21 November 2000
Maputo, Mozambique — Contrary to World Bank dogma, the liberalisation of the trade in cashew nuts has not increased the prices paid to Mozambican peasant farmers for the raw nuts.
According to a report in Tuesday's issue of the independent Maputo printed newsheet Metical, the average price that peasants will receive for the nuts this marketing season is unlikely to exceed 4,000 meticais (24 US cents) per kg.
This is 20 percent lower when compared with the average prices of 1999.
Currently prices are even lower, although they would probably pick up later in the campaign. Sources told Metical that traders in northern Mozambique are paying between 3,000 and 3,500 meticais for a kilo of raw cashews.
In 1999, there was a sharp fall in cashew prices in southern Mozambique, while in the main producing areas in the north the prices held up rather better. But now prices in the north are tumbling as well.
The real producer price now is much lower than in the 1994- 95 campaign, the first year after the recently privatised processing plants re-opened. Most of those factories are now closed again, thanks to the World Bank imposed liberalisation, which stimulates the export of raw nuts to India, thus starving the Mozambican industry of its raw material.
The main justification for the ravaging of the Mozambican processing industry was that, with liberalisation, the peasants would get a better price for the nuts. In fact, the forced closure of most of the factories merely removes the competition, allowing the Indian importers to dictate prices.
The evidence is diametrically opposed to World Bank ideology. It suggests that peasants obtain a better price when there is a thriving processing industry and exports are restricted, than when the industries are destroyed and most of the nuts are exported.
The defenders of the processing industry always argued that it made no sense to export the nuts raw, when much more money could be earned for the country by exporting those same nuts in the shape of processed kernels.
This position is strengthened still further by the fall in the prices offered by India. An exporter in Nampula province told Metical that he has just made his first shipment of nuts (1,650 tonnes) to India of this season, at what he regarded as the extremely low price of 415 dollars a tonne.
If the quality of the nuts improved, then the price might rise to 515 to 525 dollars a tonne, he said. This compares with an average price of 705 dollars a tonne in 1999.
The quality of Mozambican cashews has fallen, which certainly affects the price the Indians offer. This can be blamed in part on the ageing and diseased state of much of the Mozambican cashew orchard - but liberalisation also had the side effect of disrupting the quality control system previously use din marketing campaigns.
But Mozambique's cashew industrialists believe that a major factor in the fall in prices is that the Indians now no longer have to compete with a vigorous local industry. So they can set whatever prices they like.
In 1995 the average price offered by India for Mozambican cashews was almost 800 dollars a tonne. As liberalisation gradually wrecked the processing industry, so the price offered by India gradually declined, going into free fall this year.
Metical remarks that, whenever the cashew issue is raised, the government and the World Bank proclaim "yes, the factories have closed, 8,000 workers have lost their jobs, some towns have come to a standstill, the balance of payments has suffered substantially, indiscipline entered the sector and ruined the quality of our nuts, yes, all this is true - but liberalisation produced an ever higher price for the peasant farmer." And this, the paper declares, is simply "an enormous lie."
"Since the government and the World Bank have the strange habit of only believing in news from outside, here is a suggestion for them," it adds. "Ask BBC radio for a copy of its recent programme on Mozambican cashews. The reporter took the trouble to travel into the Nampula interior and could not find a single peasant who would confirm the thesis of the World Bank and the government. In short, liberalisation has resulted in an ever lower price for the farmer."
Still, this cloud does have a couple of silver linings. With the producer price so low, some of the closed factories may be able to re-open.
The processing plant in the Nampula locality of Lumbo, owned by the local firm Gani Comercial, is one of these: Metical says it hopes to be able to purchase enough nuts to operate throughout the year.
And there is some sign of a recovery in the cashew orchard. Trees in Nampula that have been treated against disease have dramatically increased their annual production - from two kg of nuts to 10 or even 12 kg.
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