High costs of processing cashew nuts are making the business less profitable in the country, a local firm has said.

Premier Cashew Industries chief executive officer Mushtak Fazal said yesterday the cost of processing cashew nuts was higher in Tanzania than anywhere else in the world where the crop is a major income earner.

He said contrary to common business belief that exporting processed products was more profitable than selling them raw, with cashew nuts it was better having them processed outside the country.

According to him, a kilogramme of cashew nuts costs about Sh30 at the plantations upcountry, but processing it would need about Sh950.

Mr Fazal said the situation has recently been made worse by the global financial crisis since most of their international buyers were loan beneficiaries of the struggling banks.

Most cashew nuts from Tanzania find a market in the United States, Europe, Japan and India.

On average, Tanzania produces 100,000 tonnes of cashew nuts every year. The crop is also extensively grown in India and Vietnam.

Mr Fazal, who was speaking at his company's premises during a visit by the parliamentary committee on social welfare, said as exporters they were affected by the prohibitive processing expenses.

Meanwhile, the parliamentary committee toured two of the firm's factories to check the working conditions and welfare of the workers.

Some members of the committee who were led by their chairman Haroub Mansoud said they were concerned about the "unfavourable" conditions under which the workers were living.

However, the company said it was still working to improve the conditions.