6 November 2018

Tanzania: Government Plays Down Cashew Buyers' Worries

Photo: The Citizen Tanzania
Cashew nut farmers will know their fate over the marketing crisis, following the end of a four-day ultimatum given by the government to prospective buyers to buy the crop.

Dar es Salaam — The cashew nuts auctioning saga continues, with thousands of tonnes of the crop on auction in southern Tanzania remaining unpurchased. This is basically on account of the asking price of more than Sh3000 a kilo being overly high.

In the event, prospective buyers at the latest auction have called upon the government to purchase the produce at a go. This would relieve the farmers of the burden of continuing to hold onto their crop when they badly need the money with which to defray their production costs and meet other expenses.

In any case, the minister for Agriculture, Dr Charles Tizeba, seemed optimistic about it all, saying "potential (cashew nut) buyers have agreed with the government. They have started buying at the indicative price... Let's not jump to conclusions. After all, this is the first of several auctions that will be conducted for three months and, so, let's be patient. I am optimistic that the buyers will respond well."

It so happens that cashew nuts are the most valuable of all the country's traditional export crops that include tobacco, coffee, cotton, tea, cloves and sisal.

But, falling cashew prices at the world market have forced farmers in Tanzania to hold on to their produce rather than sell same at great loss, noting that the production costs this farming season were much higher than what is being offered by dealers in the country.

The situation is so precarious that President John Magufuli decided to step in the breach last week, directing a 94 per cent increase to the prices that were being offered by prospective buyers at the open weekly auctions.

The President set the minimum price at Sh3,000 per kilogramme, up from the minimum price of Sh1,550 that was set by the Cashewnut Board of Tanzania (CBT).

But buyers who spoke to The Citizen in separate interviews yesterday said that, much as they were willing to buy, the set minimum price was so high that it didn't make business sense to them.

So far, only eight companies have purchased the commodity at the recommended price since the auction reopened last Friday.

One buyer said: "the buyers I have in the international market are willing to buy the product at $1400 per tonne. This is about $1.3 per kilo... " $1.3 is roughly equivalent to Sh2,960 - meaning that the minimum local price is higher than what international buyers pay!

Another buyer said it was unfortunate that the government decided to arbitrarily set minimum prices instead of negotiating with buyers.

"When we bought cashew nuts at the price of Sh4,000 a kilo last year, it was not due to a government directive. It was purely due to market forces. My advice to the government is that it should proceed with a plan to buy the produce so that farmers are able to earn fair returns from their produce," he said.

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