Ghana: Cashew is king as farmers gang up against traders

Under the darkness of midnight in Seketia, a farming village in western Ghana, cashew traders and middlemen go knocking from door to door looking for supplies of harvested nuts. 

"During the peak harvest, they visit us late at night, trying to get us to sell," says David Enkamah, a cashew farmer.

Worldwide demand for cashew has grown about 7% a year over the past decade on healthy snacking habits. The tree nut, along with sesame seeds — favoured especially by the Japanese, South Koreans and Chinese — and pigeon peas, a
common ingredient in Indian kitchens, are among a number of crops where the balance of power has tilted a little towards African farmers.

Growers of cashew, buoyed by demand from India and China as well as resurgent consumption in Europe and North America, are among those defying the stereotype of smallholder farmers in developing countries rendered powerless by the might of multinational companies and market forces.

During the harvest season starting in January, 30 to 40 agents and traders looking for supplies for processors and exporters descend on Seketia. During the peak months of April and May, West Africa, the world’s leading producer, is the scene of a scramble for farmer loyalty. As a handful of growers in Seketia gather to discuss the current crop and prices.

Mr Enkamah notes: "Even now, somebody might be contacting some of the farmers."

Far from accepting the first bid, Seketia farmers wield cellphones to contact growers in other communities, pitching offers against each other to get the best price. Buyers are also finding they need to offer longer-term incentives.

About a third of the farmers in Seketia work closely with Olam International, an agricultural trader in Singapore, which is the world’s largest cashew dealer and processor. Olam is looking to improve long-term relationships with the growers by providing them with zero-interest loans and training.

"They need to see there is a possibility of a livelihood in farming, and they can educate their children," says Samir Kumar, head of cashew for Olam Ghana.

In spite of strong demand, farmers cannot suddenly command high prices for their cashews, which compete with other tree nuts. Annual income for many African cashew-farming households still total less than $1,000.

About a third comes directly from the tree nut, according to the African Cashew Initiative, which is backed by the German government and co-ordinates public and private partnerships. Much of Africa’s raw cashews are processed in India and Vietnam, but Olam is raising its African processing capacity.

The company, which operates processing plants in Cote d’Ivoire, Tanzania and Mozambique, believes that local processing encourages loyalty among farmers who can see a ready market for their crop. It also says the operations generate revenues for the wider community, especially female factory workers.

To keep growers interested in supplying cashews, buyers need to offer a balanced portion of the profit margins, says Rita Weidinger, executive director of the cashew initiative. "Leaving the concept of fairness aside, from a business model point of view, it’s just not sustainable," she says.

But for all their efforts to nurture long-term relations with the growers, Olam executives are quick to acknowledge that price is king when negotiating with the cellphone-wielding farmers during the harvest. "Of course, you need to match the highest bidder," says Mr Kumar.

"You’ll be fooling yourself if you think you can get away with offering lower prices than your competitors."

Credit: Emiko Terazono