Maputo, Mozambique — Mozambican authorities have slapped an embargo on the export of raw cashew nuts to India, the independent newsheet, 'Metical', reported Friday.

For years the local cashew processing industry has been demanding a total ban on raw nut exports, arguing that exporters compete unfairly with the industry, and deprive it of its raw materials.

Liberalisation of the trade in cashews was one of the conditions imposed by the World Bank in 1995, in exchange for access to soft loans.

The government was forced to dismantle protection for the processing industry, much of which had only recently been privatised.

When it became evident that liberalisation was killing the processing industry, the government, with a reluctant World Bank go-ahead, in 1999 raised the surtax on raw nut exports from 14 to 18 percent.

The industry said this was insufficient to save the factories, and demanded the total prohibition of raw nut exports.

Currently most of the cashew processing plants are closed, and over 8,500 workers have lost their jobs.

According to 'Metical', the government suspected massive Under-invoicing on the part of the exporters.

The government could not believe that export prices (on which the companies would have to pay the 18 percent surtax) could be as low as the exporters claimed.

They alleged that this season's export price varied from 355 to 440 US dollars a tonne.

The government, however, does not want the nuts exported for anything less than an FOB price of 650 dollars a tonne.

But exporters claim that the price is low because of the poor quality of the Mozambican nuts.