The government will now be fully in charge of cashews business, with the army given the responsibility of buying and also processing the produce in Lindi and Mtwara regions.
In tough and far reaching decisions yesterday, President John Magufuli locked out private companies from buying cashews and raised the farm gate price for a kilo to Sh3,300. President Magufuli directed Tanzania Agriculture Development Bank (TADB) to provide funds for the purchase of about 200,000 tonnes of cashews expected this season.
The Head of State also said farmers should be paid in full for their produce without any sort of deductions at the auction point.
Dr Magufuli made the announcement at the State House in Dar es Salaam shortly after swearing in two newly appointed ministers and four deputy ministers. The cabinet changes in which Agriculture minister Charles Tizeba and his Industry, Trade and Investment colleague Charles Mwijage were sacked followed a fallout between the government and businesses over the purchase of cashews.
President Magufuli spelt out the tough measures that would reverberate far and wide as his administration sought to stamp its authority on the marketing of the country’s top forex earner that reportedly netted the country about $500 million in income last season.
Almost all top leaders of the various arms of the state listened as the measures were read out by Dr Magufuli. He was flanked by among others Prime Minister Kassim Majaliwa, Speaker Job Ndugai, Chief Justice Ibrahim Juma and the Chief of Defence Forces , General Venance Mabeyo. Dr Magufuli directed that 13 private firms that had enlisted with the Prime Minister’s Office to purchase the cashews be left out.
“These people (companies) have no good intentions, they are now promising to buy lots of tonnes, but will later set tough conditions that will delay farmers’ dues,” said the President.
He said the companies which agreed to a price of Sh3,000 per kilo may benefit from a profit windfall at the expense of farmers should cashews price in the global market recover in December.
“First of all where were they all this time? Didn’t they know that we have cashew nuts in Tanzania?” He was referring to firms that responded to an ultimatum issued Friday by Mr Majaliwa asking companies that would be interested to let the government know the amount of cashews they wanted to buy and the price they were offering.
Most of the 13 companies that responded were those that had participated in the auctions that failed to draw in enough quantities, forcing the government to suspend the marketing.
The remainder of more than 30 companies that had been cleared to participate in the auctions by the now disbanded cashew nut board stayed away.
This was despite an earlier meeting with the President during which the minimum price of Sh3000 per kilo was set. Earlier, the PM said other than the 13, a Chinese company was interested in buying the whole harvest.
The President’s directive for a new price of Sh3,300 a kilo and the shielding of farmers from deductions for farm input, transport and other administrative costs, will likely complicate loan recovery, especially for cooperative unions and farmer associations as well as private suppliers. This decision will also disrupt an arrangement where farmers were being deducted Sh30 per kilo to fund local education programmes, with Mtama MP and former minister Nape Nnauye telling Parliament yesterday that Sh400 million was raised this way for Lindi region last season.
For TADB, the challenge would be to quickly work out how to acquire Sh660 billion needed to purchase 200,000 tonnes of the produce, a sum that is more than three times its total capitalization. Kigoma Urban MP Zitto Kabwe also questioned the matrix of getting this loan and who would bear its risk but the bank’s managing director, Mr Japhet Justine, assured that all matters pertaining to the loan would be covered.
Regarding the army’s operation, the President said they will henceforth take control of all warehouses and pay farmers. “I have also directed that the army take over the running of the Buko cashew processing factory and team up with JKT to ensure the crop is delivered and processed to the quality required.”
The President directed other crop marketing agencies and those that are in charge of promoting Tanzanian products abroad work out the means in which both the raw and processed cashews will be sold. He warned that he will not tolerate other crop boards that do not demonstrate their interest in farmers first.
Dr Magufuli said Tanzania has a population that could provide enough market for the cashews.
The involvement of the army was apparent at the weekend when the President inspected trucks lined up for the job. Yesterday, Mr Kabwe while welcoming the intervention on the farm gate price, argued the takeover of the entire exercise by the government would render many people in the value chain jobless.
Buko, with a capacity to produce about 20,000 kilos of cashew nuts per year, was repossessed last week from its private owner who has reportedly failed to run it. Dr Magufuli said this season’s crop could be processed to some 70,000 tonnes.
In addition the president said as a country there have been measures to promote private sector but this won’t happen if farmers’ efforts keep on being undermined.
Additional reporting by Gladys Mbwiga