various things. What this means is that an economy built around exporting crude oil and then importing other products cannot turn into an exporting economy just like that. Making that change requires hard work and deliberate effort.

The needs of export activities are often quite distinct. The specific rules, infrastructure, skills, and technological mastery that export activities require tend to be different from those needed for the non-tradable activities that usually generate the bulk of a place’s employment. While diversification into new areas is always challenging, it is particularly difficult for tradable activities, which have to face foreign competition from the start. By contrast, pioneers in non-tradable activities start with a captive market. Moreover, exporters need particularly strong connections to knowhow found elsewhere on the planet, thus making them more sensitive to foreign investment, migration, and international professional links.

To survive and thrive, societies need to pay special attention to those activities that produce goods and services they can sell to non-residents. Indeed, the need to act on new export opportunities and remove obstacles to success is probably the central lesson from the East Asian and Irish growth miracles.

That, in a nutshell, is what diversification means. Exports require different types of infrastructure. That is what the NCAN President is complaining about. When you read that article and you see the mess going on at Apapa, you can clearly see that there is nothing about Nigeria that makes it ready to export anything.

Some exporters suffered so much losses having to withdrawn their shipments from being exports because they stayed longer in the ports. One of them was the Country Manager, 3F Nigeria IPEX Limited, Karamvir Singh,who said his organisation had many containers of cashew withdrawn from the ports when the shipping line couldn’t move them in time.

Shipping delays, according to him, cost agricultural shippers million in lost revenue between February through August and there is the potential for more losses this year, if they are not able to move the produce in time to their destinations in Asia.

Oil prices have collapsed and Nigeria is now reeling. It is almost as if the country only knows how to live with high crude prices. Yet, it is guaranteed that prices will collapse every few years. Moreover, Nigeria does not have a say on international oil prices or the development of the technology that makes it possible to extract and refine oil. The country is at the mercy of myriad exogenous factors.

At the very least, this suggests that the country needs to find something else to do where it has more control of its own destiny. But simply shouting ‘diversification’ from morning to night will not magically make it happen. Exporting requires infrastructure, skills and a new way of thinking from policymakers. It is hard but it is necessary.