A Value Chain Analysis of the C ashew Sector in Ghana African Cashew initiative Funded by: COOPERATION GHANA and private partners

REPUBLIQUE FEDERALE D'ALLEMAGNE

Implemented by: In cooperation with:

Published by: Deutsche Gesellschaft für Technische Zusammenarbeit GmbH (GT Z) International Foundations Postfach 5180, 65726 Eschborn, Germany Acknowledgement: T +49 61 96 79-1438 This study has been implemented as part of F +49 61 96 79-80 1438 the African Cashew initiative (ACi), a project jointly E [email protected] fi nanced by various private companies, the Federal German I www.gtz.de Ministry for Economic Cooperation and Development and the Bill&Melinda Gates Foundation. Place and date of publication: Ghana, February 2010 ACi is implemented by the African Cashew Alliance (ACA), the German Development Cooperation GTZ, as a lead agency Contributions: as well as FairMatchSupport and Technoserve. Seth Osei-Akoto

Responsible editor: Printed on 100% recycled paper Peter Keller (Director African Cashew initiative) African Cashew initiative (ACi) Design: 32, Nortei Ababio Street creative republic Airport Residential Area T h o m a s M a x e i n e r V i s u a l C o m m u n i c a t i o n s , Accra, GHANA Frankfurt am Main/Germany T + 233 21 77 41 62 www.creativerepublic.net F + 233 21 77 13 63 Photos: Contact: © iStock, Shutterstock,GTZ/Rüdiger Behrens, Claudia Schülein [email protected] Thorben Kruse & creative republic A Value Chain Analysis of the C ashew Sector in Ghana February 2010 4 Contents

List of Figures ...... 4 List of Acronyms ...... 39 List of Tables ...... 4

Executive Summary ...... 8 Appendix I – Inventory of Literature ...... 40

1 Introduction ...... 11 Appendix II – Further Sources of Information ...... 43

1.1 Background Information on the African Cashew initiative and the Purpose Appendix III – Co-operative Unions ...... 43 of the Country Study ...... 11 1.2 Objective of the Study and the Methodology Applied ...... 12 Appendix IV – Comprehensive Illustration 1.3 Major Data on Cashew Production of the Cashew Value Chain and Marketing in Ghana ...... 44 and Processing in Ghana ...... 13

2 The Value Chain Analysis ...... 17 List of Figures 2.1 Historical Background Figure 1.1 World Cashew Production ...... 11 of Cashew Farming in Ghana ...... 17 2.2 Th e Cashew Value Chain Figure 2.1 Cashew Value Chain Operators and Marketing in Ghana ...... 17 and their Functions ...... 18 2.2.1 Value Chain Map and Description of Stakeholders Involved ...... 17 Figure 2.2 Illustration of 2.2.2 Marketing Channels and Existing Marketing Channels ...... 19 the Local Cashew Trade ...... 18 2.3 Description of Cashew Production Systems ...... 21 Figure 2.3 Major Cashew Production Zones ...... 20 2.3.1 Access to Land and Inputs for Cashew Farming, and the Ecological Impact of Cashew Farming...... 22 2.3.2 An Economic Analysis of Cashew Farming ...... 23 2.3.3 Farmer-Based Organisations List of Tables in the Cashew Sector...... 24 2.4 Cashew Processing in Ghana ...... 24 Table 1.1 Importance of the Cashew Value Chain 2.5 Gender Aspects and the Poverty Relevance for the National Economy ...... 13 of Cashew Processing ...... 27 2.6 Support Services for Cashew Production Table 1.2 Essential Data/Information on along the Value Chain ...... 28 Cashew Farmers in Ghana ...... 14 2.6.1 Demand and Supply of Financial Services along the Value Chain ...... 30 Table 1.3 Overview of Projects/Programmes Supporting 2.7 Summary of Major Political Frame Conditions ...... 32 Cashew Production in Ghana ...... 14 2.8 Overview of Ongoing Support Activities/ Projects for Cashew Production in Ghana ...... 32 Table 1.4 Potential and Actual Processing Capacities 2.9 Opportunities and Bottlenecks for Promoting of Cashew Factories in Ghana ...... 15 the Cashew Value Chain in Ghana ...... 33 2.10 Proposals for the Strategic Orientation Table 1.5 Organisation of Cashew Farmers in Ghana ...... 15 of Activities Promoting the Cashew Value Chain ...... 34 Table 1.6 Policies Governing the Cashew Value Chain in Ghana ...... 16

3 Identifi cation of information gaps Table 2.1 Estimated Potential Areas in the Cashew Value Chain in Ghana ...... 35 for Cashew Cultivation in Ghana ...... 17 5

Table 2.2 Farm Gate Producer Prices and Export Prices FOB for Raw Cashew Nuts (2003–2009) ...... 20

Table 2.3 Raw Cashew Nuts Trade in Ghana ...... 20

Table 2.4 Major Climatic and Edaphic Factors Aff ecting Cashew Production and Suitability of Production Areas ...21

Table 2.5 Overview of Cashew Processing Companies in Ghana ...... 25

Table 2.6 Technical and Economic Data on Th ree Selected Small-Scale Processing Companies ...... 26

Table 2.7 Needs Assessment for Support Services along the Value Chain ...... 28

Table 2.8 Overview of Major Service Providers for the Cashew Value Chain ...... 29

Table 2.9 Short-Term Financial Needs of Value Chain Stakeholders ...... 30

Table 2.10 Long-term Financial Needs of Value Chain Stakeholders ...... 30

Table 2.11 Overview of Financial Organisations Supporting Agricultural Activities ...... 31

Table 2.12 Summary of Major Political Frame Conditions ...... 31

Table 2.13 Programmes/Projects Involved in Promoting the Cashew Value Chain in Ghana ...... 32

Table 3.1 Information Gaps ...... 35

8

Executive Summary

Agriculture is the predominant sector in Ghana’s economy. In 2008, agricultural activities contributed to 33.6% of Gross Domestic Product (GDP), employed about 60% of the labour force, and accounted for 54% of foreign exchange earnings (Ghana Statistical Service, 2008). Th e sector itself is composed of fi ve subsectors, namely crops other than cocoa, cocoa, livestock, fi sheries and forestry. However, non-traditional crops, such as pineapple, mango and cashew nuts, are increasingly of importance to the Ghanaian economy.

During the last six years, there has been growing interest in cashew cultivation in Ghana because of its importance to farm families, coupled with high demand and a fl ourishing export market. Produc- tion is mostly carried out by smallholder farmers (88%), who are usually organised into associations. Most of these producers rely on family labour or hired labour, especially for weeding and harvesting activities. Since cashew is harvested during the lean season for all major staples (e.g. maize, yam, plan- tain and millet), this crop could help avoid food purchases and contribute to increased food security.

Th e Ghana Cashew Industry Study conducted by the Ministry of Food and Agriculture (MOFA) in 1998 estimated that Ghana has enough land to develop new plantations of about 60,000 ha by 2008 and up to 100,000 ha by 2020. However, there are strong doubts about the credibility of these fi gures due to generally lacking resources (such as land and water), the competition for resources arising from the production of other food and cash crops, and the possible negative impact on (agro-) biodiversity.

In 2008, 61,590 t of raw cashew nuts (RCN) valued at US$ 45.37 million were exported for proces- sing, mainly to India, while annual local production was estimated to be 26,454 t. Th ese numbers indi- cate cross border trading of RCN between Ghana and neighbouring countries, especially Côte d’Ivoire. In 2008, RCN exports contributed to 6.1% of GDP and 18.2% of agricultural GDP (computed accord- ing to data available from the Ghana Shippers’ Council and the Ghana Statistical Service). 9

Value chain addition regarding cashews is mainly realised through processing and packaging activ- ities. Th ere are diff erent processing steps involved, mostly carried out by diff erent actors and, again, mostly outside Ghana. As for RCN originating from Ghana, the vast majority are exported to India, where they are converted into plain kernels which are then exported in bulk to markets in developed and emerging countries. Th ere, further processing takes place with regard to roasting, salting/seasoning, packaging, and labelling/branding.

Th e cashew industry in Ghana currently boasts 12 processing companies, with a total installed capacity of 2,137 t per year. Th e only medium processing company is Mim Cashew Products, which has an installed capacity of 1,000 t per year and, as the name implies, is located in Mim. Th e remainder are small enterprises with an installed capacity ranging from 10 to 250 t per year. Th ese companies process kernels for export and for secondary processing around Accra.

Th ere are 21 kernel roasting companies operating in diff erent parts of the country: 17 in the Greater Accra Region, three in the Brong-Ahafo Region and one in the Eastern Region. Th e kernels they roast are sold in hotels, restaurants and supermarkets. Th e “Cashew Processing, Marketing and Consumption in West Africa” (USAID 2007) study concludes that the average retail price of locally processed cashews is highest in Ghana and Côte d’Ivoire – higher even than that of imported Asian cashews. If prices cannot be reduced signifi cantly, the local market for cashews will be dominated by imports.

It has been estimated that the cashew sub-sector can contribute to pro-poor economic growth by genera ting over 200,000 permanent and seasonal jobs, particularly for farm labourers and interme- diaries (Cashew Development Project, 2008). Furthermore, marketing, distribution and processing of RCN off er more than 5,000 permanent and seasonal jobs annually in the cashew industry as it now stands (CDP 2009a).

Th e marketing of RCN is currently one of the most critical issues of concern for farmers. RCN are marketed between February and May of each year, and without much structured organisation to the underlying process. Basically, RCN marketing companies visit known cashew farming communities individually to either purchase RCN directly, or to collect the RCN already purchased at an agreed price by their locally commissioned people and local marketing agents. Th us, the marketing channel consists of producers, village merchants, or agents and exporters. Since this is an activity restricted to only four months in the year, there are no exclusive traders for raw cashew nuts. Often, there are intermediaries or agents acting between traders, exporters and processing companies who provide in- formation services and make deals. Th is has resulted in middlemen playing an important role in the marketing of nuts, and thereby reduced the margin or dividends accrued by cashew farmers.

Prices vary widely from place to place, from season to season, and even within the same season. Th e producer price is a function of many factors, the most important of which are international cashew supply and demand dynamics, domestic market conditions, as well as the effi cacy of the regulatory mechanism and the tax/levy structure for the agricultural sector (personal comments by M. Das, 2009). Th e highest average farm gate producer price obtained so far was for the 2009 harvesting season.

Th ere are a number of major bottlenecks hindering the development of the cashew value chain in Ghana. At the farmer level, these would be: limited access to good planting material; a high incidence of pest infestations; weak extension services; and weak farmers’ associations. Meanwhile, limited access to working capital, an inconsistent supply of raw cashew nuts, inadequate transport facilities, and fre- quent fuel price fl uctuations that result in high transportation costs are major bottlenecks on the side of processing companies.

Bissau Guinea and d’Ivoire Côte Mozambique, Tanzania, Nigeria, are countries producer main the Here, nut production. cashew raw in importance gaining is Africa Increasingly, Indonesia. and Asia. Th East South and America Latin Africa, in grown are Cashews alleviation. poverty and development nomic eco- sustainable own their support thus, and, growth nomic have to signifi they advantages comparative the use could countries African up and strengthening national economies. In this context, building for options reveal thereby can and economy global opportunities for integrating developing countries into the provides Moreover, globalisation resources. natural on their vantages within the agricultural sector at their disposal based Many countries African have considerable comparative ad- 1.1 1 Introduction exported to India. On average, 90% of the raw nuts produced in this nuts. region cashew raw are unprocessed as exported predominantly are cashews West African oftraders. number nated byasmall global market for cashew kernels is steadily growing,the it Although is domi- cultivation. under areas expanding currently are Figure 1.1 Source: RedRiverFoods Inc. /FAO World Cashew Production 1 e leading producer countries are India, Vietnam, Brazil Brazil Vietnam, India, are countries producer eleading , while countries such as Ghana, Burkina Faso and Benin Benin and Faso Burkina Ghana, as such countries , while Initiative and the Purpose of the Country Study Country the of Purpose the and Initiative Cashew African the on Information Background

Estimated world raw cashew produktion Production Cashew World cantly increase their share of international eco- ofinternational share their increase cantly India by region and country in million kgs 100 200 300 4 5 60 700 80 0 0 0 0 0 0 0

Vietnam 1998

1999

20 00 Brazil

2001

20 02 their cashew production. Th production. cashew their straints that hinder them in increasing the profi con- several face farmers African time, However, ofthe most 2009). Peter Gyan, by comment (personal security food toincreased contribute and purchases avoid food help could crop this millet), and plantain yam, (e.g. maize, staples major all for season lean the a fl and demand ofhigh presence the with coupled families, farm Th country. the across cultivation cashew in interest growing seen have years six last toGhana’s economy. Th ofimportance increasingly are nuts, cashew and mango pineapple, as such crops, Non-traditional GDP). (9.9% ofagricultural GDP), forestry and tural GDP), fi (5.5%stock ofagricultural GDP), live- (22.5% GDP), ofagricultural cocoa of agricultural posed of fi ings (Ghana Statistical Service, 2008). Th earn- exchange 54% for offoreign accounted and force, labour to33.6% ofGDP, ofthe contributed 60% about employed activities agricultural 2008, –in economy Ghana’s dominates many Ghanaian smallholder farmers. Agriculture, as a whole, Cashew nut production is an important source of income for diversifi under cashews grow who holders Th nut production. cashew global oftotal 40% about for accounted farmers 2007,In African West Africa do not allow for adefi for notallow do ranking. yearly nite production (which also depend on the quality of information sources) 1 Th ourishing export market. Since cashew is harvested during during harvested is cashew Since market. export ourishing 2003 is is a listing rather than a ranking as fl as aranking than rather alisting is is ve sub-sectors, namely crops other than cocoa (49% cocoa than other crops namely ve sub-sectors,

2004 is is because of the crop’s importance to

EastAfrica 20 05 ese would include: low tree pro- lowtree include: would ese 20 06 ese are mostly poor small- poor mostly are ese sheries (12.2% of agricul-

20

07 e sector itself is com- ed cropping systems. systems. cropping ed uctuations in in uctuations Other 20 0008 tabilityof e 11 11

12 ductivity and insuffi cient nut quality due to sub-optimal agri- 1.2 Objective of the Study and the Methodology Applied cultural practices; few economies of scale in the production and marketing of nuts because of weak farmer organisations; Th e ACi started in April 2009 with a kick-off workshop in limited access to necessary support services (e.g. technology, Accra. Representatives of the four implementing partners as credit and marketing); and a lack of political support. well as private and public stakeholders involved in the cashew value chain discussed the project’s underlying concept and Many African governments have realised that agro-processing strategy. By the end of this workshop, the participants had industries play a crucial role towards achieving sustainable identifi ed project goals, agreed on the major principles for economic development. Nevertheless, the overwhelming ma- project implementation, and decided on the institutional set- jority of nuts are exported raw, mostly to India, rather than up for steering and coordinating project activities. In addition processed locally. Th e development of a national cashew nuts to this start-up workshop, the major activities undertaken by processing industry could help diversify Ghana’s economy, the ACi in Ghana have comprised: fi nalisation of contracts capture an increased part of the achievable added value, and with implementing partners; identifi cation of key stakehold- create employment opportunities for the population. ers in the national cashew value chain; and an assessment of the country situation. Th e objective of the African Cashew initiative (ACi), funded by the Bill & Melinda Gates Foundation, the German Federal As a fi rst step towards developing and implementing an eff ec- Ministry for Economic Development and Cooperation and tive support strategy for cashew production and processing in private sector organisations, is to strengthen the global com- Ghana, the ACi planned to conduct a study on the cashew petitiveness of cashew production and processing in fi ve pilot value chain in the country. Th e objective of this study is to countries in sub-Saharan Africa, namely Mozambique, Ghana, summarise and analyse all facts and information on the cash- Burkina Faso, Côte d’Ivoire and Benin. ew value chain in Ghana systematically, to review ongoing support activities and, thus, to provide a com pre hensive insight Th e ACi aims to help 150,000 small-scale cashew producers into the national cashew sector. increase productivity and gain additional income of US$ 15 million per year. Furthermore, the project’s support activities Based on the results of such country studies, the project will will develop 5,500 new jobs in local, medium- and large-scale develop an eff ective and sustainable support strategy for cashew cashew nut processing industries in the pilot countries. Indeed, value chain promotion in each pilot country. Moreover, the the vision for the longer term is to have 60% of cashew nuts studies: help avoid a duplication of eff orts with other support processed locally in their country of growth. Finally, the pro- agencies; develop synergies with existing promotion measures; ject should alleviate rural poverty and promote pro-poor growth are in line with ongoing national support activities; widen by increasing the income of poor small-scale farmers and by knowledge of best practices; and also help in identifying creating new employment opportunities, especially for women. essential key players in the sector and with implementing demand-driven support measures. Th is cashew project is implemented by the Deutsche Gesell- schaft für Technische Zusammenarbeit (GTZ) GmbH in A country study is mainly compiled using analysis from ex- cooperation with three sub-grantees: Technoserve, a US non- isting studies, research papers and documents relating to the governmental organisation; FairMatch Support, a non-profi t cashew sub-sector. If necessary, further information can be foundation based in the Netherlands; and the African Cashew collected by using participatory methodologies, including focus Alliance, a supranational platform of private and public sector group discussions (involving major players in the cashew in- partners involved in the cashew value chain. dustry) and interviews with individuals. 1.3 Major Data on Cashew Production more, RCN marketing, distribution and processing off er more 13 and Processing in Ghana than 5,000 permanent and seasonal jobs annually in the cash- ew industry as it now stands (CDP, 2009a). In 2008, 61,590 t of raw cashew nuts valued US$ 45.37 million were exported for processing, mainly to India, while annual Th e Ghana Cashew Industry Study conducted by MOFA in local production was estimated to be 26,454 t. Th ese numbers 1998 estimated that Ghana has enough land to develop new indicate cross border trading of raw cashew nuts between Ghana plantations of about 60,000 ha by 2008 and up to 100,000 ha and neighbouring countries, especially Côte d’Ivoire. In 2008, by 2020. However, strong doubts exist about the credibility of RCN exports contributed to 6.1% of GDP and to 18.2% of ag- these fi gures due to generally lacking resources (such as land and ricultural GDP (computed according to data available from the water), the competition for resources arising from the produc- Ghana Shippers’ Council and the Ghana Statistical Service). It has tion of other food and cash crops, and the possible negative im- been estimated that the cashew sub-sector can contribute to pact on (agro-) biodiversity. Tables 1.1-1.6 that follow summa- pro-poor economic growth by generating over 200,000 perma- rise major data on cashew production and processing in Ghana, nent and seasonal jobs, particularly for farm labourers and in- and place the cashew sector in the broader context of the termediaries (Cashew Development Project, 2008). Further- country’s economy.

Table 1.1 Importance of the Cashew Value Chain for the National Economy

Cashew Source of Information

Human Development Index Human Development 152 (out of 177) (global ranking) Report 2009 (UNDP)

ÿ US$ 744.32 million ÿ Other sources provide signifi cantly different fi gures for nominal GDP 6.1% of national GDP* GDP in 2008: ÿ CIA: US$ 16.12 billion ÿ IMF: US$ 16.65 billion Ghana Statistical Service (2008) ÿ AfDB: US$ 14.7 billion

Agricultural GDP US$ 250 million*** 18.2 % of agricultural GDP*

Agricultural GDP’s share 33.6% of national GDP

Raw cashew nuts produced Equals 1.3% of the total global 26,454 t** in 2008 production estimated for 2008 Ghana Shippers’ Council (2008) Raw cashew nuts exported 61,590 t** in 2008

Raw cashew nuts produced 2.1 million t (2008 estimate - 2 million t) Red River Foods, Inc. (2008) worldwide in 2007

13.6 million haa (i.e. approx. a AfDB (2006): Appraisal Report 30% of total land areab - – Afram Plains Agricultural this fi gure seems to be 7 % of area cultivated with Development Project Agricultural area cultivated rather optimistic; other tree crops, including cashew sources indicate about 16% b WTO Trade Policy Review is used as arable land and (2008) 10% for permanent crops)

In 2000, 70% of the population was engaged in agriculture, of Total population in 2000 18,912,079 which 0.53% (i.e. around Ghana Statistical Service (2002) 70,000 people) were involved in cashew production

Total population in 2009 CIA World Fact Book and AfDB 23,832,495 (estimated) (2009)

28.5%, of which 10.8% is Poverty incidence urban-related and 39.2% Ghana Statistical Service (2007) in 2005/2006 (%) is rural-related

* Figures refer to the total volume of RCN exported. ** The difference between local production and exports is mainly explained by smuggling from neighbouring countries. *** This fi gure changes according to the level of GDP specifi ed.

14 Table 1.2 Essential Data/Information on Cashew Farmers in Ghana (2009)

Source of Information

Total number of 70,000 farmers cashew farmers in Cashew Development Project (2009a) (60,000 males and 10,000 females) Ghana (estimated)

Average size of farm for 0.8 – 2.5 ha Cashew Development Project (2009c) cashew smallholders

Average size of farmer Statistics, Research and Information Directo- 6 persons family rate, Ministry of Food and Agriculture (2007)

Farm gate price of 1 kg of raw cashew nuts (2009 US$ 0.39/kg – US$ 0.52/kg cropping season)

FOB price (Tema) of raw US$ 550/t – US$ 650/t cashew nuts

Average income of US$ 655 per year (estimated) Cashew Development Project (2009b) a cashew farming family

Cashew-related income of cashew farming family as a 43% share of total income

Yam, maize, millet, sorghum, ground nut, Cashew intercropped with… soybean, pepper, pineapple

Policy Planning, Monitoring and Evaluation Di- Other cash crops farmed Cocoa, plantain, citrus, cassava, cowpea rectorate, Ministry of Food and Agriculture by cashew farmers (2007)

Harvest period From February to May

Number of cashew trees 70 – 100 trees per ha

Annual tree productivity 3 – 6.5 kg per tree

Average age of trees 5 – 10 years

Improved seeds (cashew, yam, maize, Cashew Development Project soybean, groundnut); jute sacks; herbicides Inputs used for cashew (glyphosate); pesticides (cyperdim); intercropping systems fertilisers/decomposed poultry manure; pesticide sprayers

Inputs used for old cashew Herbicides (glyphosate); pesticides (cyperdim); farms jute sacks; pesticide sprayers

Table 1.3 O v e r v i e w o f P r o j e c t s / P r o g r a m m e s S u p p o r t i n g C a s h e w P r o d u c t i o n i n G h a n a

Name of project/programme Supporting donor/s

Cashew Development Project of the GoG AfDB

Afram Plains Agricultural Development Project, GoG (an integrated project AfDB including cashew promotion)

Adventist Development and Relief Agency (ADRA), a non-governmental USAID organisation

Trade and Investment Program for a Competitive Export Economy (TIPCEE) – USAID this project includes a cashew component

African Cashew Alliance Private sector agents and USAID

West African Trade Hub USAID

Bill & Melinda Gates Foundation, German African Cashew initiative Federal Ministry for Economic Cooperation and Development Table 1.4 Potential and Actual Processing Capacities of Cashew Factories in Ghana 15

Source of Information

Potential installed capacity 2,137 t per year for processing RCN

Annual amount of RCN 362.62 t per year (i.e. about 17% of potential capacity) processed (actual capacity)

Large-scale (Installed capacity for processing None more than 1,000 t of RCN per year)

MIM Cashew Factory Medium-scale (Installed capacity for processing (Brong-Ahafo Region; capacity 500 – 1000 t of RCN per year) for processing around 1000 t per year)

Kona Agro-Processing Ltd – Awisa (250 t)

Cash Nut Foods Ltd – Cashew Development Faaman (250 t) Project (2009b) Overview of existing NASAKA – Kabile and Nsawkaw processing factories (200 t)

CRIG – Bole (120 t)

Small-scale Winker Investments Ltd – (Installed capacity for processing Afi enya (100 t) up to 500 t of RCN per year) Dudasu – Dudasu (90 t)

Latemu – Kabile (72 t)

Shop Best Company Ltd – Accra (25 t)

Jelana Company Ltd – Jamera (20 t)

Nsuro – Accra (10 t)

Table 1.5 Organisation of Cashew Farmers in Ghana

Objective of organisations/ general remarks

ÿ 156 district co-operative societies (formed from

ÿ 1,549 production groups in 389 farming communities) Local level ÿ 11 D i s t r i c t C a s h e w F a r m e r s ’ U n i o n s f o r m e d and registered *

Ghana Cashew Association – Brong-Ahafo Chapter Regional level (inaugurated on 28 August 2009)

National level Cashew Processors and Exporters Association of Ghana Formed, but not functional

* Contact addresses are provided in Appendix 1 16 Table 1.6 Policies Governing the Cashew Value Chain in Ghana

Source of Information

Cashew sector policy is a part of the Food and Agriculture Sector Development Policy (FASDEP). Cashew sector policy Objective of FASDEP: to promote selected commodities (tree and industrial crops) and improve access to national and global markets. Ministry of Food and Agriculture (2002)

Price regulation No price regulation

For raw cashews: none Export tax For shelled cashews: none

Import duties for raw cashew nuts: US$ 2.07/80 kg of RCN (equals roughly US$ 26/t; the 80kg bag is the typical measure used in the cashew industry). Import duties for No import duty on kernels, but a quarantine fee of US$ 3.5 is Personal comments, K. Gallant (2009) cashew products charged on every 2 tonnes of imported kernels.

NB: WTO lists applied tariffs for fresh or dried cashew nuts in shells or shelled at 20%.

The corporate tax on income from non-traditional exports such as cashew nuts is 8%.

A tax holiday of 10 years applies from the start of tree cropping operations.

After an initial 5-year tax holiday period, agro-processing Investment support enterprises which primarily use local agricultural raw materials Ghana Investment Promotion Centre via tax relief as inputs have corporate tax rates fi xed according to their (2007) location, i.e. according to whether they are based in urban or rural areas – a 0% tax rate applies to those fi rms outside regional capitals.

Industrial plant machinery and parts thereof are exempted from customs import duty under the Customs Harmonized Commodity and Tariff Code.

Country label None

Since 1992, Ghana has been using a fl oating exchange rate Exchange rate policy regime, a hybrid system of inter-bank and retail trading with minimum interventions.

Bank of Ghana (2008) The US dollar/cedi rate moved up from the GH0.0520 per US Exchange rate dollar registered in 1992 to GH1.2457 per US dollar at the end stability of 2008. It thus increased about 24 times with an average yearly depreciation of 17.04%.

Ghana has been a WTO member since 1 January 1995. The country is committed to the full implementation of the ECOWAS Trade agreements protocol for the free movement of goods and persons in West Ministry of Food and Agriculture and preferences Africa. The differential tariff structure between Ghana and the (2002), and WTO (2009) West African Economic and Monetary Union may be one of the barriers that may impact the cashew trade in the future. 2 The value chain analysis facilitated an integrated and coordinated approach towards 17 the development of the cashew industry. Up until then, only a few isolated attempts had been made by individuals, gov- 2.1 Historical Background of Cashew Farming in Ghana ernment agencies, and NGOs to promote the cashew sector in Ghana. In the early 1990’s Ghana embarked on an Economic Recovery Programme (ERP), which helped rekindle interest in cashew production. Making this a viable export crop was considered 2.2 The Cashew Value Chain and Marketing in Ghana one way of broadening and diversifying the country’s export base. Th e implementation of the ERP resulted in the liberali- 2.2.1 Value Chain Map and Description of Stakeholders Involved sation of commodity markets. Cashew farmers gained access to marketing centres and benefi ted from prompt payment for Th e aim of measures promoting cashew value chains in agri- their nuts. Farmers became enthusiastic about the crop and business is to generate greater added value within a country invested money and labour to rehabilitate some of the old or region, and to improve the competitiveness of locally pro- cashew farms that had been planted in the late 1980’s under duced cashews in national and international markets. Value the National Agroforestry Programme. As a result, Ghana re- addition regarding cashews is achieved both at the processing corded its fi rst RCN export of 50 t in 1991. By 1997, according and packaging stage. Th e key criterion in this context is one to offi cial statistics, cashew exports had increased to 3,571 t. of broad impact, i.e. growth that benefi ts the rural poor to the greatest possible extent, or at least does not worsen their In 1998, the Ministry of Food and Agriculture commissioned position relative to other demographic groups (GTZ, 2006). and funded a study on the status of the cashew industry. Th is Th us, adding value to commodities produced for export and focused, in particular, on its performance, the potential for domestic markets (like cashews) is believed to generate sub- production, possible areas for cultivation, as well as the general stantial profi ts and employment along the chain and, in this problems hindering the industry in its development. One of way, contributes to poverty alleviation. Pro–poor growth is the conclusions of this study is that there is potential to increase one of the most commonly quoted objectives of value chain the area under cultivation. It is estimated that more than 3 mil- promotion. Th e stakeholders involved and their most impor- lion ha of land suitable for cultivating cashew are available, tant activities at diff erent stages of the cashew value chain are largely in the Northern and Brong-Ahafo regions. However, shown in Figure 2.1 on page 18. this estimate should be treated with caution, given the compet- ing uses for land and related environmental aspects. Nonethe- Input suppliers: provide producers with specifi c inputs such less, this study also indicated that increased cashew production as seedlings, pesticides, herbicides, fertilisers, processing equip- in Ghana has a tremendous potential for raising signifi cantly ment and packaging materials. Seed dealers/nurseries are found the income of rural farm families, and hence for reducing rural only in a few cashew producing areas. Some big agro-chemical poverty. dealers are located in Greater Accra (Dizengoff , Agrimat, Chemico, Aglow, Kurama Co. Ltd), while smaller dealers Table 2.1 Estimated Potential Areas for Cashew Cultivation in Ghana operate throughout the country. Th ey sometimes off er infor- mation on the use of chemicals to producers. Major Areas of Production Potential Area (ha)

Coastal Savanna 21,000 Cashew producers: production is mostly carried out by smallholder farmers (88%)2, who are usually organised Brong-Ahafo/Afram Plains 1,150,000 into associations. Most of these producers rely on family Upper East Region 220,000 labour or hired labour, especially for weeding and harvest- ing activities. Northern Region 1,180,000

Upper West Region 510,000 Processors: value chain addition to cashews is mainly realised TOTAL 3,270,000 at the processing and packaging stage. Th ere are diff erent steps for processing cashews, mostly carried out by diff erent actors Source: Addaquay and Nyamekye-Boamah (1998), as cited by SNV (2006/07) and, again, mostly outside of Ghana. As for RCN originating from Ghana, the vast majority are exported to India, where In 2003, the Government of Ghana (GoG) requested the Afri- they are converted into plain kernels which are then exported can Development Bank (AfDB) to fi nance a six-year Cashew in bulk to markets in developed and emerging countries. Development Project (CDP) in fi ve regions at a cost of US$ Th ere, further processing takes place with regard to roasting, 13.32 million. Th e CDP aimed to increase production by salting/seasoning, packaging, and labelling/branding. doubling the then 18,000 ha under cultivation, and to ex- pand the processing of cashews at the village level. Th e CDP

2 Th is number refers to individuals, not to the size of their land. Without information on land distribution it might be the case, for example, that the 12% of commercial farmers, while few in number, still own the majority of land. 18 Figure 2.1 Cashew Value Chain Operators and their Functions

Specific Inputs Production Transformation Commerce / Trade Consumption

Functions

ÿ Supply of seeds ÿ Seed sowing ÿ Bulk purchase ÿ Harvesting, ÿ Consumption of of RCN collection and roasted kernels ÿ Supply of agro- ÿ Weeding, spraying purchase of chemicals ÿ Sorting cashews from ÿ Harvesting producers ÿ Supply of specifi c ÿ Cracking, peeling information to ÿ Sale of RCN ÿ Post-harvest producers ÿ Grading, roasting handling ÿ Hiring of wage ÿ Supply of labourers ÿ Packaging ÿ Sale of cashews to equipment and exporters/traders packaging ÿ Post-harvest materials handling (grading ÿ Payment for included) transport

Participating Actors

ÿ Agrochemical ÿ Small- and large- ÿ Processors/ ÿ Agents/traders ÿ Households dealers scale producers entrepreneurs (urban, domestic ÿ Middlemen and export) ÿ Seed dealers ÿ Producers’ ÿ Wage labourers associations ÿ Wholesalers/retail- ÿ Hotels ÿ Equipment/ ÿ Roasters ers (supermarkets) packaging dealers ÿ Outgrowers ÿ Restaurants ÿ Exporters ÿ Seasonal labourers

Th e cashew industry in Ghana currently boasts 12 processing sometimes travel to the farming communities themselves. companies with a total installed capacity of 2,137 t per year. Agents and traders are responsible for transporting cashews Th e only medium processing company is Mim Cashew Prod- to ports and pay for the related costs. Th ey sell RCN to ex- ucts which has an installed capacity of 1,000 t per year and, porters directly and, in some cases, to secondary intermediaries as the name implies, is located in Mim. Th e remainder are or middlemen. small enterprises with an installed capacity ranging from 10 to 250 t per year. Th ese companies process kernels for export, while Exporters: these are few in number and operate mostly from the bulk of secondary processing takes place around Accra. the Brong-Ahafo Region, as well as from marketing centres in other cashew growing areas of Ghana. Th e RCN are collec- Th ere are 21 kernel roasting companies operating in diff er- ted in bulk and packed into jute sacks obtained from associ- ent parts of the country. 17 of these are to be found in the ations. Th ese are then transported to Tema harbour, where Greater Accra Region, three in the Brong-Ahafo Region and they are shipped to target markets such as India and Vietnam. one in the Eastern Region. Th e kernels they roast are sold at hotels, restaurants and supermarkets. Th e “Cashew Processing, Consumers: the majority of consumers buy locally roasted Marketing and Consumption in West Africa” (USAID 2007) kernels from supermarkets and other retailers. study concludes that the average retail price of locally proc- essed cashews is highest in Ghana and Côte d’Ivoire – higher even than that of imported Asian cashews. If prices can- 2.2.2 Marketing Channels and the Local Cashew Trade not be reduced signifi cantly, the local market for cashews will be dominated by imports. In addition, Gha na ian producers Th e diagram that follows depicts the marketing channel for do not use all of the market channels avail able within the raw cashew nuts produced in Ghana. Only 2% of these are country eff ectively. As a result, products do not reach all po- processed locally, while the remaining 98% are exported to tential points of sale, and potential buyers or sellers (such as India. World prices for cashew kernels fl uctuate, as is partic- hotels) are underserved. ularly the case for raw nuts from Africa. Farm gate prices reached a peak in 2000, before they collapsed by 50% in Distributors: these include local traders, intermediaries, 2001. In Ghana, the farm gate price for RCN was US$ 0.52 (agents), retailers and exporters. There are nine local RCN per kg in 2009. Th is compares with the price range of US$ buyers, plus the four foreign companies in operation during the 0.31 per kg to US$ 0.54 per kg identifi ed by a survey of 2008 harvesting season. Th e agents of these companies purchase three West African countries conducted in 2006. In 2009, RCN by travelling from one marketing centre to another and the realised sales revenues from cashews in Ghana were: Th e marketing of RCN is currently one of the most critical 19 Farm gate price of RCN per kg = US$ 0.52 issues of concern for farmers. RCN are marketed between February and May each year, and without much structured Processing centre price per kg = US$ 6.80 organisation to the underlying process. Basically, RCN mar- of WW320 kernels keting companies visit known cashew farming communities individually to either purchase RCN directly from farmers, Roasting centre price per kg = US$ 10.00 or to collect the RCN already purchased at an agreed price of roasted kernels by their locally commissioned people and local marketing agents. Th us, the marketing channel consists of producers, Retail price per kg of roasted = US$ 17.00 village merchants, or agents and exporters. Since this is an and packaged kernels activity restricted to only four months in the year, there are

Figure 2.2 Illustration of Existing Marketing Channels

98% Import to India for processing and worldwide distribution (Output: 96%)

2% remain in Ghana for processing and world-wide distribution (Output: 1,86%)

98% 100% 2%

Local RCN Traders/Buying Agents Producers of Private Processors Raw Cashew Nuts in Ghana 100 % 70 % 25 % 5 %

Exporters of Raw Nuts to India Exporters of Kernels

Processors in India 98 % 2 %

98 % 2 %

Indian Local Household Household Household Consumption Consumption Consumption

Indian Roasters Roasters abroad Local Roasters

Wholesalers/Retailers Wholesalers/Retailers abroad Wholesalers/Retailers (local traders)

96% Total 1,38% Total 0,5% Total

Global Consumers 20 Table 2.2 Farm Gate Producer Prices and Export Prices FOB for Raw Cashew Nuts (2003 – 2009)

Range of Range of FOB, Average percent age Quantity of RCN producer prices at Year Tema (US$ /t) of FOB price obtained Source of Information traded (t) the farm gate (Export Price) by farmers (Ghana Cedi (GC)/kg)

2003 31,335 N/A N/A N/A N/A

2004 38,181 0.20-0.30 600-700 69.2 CDP Annual Report (2004)

2005 40,992 0.25-0.60 700-800 71.1 CDP Annual Report (2005)

2006 47,962 0.30-0.45 500-600 69.5 CDP Annual Report (2006)

2007 38,298 0.25-0.40 550-600 64.0 CDP Annual Report (2007)

2008 61,590 0.35-0.60 700-900 54.5 CDP Annual Report (2008)

Computed using data avail- 2009 N/A 0.40-0.60 500-600 63.7 able from the CDP (2009)

no exclusive traders for raw cashew nuts. Often, there are in- Prices vary widely from place to place, from season to season, termediaries or agents acting between traders, exporters and and even within the same season. Table 2.2 above shows processing companies who provide information services and RCN production, producer prices, FOB, Tema export prices make deals. Th is has resulted in middlemen playing an im- and the average percentage of FOB prices obtained by farmers. portant role in the marketing of nuts, and thereby reduced Th e producer price is a function of many factors, the most the margin or dividends accrued by cashew farmers. important of which are international cashew supply and de- mand dynamics, domestic market conditions, the effi cacy of Figure 2.3 Major Cashew Production Zones the regulatory mechanism and the tax/levy structure for the agricultural sector (personal comments by M. Das, 2009).

It can be noted from Table 2.2 that the highest average farm gate producer price obtained so far was in 2009. During the harvesting season, marketing companies liaise with private sector carting and haulage providers to ensure that the RCN purchased are transported to ports, especially the one at Tema.

Presently there are 13 marketing companies in Ghana which purchase cashews from farmers. Nine of these are local com- panies, the other four are foreign and mainly of Indian origin. Th e leading marketing companies in the country are: Bet Exports Ltd, Olam Ghana Ltd, Blossom Exports Ltd, Mim Cashew Products, Rals Commodities Ltd, Ghana National Procurement Agency and Sri Amanan Ghana Ltd. Data on the volume of raw cashew nuts traded from 2003 to 2009 are given in the Table 2.3 below:

Table 2.3 Raw Cashew Nuts Trade in Ghana

Year Quantity (t) Value (US$ ) Source of Information

2003 31,335 15,667,500 Ghana Ports and Harbours Authority 2004 38,181 20,999,550

2005 40,992 29,930,000 Ghana Shippers’ 2006 47,962 23,981,000 Council 2007 38,298 21,064,000

Regional Boundary Cashew Production Zones 2008 61,590 45,367,000 Cashew Development Project Districts Source: Adaptation of Cashew Development Project data Table 2.4 Major Climatic and Edaphic Factors Affecting Cashew Production and Suitability of Production Areas 21

Agro- Temperatures (°C) Number ecological Rainfall (mm) Soil Types of Dry Suitable Production Areas Zone Max. Min. Months

North of Ashanti (Ejura- Soil types found are pre- Sekyere-Dumasi, Offi nso, dominantly Luvisols, Lix- Sekyere W& E, Ashanti Rainfall is characteristi- isols and Acrisols (ISSS Akim N. districts), Brong- cally bimodal and ranges FAO-ISRIC, 1998). Ahafo (Jaman N&S, Kin- from 1,200-1,400 mm per Forest- These soil types are suit- tampo N&S, Wenchi, Tain, year. The major season Savanna 29-33 19-22 able for the crop. These 5 Nkoranza N&S, Techiman, starts at the end of March Transition are highly deep soils and Attebubu, Sene, Pru dis- and the minor season mostly of a medium tex- tricts), Eastern (Kwahu N, at the beginning of ture. Soil moisture and Asuogyaman and Suhum September. nutrient retention is low Kraboa Coaltar districts), to moderate. Volta (Nkwanta N&S, Kete Krachie districts) regions

Suitable soil types in- Rainfall in the Guinea Sa- clude Lixisols, Luvisols, vanna ranges from 1,000- Acrisols and Plinthosols. Part of Northern (W&C Interior 1,200 mm. This zone has They have good physical Gonja, Bole, Sawla-Tuna- Guinea unimodal rainfall which 32-34 20-22 characteristics, are well 6-7 Kalba, Yendi, Nanumba N., Savanna starts at the end of April to moderately well Wulensi districts), entire and runs until end Au- drained, and feature low region of Upper West gust/September. levels of organic matter and nitrogen.

Soils are heterogeneous, deep to moderately deep, This R a i n f a l l r a n g e s f r o m 9 0 0 - and medium textured. zone has 1000 mm per year. Marked Interior Soil moisture and nutri- a much Parts of Upper East by unimodal rainfall that Sudan 32-34 20-22 ent retention is low to longer (Bawku, Builsa, Kassina- usually starts at the be- Savanna moderate. Commonly dry peri- Nankana districts) ginning of May and ends in found soils include Luvi- od of 7-8 September sols, Plinthosols and months Lixisols.

T h i s z o n e f e a t u r e s a b i - modal rainfall pattern. Major soils here are me- Central (Gomoa KEA, Asi- R a i n f a l l r a n g e s f r o m 7 5 0 - dium textured Luvisols kuma districts), GT. Accra 1,000 mm per year, and is Coastal and Acrisols, and light (Ga W&S, Damgbe West very low along the coast 29-33 20-24 4 Savanna textured Arenosols. Or- Districts) and Volta (Akat- but increases towards in- ganic matter levels are si, Kpando, Keta districts) land areas. The major generally very low. regions season starts at the end of March.

Source: Adapted from Dedzoe et al. (2001) and Brammer (1967)

2.3 Description of Cashew Production Systems tors aff ecting these farming systems and the major areas of production are summarised in Table 2.4 above. Cashew is Cashew is grown as a cash crop in three agro-ecological zones, invariably established among short-term intercrops and in- namely in the Interior Savanna (Guinea and Sudan Savannas), tercropping is pursued as long as space and soil fertility Forest-Savanna Transition and Coastal Savanna (Figure 2.3, allow. Th e criteria used for selecting intercrops under the page 20). To put it another way, cashew is grown in all regions various farming systems include crop compatibility with of Ghana except for the Western Region. Among these agro- cashew, plus whether a crop has a comparative advantage in ecological zones, Forest-Savanna Transition is regarded as terms of production area and profi tability. Th e most com- highly suitable for cashew cultivation while Coastal Savanna mon intercrops in both the Forest-Savanna Transition and is considered only marginally suitable (Dedzoe et al.2001). In Interior Savanna zones are yam, groundnut, soybean and addition, these agro-ecological zones feature a range of environ- maize. Pineapples, pepper and maize are the most important ments, which explains the presence of several farming sys- intercrops for cashew farming in the Coastal Savanna agro- tems. The most important of the climatic and edaphic fac- ecological zone. 22 Cashew is grown as a smallholder crop in Ghana and the 2.3.1 Acces s to L and and Inputs for C ashew Far ming commercial plantations sector is very small. It is estimated – and the Ecological Impact of Cashew Farming that about 88% of cashew farms are owned by smallholders, with farms ranging in size from a minimum 0.8 ha to 3.0 ha. Most of the agricultural land in Ghana is under communal ownership. Large plantations account for 12% of cashew farms and are Communal land is controlled by lineage- or clan-based land-owning sized between 4 ha to 40 ha (Osei-Akoto et al. 2005). According groups. It is allocated to individuals or households on an infrastruc- to estimates, there were 60,000 ha under cashew cultivation in tural basis. In most parts of the country, particularly in the northern 2008, producing about 26,454 tonnes of raw cashew nuts per regions, women generally have diffi culties in accessing such land year (CDP, 2008). As a result of research, certain interventions except where it is owned by a group or where a male guarantor is have been implemented to address some of the production con- present. In principle, both men and women have equal rights of straints experienced. Th ese interventions of improved planting access to land in many parts of Ghana, but in practice women are materials (seeds and grafts); rehabilitation of old unproductive often allocated smaller areas of poorer quality land that are far away farms through canopy substitution with scion materials from from villages or homesteads (IFAD, 1997). high yielding trees; selective thinning; pruning; and chemi- cal control of weeds, pests and diseases. Th e majority of cashew farmers experience severe diffi culties in obtaining necessary inputs. In most instances, the use of Most cashew trees start bearing fruit in their third or fourth agrochemicals for controlling pests and diseases has become year and are likely to reach their yield at maturity by the sev- inevitable. However, these are only implemented on a limited enth year, that is, if conditions are favourable. Th e average basis because they are either unavailable (e.g. due to untimely yield of a mature tree ranges from 7 kg to 11 kg of nuts per distribution) or unaff ordable. Th e existing distribution system year. Although the cashew tree can reach an age of 50 to 60 is generally weak, and characterised by a lack of funds, unre- years, most trees produce nuts for about only 15 to 20 years. liable suppliers, as well as weak and poorly developed rural Th e cashew tree grows with a minimum of attention and is infrastructure. easily cultivated. It is usually found up to an altitude of 1,000 m above sea level, in regions where the annual rainfall is as Cashew has been found to be a valuable tropical cash and food low as 500 mm and as high as 3,750 mm. For maximum pro- tree crop that can grow on even marginal lands. It has the abi- ductivity, good soil and adequate moisture are essential. Opti- lity to stabilise the soil in which it grows and is also a source mal conditions include an annual rainfall of at least 889 mm of fuelwood. Th e additional tree cover provided by cashew and not more than 3,048 mm. Th e tree has an extensive root plantations helps to alleviate the pressure on local vegetation system, which helps it to tolerate a wide range of moisture and increase soil fertility. Th is, in turn, helps mitigate the levels and soil types, but commercial production is only ad- eff ects of drought and desertifi cation. In addition, the use of visable in well-drained, sandy loam or red soils (FAO, 2001). cashew shells to fi re boilers and ovens during processing reduces the need for cutting down trees for fuelwood, and hence re- Currently, yields from improved seeds planted by farmers in duces the pressure on surrounding forests. Ghana vary from 350 kg/ha in some parts of the Interior Savanna to 650kg/ha in the Forest-Savanna Transition zone. Cashew trees, as any other trees, serve as carbon sinks. Poten- However, through the planting of grafts from elite mother tial negative environmental impacts include loss of habitat and trees, the productivity of cashew plantations could potentially subsequent decrease in biodiversity, plus an increased possibility be raised from the present level to about 800-1,200 kg/ha. of crop loss due to higher susceptibility to pests and diseases. Elite mother trees produce at least eight kilos of nuts per tree annually, with an average nut weighing seven grams. Th e use of agrochemicals, if not properly controlled, can be a Th e cost of cultivating one hectare of cashew trees amounts 23 health hazard to farmers through direct inhalation or via run- to US$ 158 and consists of US$ 53.20 in capital costs and off into local water bodies that aff ects the quality of drinking US$ 104.80 in variable costs: water. Furthermore, localised soil erosion and loss of fertility resulting from chemical and biological changes in soil structure Capital costs Operating costs can occur. Th is is because when litter becomes dominated by Weed control (3 times); a single plant species, the decomposition process is altered Tools; mist sanitation pruning; (AfDB, 2000). As cashew trees will not tolerate arid conditions blower fi re belt construction; (i.e. mean annual rainfall < 600 mm) without supplementary (annualised for application of pesticides; 10 years) and harvesting and water, the issue of irrigation needs to be considered, where packaging (lump sum) feasible. Sum (US$ per year 53.20 104.80 and per ha) 2 .3. 2 A n Economic A nalysis of C ashew Far ming

“Gross margin” can be defi ned as the gross income from an Th e returns from cashew farming are derived from nut sales - enterprise less the variable costs incurred to achieve this. Th is calculated as the yield multiplied by the price received. Yields measure enables producers to evaluate their existing perform- vary according to farm location and soil type. Th e following ance and, for those who are considering investing in a new Table depicts possible cashew tree yields in diff erent parts of enterprise, it provides a guide to estimating gross profi t. Th e Ghana, in each case for a hectare of land with 100 trees. following calculation off ers a practical example. Here, the RCN Yield in kg per tree of Different Ages and result is net annual revenue of US$ 180 per hectare for a under Different Climatic Conditions mono-crop cashew farm which is six years old. Th e under- Medium Areas lying assumptions are as follows: Tree Low Areas High Areas (Northern/ ÿ Number of trees per ha: 10 x 10 m spacing, resulting Age (Upper West/ (B/A, E/R, A/R, Greater Accra (years) Central Regions) V/R) in 100 trees/ha Regions) ÿ Cultural practice: A cashew farm requires relatively high levels of inputs to ensure trees yield to their genetic poten- 1 0 kg 0 kg 0 kg tial. Cultural practices include slashing in conjunction with: 2 0 kg 0 kg 0 kg herbicides to minimise weed competition; the maintenance of a clean ground area to facilitate harvesting; sanitation 3 0 kg 0.5 kg 1.5 kg pruning; and fi re belt construction. Pesticides are also 4 0.5 kg 2.0 kg 4 kg used to contain a variety of insects likely to damage trees. 5 2.0 kg 4.0 kg 6 kg Labour is engaged to pick the fruit during the harvesting season that runs from February until the end of April. 6+ 4.0 kg 6.5 kg >8 kg ÿ Costs and returns: Costs and returns are presented in real and not nominal or face value terms. Real costs and Based on a farm gate price of US$ 0.52 per kg of RCN (2008) returns exclude the eff ect of infl ation. and an average annual yield of 6.5 kg per tree, gross annual ÿ Costs: Th ese comprise the capital costs and operating income is US$ 338. Th e following Table on page 24 summaris- costs. Th e analysis takes into consideration that no major es the returns and revenue from cashew cultivation. outlay was incurred under capital costs except for the ac- quisition of basic farming tools and a mist blower which was annualised for 10 years. 24 A n E c o n o m i c A n a l y s i s o f A n n u a l C a s h e w C u l t i v a t i o n ( p e r h a ) : So far, 11 district co-operative unions have been registered by the Department of Co-operatives. However, the organisa- Income US$ 0.52 x 650kg/ha = US$ 338 tional capacities of these co-operative societies are still weak. Costs US$ 104.80 + US$ 53.20 = US$ 158 Th ey usually lack training in: group management (adminis- tration, leadership, simple business development and manage- Gross Revenue US$ 338 ment techniques); accounting and fi nancial management Net Revenue US$ 338 – US$ 158 = US$ 180 (non-sophisticated); programme planning and monitoring; and product market development.

2.3.3 Farmer-Based Organisations in the Cashew Sector 2.4 Cashew Processing in Ghana Th ere are about 5,000 agricultural farmer-based organisations (FBOs) registered in Ghana, but only a few (about 100) are Currently, the overwhelming majority of cashews produced wholly owned and managed by women (IFAD 1997). Generally, in Ghana are exported rather than processed locally or the environment here is not very supportive to the existence of consumed within the country. Th ere are 12 RCN process- FBOs. Most do not function well and suff er from several weak- ing enterprises now operating in Ghana, with an estimated nesses, including: low member commitment, support and par- capacity of 2,137 t. By the end of 2008, these companies ticipation; very high levels of illiteracy (of members and offi - had the capacity to process 3.5% of all RCN (61,590 t) export- cials); inadequate capitalisation; a low scale of operations; weak ed from Ghana. and unprofessional management; as well as low levels of busi- ness management skills, internal controls, planning and mon- In terms of RCN processing, the Brong-Ahafo Region accounts itoring capabilities. for 88% of the total installed capacity nationwide. Th e lead- ing names present here are Mim Cashew Products, Cash Nut Th e Cashew Development Project, in collaboration with the Foods Ltd, and Kona Agro-Processing Ltd. Most of these Department of Co-operatives, has successfully organised processing companies use Indian technology, and employ be- 1,549 farmer groups into 156 cashew co-operative societies. tween 5 – 250 permanent and seasonal staff . Further details Th ese 156 co-operative societies cover 15 districts in fi ve on some of these processing companies are presented in the regions of Ghana: Tables 2.5 and 2.6 on the next two pages. ÿ Northern Region: fi ve districts with 60 co-operative societies Since processing is a recent development, most employees, ÿ Brong-Ahafo Region: six districts with apart from permanent staff , are unskilled and have a low 57 co-operative societies capacity to handle the large volumes of RCN required for the ÿ Upper West Region: two districts with export market. Processing companies ensure that substantial 25 co-operative societies quantities of nuts (of the necessary quality) are procured dur- ÿ Volta Region: one district with ing the harvesting season. Admittedly, some fi rms would 3 co-operative societies need to re-engineer themselves in order to become competi- ÿ Greater Accra: one district with tive and benefi t from economies of scale. 11 co-operative societies Table 2.5 O v e r v i e w o f C a s h e w P r o c e s s i n g C o m p a n i e s i n G h a n a 25

In- Qty of Assessment Level of stalled Qty of RCN kernels capacities to Name Location Region Ownership process- capacity used (t) proc- expand their ing * (t/yr) essed (t) turnover

Shop Best Ltd Accra 25 11.42 2.28 Joint Venture

Nsuro Farms Accra Greater 10 1.80 0.42 N/A Accra Winker Afi enya 100 31.31 6.91 Investments Ltd Joint Venture Kona Agro- Brong- Awisa 250 58.48 9.77 Processing Ahafo Yes CRIG Bole Northern 120 18.04 3.26 CRIG Small Dudasu Dudasu 90 12.93 2.66

Cash Nut Faaman 250 5.50 0.95 Foods Ltd Joint Venture

Jelana Jaman 20 1.56 0.46 Company Ltd

Brong- Farmer NASAKA Kabile 100 35.38 7.82 Ahafo Co-operative

Latemu Kabile 72 15.00 3.00 Joint Venture Yes Mim Cashew Mim 1,000 150.00 30.20 Medium Products

Farmer NASAKA Nsawkaw 100 21.19 4.09 Small Co-operative

* Large > 1,000 t, Medium 500-1,000 t, Total 2,137 362.62 71.87 Small < 500 t

Source: Adapted from the CDP Progress Report for the period April – June, 2009

Th ere are 21 roasting companies in Ghana adding fl avour and notably Winker Investments Ltd, SPB Agro Processing Ltd, taste to 42.02 t of kernels for the domestic market. Local Ermark Ltd, Shop Best Ltd, Yummy, Goody Star, and Friends demand for cashew kernels is currently estimated at over 50 t Nuts. Others would include Jiji, Gunners, Nsuro, Gaabs and per year, while production is only about 42 t (CDP, 2009). Kabile Nuts. Major cashew kernel roasting companies are located in Accra, 26 Table 2.6 Technical and Economic Data on Three Selected Small-Scale Processing Companies

Name Kona Agro-Processing Ltd Cocoa Research Institute of Ghana (CRIG) Winker Investments Ltd

Potential processing capacity 250 t per year 120 t per year 100 t per year

RCN actually processed 58.48 t per year 18.04 t per year 67 t per year

From India and Brazil: From India: crackers steamers, cutters, boilers, From India: steamers, cutters, boilers, Locally manufactured Technology used dryers, vacuum-packaging dryers, vacuum-packaging machines machines: steamers, dryers machines and crackers

Total Staff employed 165 34 51

ÿ male staff 71 3 22

ÿ female staff 94 31 29

Number of permanent staff 15 0 39

N u m b e r o f s e a s o n a l s t af f 150 34 12

Cooperation with outgrower None None 25 farmers

Services delivered to cashew Advice to farmers for im- Advice to farmers for improving Financial advances farmers proving the quality of nuts the quality of nuts against raw cashew nuts

Netherlands: kernels Local market: kernels Market Local markets (WW240,WW320,WW450) (WW240,WW320,WW450)

Yearly turnover No information No information US$ 130,525

Ownership structure/source of Joint venture between family ÿ Private partners Owned by CRIG/ Government of Ghana fi nancing members ÿ 100% local investment CDP/TECHNOSERVE regard- Supported by Cashew Development Programme ing technical expertise and operational advice Personal comments from Personal comments from Personal comments from Justus Source of information Nyamekye Amankwaa, M r S m i t h , W i n k e r I n v e s t - Gariba, Chief Technical Offi cer (2009) Production Manager (2009) ments (2009) 2.5 Gender Aspects and the Poverty Relevance women and men, albeit in diff erent proportions. In some 27 of Cashew Processing cashew producing communities, women make juice and alcohol from cashew apples, and are therefore highly involved in the Poverty in Ghana is concentrated in rural areas and impacts processing of apples and nuts at the household level. Further- women more severely than men. Th e poverty rate for north- more, 70% of the labour force involved in processing activities ern savannah areas is signifi cantly higher than the national is comprised of women (CDP, 2009c), and many women par- average. Th e Northern, Upper East and Upper West Regions ticipate in the selling of raw nuts at marketing centres. However, are generally the poorest in Ghana, followed by the Volta Re- large traders/exporters and their agents generally tend to be men. gion (GLSS, 2006). Both the incidence and depth of poverty are found to be greater in the rural savannah than in any oth- In the northern part of the country, some farmers use income er area. Th e proportion of Ghanaians described as being “poor” gained from cashew production to establish livestock enter- decreased to 28.5% in 2005/06 from 39.5% in 1998/1999. prises (PPMED, 2007). While there is a progressive trend to- Th ose considered “extremely poor” declined to 18.2% from wards more inclusion of perennial tree crops (cocoa, citrus, 26.8%. All localities in Ghana with the exception of Greater rubber, cashew, mango) in farming systems, most farm-based Accra and the Upper West Region have experienced a decline households maintain traditional multiple sources of income - in poverty. each has on average 7-8 income sources (PPMED, 2007).

Th e Poverty Impact Assessment conducted by GTZ revealed Th is strategy aims to reduce economic and production risks that women (heads of households, single and married), show by allowing for agricultural seasonality and increased use of signifi cant interest in working in existing cashew processing labour during the course of the year. However, it usually in- companies. Based on the discussions held with women actu- volves limited labour productivity for those households in the ally working in processing companies, it seems that this type poor and medium categories, and also restricts the labour and of employment is preferred to the hard labour associated with capital investments needed for intensive commercial agricul- cashew production and other agricultural activities. Conse- ture and specialisation (PPMED, 2007). quently, processing jobs are a favoured alternative way of earn- ing income for women in rural communities. Cashew farming can lead to increased employment opportu- nities for women in rural areas (processing companies), and There is no apparent division of labour based on gender in generate income for vulnerable smallholder farmers and women. cashew production, apart from regarding thinning and prun- All these opportunities will ultimately result in an improvement ing, which are almost always done by men. Activities such as in rural living conditions, and hence contribute to poverty weeding, clearing, planting and sowing are undertaken by both reduction. 28 Table 2.7 Needs Assessment for Support Services along the Value Chain

Value Chain Operators Operational/Support Services Results of Needs assessment

ÿ Financial support ÿ Technical training ÿ Training support ÿ Advocacy Input Dealers ÿ Transportation ÿ Promotion of inputs ÿ Support with infrastructure ÿ Loans ÿ Cold rooms

ÿ Extension services ÿ Appropriate research technologies ÿ Credit facilities ÿ Technical training ÿ Research support ÿ Transfer of technology Producers ÿ Market information ÿ A c c e s s t o m a r k e t i n f o r m a t i o n / p r i c e s f o r p r o d u c t s ÿ Training support and farm inputs ÿ Delivery of inputs ÿ Credits for inputs and investment

ÿ Legal advice ÿ Tr a i n i n g i n e n t r e p r e n e u r i a l s k i l l s ÿ Packaging and labelling ÿ Transportation and logistics ÿ Maintenance of equipment and buildings ÿ Support through policies promoting Processors ÿ Credit facilities agro-processing industries ÿ Research support ÿ Development of business partnerships between ÿ Quality assessments small- and large-scale factories ÿ Development of international quality standards

ÿ Credit support ÿ Garages to repair the vehicles needed ÿ Tr a i n i n g o n r o a d s a f e t y i s s u e s Distributors for transporting raw materials ÿ Strong and reliable haulage trucks ÿ Good road networks ÿ Adequate knowledge of maintenance ÿ Spare parts

ÿ Advertising ÿ Logistics ÿ Transportation ÿ Legal support Exporters ÿ Warehouses ÿ Financial support ÿ Entrepreneurial skills and marketing ÿ Quality assessments ÿ Skills for improving the quality of exports

2.6 Support Services for Cashew Production along the Value Chain

Operators along the value chain face varying constraints and sations in Ghana which could assist cashew farmers and pro- thus require diff erent support services in order to overcome cessing companies with overcoming their technical and entre- these constraints. preneurial constraints. Th e major support organisations are listed in Table 2.8 on page 29. So far, the Cocoa Research Table 2.7 (above) summarises the operational services needed Institute in Ghana (CRIG) has been mandated to handle by these key agents and gives an assessment of their needs. cashew research. Apart from the CRIG, national universities Th ere are many governmental and non-governmental organi- and the Council for Scientifi c and Industrial Research (CSIR) Table 2.8 Overview of Major Service Providers for the Cashew Value Chain 29 Relevance to Cashew Production and Service Provider Major Activity Processing

Research and training Research and training (for extension staff Cocoa Research Institute of Ghana (CRIG) (for extension staff and farmers) and farmers) related to cashew production

Research (e.g. on soils) and training of Research and training, including as related Crop and Savanna Research Institute (CSRI) students and entrepreneurs to soils for cashew production

ÿ Analysis of cashew production Universities – Legon, KNUST, University of systems Research on cashew farming and Development Studies, University of Cape ÿ provision of background information on marketing Coast, University College of Winneba the economic and socioeconomic issues relevant to cashew farming

Organises groups of farmers into societies, Strengthening and development Department of Co-operatives associations and unions of cashew farmers’ organisations

Cashew Processors and Exporters Organisation for cashew farmers and Marketing and lobbying for Association of Ghana (CAPEAG) exporters the cashew sector

Ghana Cashew Association, Brong-Ahafo Organisation for cashew farmers in ÿ dupport regarding production Chapter Brong-Ahafo ÿ l o b b y i n g o n b e h a l f o f c a s h e w f a r m e r s

Ghana Standards Board, Food and Drugs Watches over the quality and safety of Board cashew products ÿ development of quality standards ÿ control of quality standards SGS, Quality Control Division of COCOBOD Grading, certifi cation of quality standards

Plant Protection and Regulatory Services Di- Issues quarantine certifi cates for kernel Quality control rectorate – Ministry of Food and Agriculture products and raw cashew nuts

Statistics, Research and Information Provides market information, especially I m p r o v e s a c c e s s t o m a r k e t i n f o r m a t i o n Directorate (SRID) – Ministry of Food and regarding intercrops (e.g. maize, yam, for cashew farmers Agriculture groundnut, etc.)

ÿ Coordinates cashew-related activities ÿ Supports extension services in the country; provides technical ÿ helps organise farmers backstopping to activities Cashew Development Project (CDP) ÿ political lobbying on behalf of the ÿ provides market information through cashew sector; strengthens production its Buyers Directory and website: sector www.ghanacashewproducts.com

Ministry of Information ÿ Promote the political frame conditions Ministry of Trade and Industry Provide market information, offer promo- for agro-processing industries Ghana Export Promotion Council tion services, organise trade fairs, etc ÿ support the organisation of trade fairs Export Development Investment Fund (EDIF)

Provides extension services; supports Ministry of Food and Agriculture (MoFA) – development of favourable political frame district and regional offi ces; Agricultural Extension services for cashew farmers conditions for the agricultural sector in Extension Services Directorate Ghana

are also involved in cashew-related research. Th e Cashew De- sion services. Non-governmental organisations, most notably velopment Project provides technical support to District Ag- the Trade and Investment Program for a Competitive Export ricultural Development Units (extension units) as well as Economy (TIPCEE), Technoserve and the Adventist Devel- cashew farmers regarding appropriate methods for cashew opment and Relief Agency (ADRA), are supporting national production. It also supplies farmers and processors with im- extension staff with training on technical issues and business portant market information. Various extension manuals and management. bulletins have been published by the CDP to support exten- 30 2.6.1 Demand and Supply of Financial Services along the Value Chain

Funding is of crucial importance to success in the cashew value haulers and exporters). Currently, some cashew value chain chain. Th e various stakeholders may require fi nance to procure stakeholders (i.e. producers, processors and exporters) benefi t and distribute inputs, to purchase RCN, or to process and mar- from credit facilities off ered by the AgDB and EDIF. ket cashew products. An assessment of the short- and long-term Table 2.11 on page 31 gives an overview of the fi nancial credit needs of the diff erent value chain stakeholders is pre- organisations which could play an important role in the sented in the Tables 2.9 and 2.10 below. provision of short- and long-term credit to cashew value chain stakeholders. Short-term loans could be provided by the Agricultural Develop ment Bank (AgDB), rural banks, commercial banks and the National Investment Bank. Meanwhile, the Export 2.7 Summary of Major Political Frame Conditions Development Investment Fund (EDIF), venture capital fi rms, and the proposed government fund for agricultural develop- Cashew value chain promotion in Ghana has to be integrated ment could supply long-term loans. Th e latter would support into national policies and strategies. Major policies important agricultural activities and related agents (including input sup- for cashew sector development are summarised in Table 2.12 pliers, processors, market intermediaries, warehouse operators, on page 31..

Table 2.9 Short-term Financial Needs of Value Chain Stakeholders

Value chain stakeholders

Input dealers Farmers Processing fi rms Distributors Exporters

Farm inputs Purchasing of Transportation Purchasing of RCN Short-term credit Import of and hiring of raw material and costs (renting of for export, and for ... agrochemicals farm labour labour costs cars) warehouse rental

AgDB AgDB AgDB AgDB AgDB Financial Rural banks Rural banks National Rural banks Commercial banks organisation Investment National Invest- Credit unions Credit unions Bank ment Bank EDIF

Table 2.10 Long-term Financial Needs of Value Chain Stakeholders

Value chain stakeholders

Input dealers Farmers Processing fi rms Distributors Exporters

Construction Purchasing of Long-term credit and extension Construction of No information No information haulage equipment for ... of processing warehouses and trucks facilities

EDIF

Venture capital National Invest- EDIF Financial ment Bank organisation Proposed govern- AgDB ment fund for agri- Rural banks cultural develop- ment 31

Table 2.11 Overview of Financial Organisations Supporting Agricultural Activities

Name Target group Products Assessment

ÿ Input suppliers ÿ Warehouse Receipt AgDB serves as a channel for credit ÿ Farmers ÿ Short-term and long- schemes (associated with food security Agricultural Development ÿ Traders term loans and the marketing of farm produce) Bank ÿ Distributors ÿ Credits for investment supported by the government, as well as ÿ Processors and working capital bilateral and multilateral assistance. ÿ Exporters

ÿ many cashew farmers have accounts ÿ Various agricultural with rural banks ÿ Producers loans (short-term and ÿ producers, buying agents, traders and Rural banks ÿ Traders long-term; and micro- processors work with rural banks ÿ Distributors credit) ÿ Network of branches in rural areas.

ÿ Medium- to large-scale businesses ÿ Support investment in the equipment Commercial banks; ÿ Warehouse Receipt ÿ Commercial farmers; and machinery required for processing National Investment ÿ long-term loans, inven- medium- to large- RCN Bank; ECOBANK; Mer- tory credit, working scale traders, proces- ÿ Help with purchases, e.g. haulage chant Bank capital sors, exporters and trucks. distributors

Table 2.12 Summary of Major Political Frame Conditions

National Policies Description

Within the framework of FASDEP, the Government of Ghana through the Ministry of Food and Agri- culture (MoFA) identifi es and promotes processing technologies at the farm and industry level. FASDEP aims to support the private sector by creating an enabling environment for investments.

F A S D E P a d o p t s a s e c t o r w i d e a p p r o a c h t o m a n a g i n g a g r i c u l t u r a l d e v e l o p m e n t , i . e . a s o p p o s e d t o the discrete project approach pursued in the past. It is the strategic framework within which all Food and Agricultural Sector present and future programmes and projects operate. It provides a broad platform for agricultur- Development Policy (FASDEP) al development from which projects and programmes dealing with specifi c issues can be planned in detail and implemented.

FASDEP recognises access to markets as being a major key to success. In the short term, the government will facilitate improved marketing through advancements in infrastructure (such as roads, markets and storage facilities), and strengthen farmer-based organisations.

GPRS I provides a policy framework for eradicating poverty. Specifi c interventions in the agricultural sector for reducing poverty, as outlined under the GPRS II and equally supported by FASDEP, are:

ÿ Infrastructure development (e.g. as regards feeder roads, bridges, farm tracks, irrigation, Ghana Poverty Reduction Strategy I, and construction of storage and marketing facilities). Growth and Poverty Reduction Strategy II, etc. ÿ Promotion of appropriate technology (linked to research, development and dissemination work; focus on value addition).

ÿ Extension: the public extension system will initiate pro-poor extension programmes in targeted areas and for specifi c groups of the population. 32 Ta b l e 2 .13 Programmes/Projects Involved in Promoting the Cashew Value Chain in Ghana

Programme/ Major partners Potential Interest in Experience projects involved involved (gov- Geographical coopera- Major activities cooperation Remarks of in cashew value ernment, NGOs, area tion with with ACi cooperation chain promotion donors) ACi

ÿ 6 districts - Brong-Ahafo ÿ Production Coopera- ÿ 5 districts - ÿ Processing tion with Northern ÿ Marketing Project NGOs in Cashew Region ÿ Research & ends in farm map- Development ÿ 2 - Upper Extension Government of Septem- ping; train- Project (CDP) West ÿ Credit provision Ghana and the ber 2010 ing and ex- ÿ 2 - Volta ÿ Local improve- African Devel- tension ac- Region ments –feeder opment Bank tivities ÿ 2 - Greater roads Accra All activi- ties along Yes Afram Plains Ag- the value Project Coopera- Kwahu North ÿ Production ricultural Devel- chain ends tion with District ÿ Marketing opment Project in 2012 CDP

ÿ Training (tech- nical- and busi- Trade and Invest- Project Coopera- ness manage- ment Program Operates in all ends in tion with ment-related) for a Competitive cashew growing Decem- Tech- ÿ Farm Mapping Export Economy districts ber noserve/ ÿ Technical Back- (TIPCEE) 2009 CDP stopping USAID ÿ Marketing

No Adventist Devel- ÿ Training All activi- funds to Coopera- opment and Re- Districts in ÿ Farm Mapping ties along continue tion with Yes lief Agency Brong-Ahafo ÿ Technical Back- the value cashew CDP to map (ADRA) stopping chain activi- farms ties

Ricerca e Project Project Kwahu North ÿ Production Cooperated Cooperazione Italian NGO has has District ÿ Marketing with CDP (R & C) ended ended

ÿ Promotion of African cash- Imple- African Cashew Public-Private ews in regional menting Marketing Alliance (ACA) Partnership Cashew and global partner Coopera- growing markets tion with districts ACi West African Promotion ÿ Trade Develop- Trade Hub USAID Yes of trade ment Services (WATH) services

2.8 Overview of Ongoing Support Activities/Projects for institutions most actively involved in cashew production and Cashew Production in Ghana processing have been: Technoserve; Ricerca e Cooperazione; ADRA; West African Trade Hub (WATH); Ghana Export Th e Government of Ghana has given priority to the cashew Promotion Council (GEPC); MoAP (supported by GTZ); TIP- sector, more specifi cally through the Cashew Development CEE (supported by USAID); and the African Cashew Alliance Project of the Ministry of Food and Agriculture. Over the past (ACA). decade, training and technical advice on cashew production has been given to more than 40,000 farmers. Th rough collaboration between CDP, ADRA and TIPCEE, cashew farms are being mapped using Geographic Informa- Non-governmental organisations and other projects supported tion Systems technology. Th is farm mapping is primarily by donors have joined the MOFA in its eff orts. Th e NGOs and aimed at facilitating extension delivery and forecasting yields, or estimating harvest volumes at particular times. Also, map- ÿ High interest rates and lack of working capital: High 33 ping allows for traceability which is a critical requirement for interest rates charged by fi nancial institutions on loans certifi cation. Recently, TIPCEE, Technoserve and CDP joint- and overdrafts are said to be one of the major factors ly organised a Training of Trainers workshop for selected ex- negatively impacting processing. Also, lack of working tension staff on quality standards and norms for cashew. Th e capital prevents the expansion of processing companies. major outputs expected from such workshops include training ÿ Inconsistent supply of RCN to processing companies: and the sensitisation of farmers towards producing good qual- although RCN are exported, there is an inadequate ity RCN for domestic and export markets. Table 2.13 supply to meet the needs of existing local processing on page 32 summarises programmes/projects involved companies. in promoting the cashew value chain in Ghana. ÿ Weak farmer associations: Th ese associations do not have a strong enough collective voice to promote the interests of their members when it comes to selling RCN. 2.9 Opportunities and Bottlenecks for Promoting the Th us, their members lack the bargaining power needed Cashew Value Chain in Ghana for negotiations with traders. ÿ Inadequate transport facilities and frequent fl uctua- Th e most important problems/ bottlenecks within the cashew tions in the price of fuel have resulted in high cashew value chain in Ghana are: transport costs. ÿ Lack of an eff ective marketing information system for ÿ Diffi culty in accessing farm inputs and good planting monitoring and analysing global products and market materials: Th e existing distribution system for farm in- trends, and for relaying the information gathered to puts is generally weak and characterised by a lack of stakeholders in the sector. funds, unreliable suppliers and poor infrastructure ÿ Frequent bush fi res. (feeder road networks, storage facilities) in rural areas. Furthermore, farmers lack access to agro-chemicals need- Th e most important opportunities for the cashew ed for increasing the productivity of cashew farming. value chain in Ghana are: ÿ High incidence of pest infestations: Devastating eff ects from sucking pests (Helopeltis spp, Anoplocnemis curvipes, ÿ Increased global demand for cashews Pseudotheraptus devastems) and stem borers (Apate tele- ÿ Availability of land in environments suitable brans) lead to secondary infections and subsequent losses for cashew production in yield and quality. ÿ Increased farmer interest in cashew production ÿ Inadequate extension services: Th ere is insuffi cient dis- due to a fl ourishing export market semination of research fi ndingsgq due to inadequate exten- ÿ Th e enablinggygp environment facilitated by government sup- sion services anandd highhigh extension worwork-k- pportort fforor infrastructureinfrastructure support (e.g. 70% ofof er-farmerer-farmer ratios ththee ffeedereeder roadsroads in major proproduc-duc- (1: at least 500).500). iingng areas have been rehabil-rehabil- iitated)tated) 34 ÿ Geographical proximity to primary consumption ÿ Farm mapping and development of training on quality markets in the U.S. and Europe standards and norms: Ghanaian cashews have to meet na- ÿ Associated employment opportunities (seasonal and tional and international quality standards in order to be permanent) for rural people competitive in national and global markets. Th is is why ÿ Donor agencies that support cashew production training on quality standards is of crucial importance to ÿ Th e positive contribution of cashew trees in terms project success. TIPCEE and CDP have helped their lo- of desertifi cation, plus their resistance to drought. cal partners to map farms and to implement training in order to ensure that quality standards and norms are maintained. Th e ACi can continue the eff orts of TIPCEE 2.10 Proposals for the Strategic Orientation of Activities and CDP here. Promoting the Cashew Value Chain ÿ Improving farmers’ and processors’ access to short- and long-term credit (for investment and working capital) will Based on the strengths and bottlenecks identifi ed, it is re- increase the economic profi tability of small-scale cashew commended that interventions in the cashew value chain farmers and raise the turnover of national processing in Ghana should focus on the following areas: companies. Over 95% of the cashew nuts produced are exported in their raw form due to bottlenecks in process- ÿ Scaling-up of extension and training activities to increase ing that refl ect poor access to credit. Apparently, there is awareness of cashew production and processing through limited support for the cashew processing industry in individual, group and mass extension methods (e.g. local terms of credit. It is suggested that intensive education, radio programmes promoting good agricultural practices communication and information campaigns on the prof- and sharing information on marketing). itability of workable processing models should be ÿ Strengthening of farmers’ organisations at the local, re- launched by the project so that processing fi rms attract the gional and national levels: strong cashew farmers’ organi- necessary capital. sations can better defend the interests of this agricultural sub-sector at the political level. In this way, they can con- Furthermore: tribute to improved legal, organisational and political frame conditions (e.g. in the area of tariff s, taxes and lev- ÿ As regards improvements to nut quality and yields, it is sug- ies, etc). Furthermore, strong cashew farmers’ co-opera- gested that emphasis should be placed on the development tives help their members through improved access to and maintenance of new plantations with high yielding credit, marketing (via economies of scales) or training. clones that conform to quality requirements for exports. ÿ Increasing access to improved planting material (grafts) ÿ Pilot demonstrations of clonal cultivation using model for farmers: two central nurseries have already made clonal cashew gardens can transfer agricultural science progress in producing improved planting materials. High and technologies to farming communities for production yielding materials (with annual yields ranging from 8-15 purposes. kg/tree) have been used to establish scion banks supplying ÿ Adoption of intensive pest control (based on integrated pest scions for graft production purposes. Th ese nurseries have management approaches) can limit the incidence of major been developed through the combined eff orts of MOFA, pests identifi ed as a threat to cashews. Th is would prevent CDP, and CRIG. It is suggested that the African Cashew a loss in yield, especially in farms loca ted in the Forest- initiative should join in this initiative. Th e production of Savanna Transition agro-ecological zone. grafts for planting helps increase smallholder access to ÿ Furthermore, RCN traders or exporters should be en- better planting material, and thereby raises the produc- couraged to assist in the provision of inputs for farmers, tivity of Ghanaian farmers. e.g. credit. ÿ Strengthening research on cashew farming systems and ÿ Secondary processing should also be promoted in Ghana, the cashew value chain by national research institutes and namely the production of both alcoholic and non-alco- universities (e.g. CRIG). Th e ACi could benefi t from re- holic beverages from cashew apples. search on cashew farming systems conducted by national universities, and take this into consideration in the strategic orientation of its support activities. 3 Identifi cation of information gaps 35 in the Cashew Value Chain in Ghana

Th ere are certain information gaps regarding farmers/produc- credit which need to be investigated in further studies. Th ese ers, marketing channels, processing companies, and access to are specifi ed in the following table:

Table 3.1 Information Gaps

Information gap

ÿ Area under cultivation ÿ Production level Producers ÿ Economic profi tability of cashew production ÿ N u m b e r o f f a r m e r s i n v o l v e d i n c a s h e w p r o d u c t i o n ÿ Motivation to join farmers’ associations

ÿ Structure of marketing and marketing channels: how exactly does the purchase of cashews from local farmers and their sale to processing companies/exporters work (quantitative and qualitative description) ÿ Factors infl uencing farm gate prices Marketing channels ÿ Transparency of marketing for farmers ÿ The market power of farmers, traders and processors

Processing companies ÿ Annual turnover, costs and economic profi tability

Credit ÿ Demand for credit by different stakeholders in the cashew value chain 36 37 38 List of Acronyms 39

ACA African Cashew Alliance ACi African Cashew initiative ADRA Adventist Development and Relief Agency AFD Agence Française de Developpement AfDB African Development Bank AgDB Agricultural Development Bank CAPEAG Cashew Processors and Exporters Association of Ghana CDP Cashew Development Project CIA Central Intelligence Agency CRIG Cocoa Research Institute of Ghana CSIR Council for Scientifi c and Industrial Research DADUs District Agricultural Development Units ECOWAS Economic Community of West African States EDIF Export Development Investment Fund FASDEP Food and Agriculture Sector Development Policy FOB Freight on Board GDP Gross Domestic Product GLSS Ghana Living Standards Survey GoG Government of Ghana GPRS I Ghana Poverty Reduction Strategy I GPRS II Growth and Poverty Reduction Strategy II GTZ Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH ha hectare IFAD International Fund for Agricultural Development IMF International Monetary Fund KNUST Kwame Nkrumah University of Science and Technology M&E Monitoring and Evaluation MOFA Ministry of Food and Agriculture MOTI Ministry of Trade and Industry NASAKA Nsawkaw, Sampa, Kabile Cooperative Association NGO Non-Governmental Organisation PIA Poverty Impact Assessment PPMED Policy Planning, Monitoring and Evaluation Directorate R&C Ricerca e Cooperazione RCC Regional Coordinating Council RCN Raw Cashew Nuts SRID Statistics, Research and Information Directorate t tonne (metric) TIPCEE Trade and Investment Program for a Competitive Export Economy USAID United States Agency for International Development WATH West African Trade Hub WTO World Trade Organization 40 Appendix I: Inventory of Literature

Credibility Usefulness of of Data/ Author(s) Title of Document/Material Information Informa- tion

Addaquay, J., & Nyamekye- The Ghana Cashew Industry Study for MOFA Outdated Medium Boamah,K. (1998)

AfDB (Agric. & Rural Develop- Appraisal Report – Afram Plains Agricultural Development ment Dept. For Central & West Project Regions) – (2006)

AfDB (Country Department for Appraisal Report – Cashew Development Project West Region) – (2000) High High Bank of Ghana (2008) Exchange Rate Management in Ghana

Berg, C., Bercher-Hiss, S., Fell, Poverty Orientation of Value Chains for Domestic and Export M.,Hobinka, A., Muller, U., Markets in Ghana Prakesh, S. (2006)

Outdated since new studies on soil tax- Brammer H. (1967) Soils of the Accra Plains Low onomy and classifi - cation

Medium (in parts Behrens, Ruediger, GTZ (1996) Cashew as an Agroforestry Crop outdated)

CDP (2004) High CDP (2005) Annual Report High

CDP (2006)

CDP (2006) Cashew Production Guide Medium Medium

CDP (2007) Annual Report High High CDP (2008)

CDP (2009a) Project Monitoring &Evaluation Report Medium Medium

Project Progress Quarterly Report CDP (2009b) High and brand new (April – June 2009)

CDP (2009c) Status of Ghana Cashew Industry High

High quality infor- Suitable Agro-ecologies for Cashew (Anacardium occidentale Dedzoe, C.D., Senayah, J.K., and mation despite being L i n n ) P r o d u c t i o n i n G h a n a , W e s t A f r i c a J o u r n a l o f A p p l i e d E c o l - A s i a m a h , R . D . ( 2 0 01) published eight ogy, Vol.2 years ago

Evaluation of Karate EC, Cyperdim EC, and Confi dor SL for the Dwomoh, E. A., Afun, J.V.K. and control of Helopeltis schoutedeni Reuter (Hemiptera: Miridae) High Ackonor, J.B. (2007) on cashew in Ghana, Journal of Science and Techn.,Vol. 27 High Survey of insect species associated with cashew (Anacardium Dwomoh, E.A., Ackonor, J.B., occidentale Linn) and their distribution in Ghana, African Jour- Afun, J.V.K. (2008) n a l o f A g r i c u l t u r a l R e s e a r c h V o l . 3 ( 3 ) , p p 2 0 5 - 2 14 Brand new Laboratory studies of the biology of Helopeltis schoutedeni Reu- Dwomoh, E.A., Afun, J.V.K., Ack- ter (Hemiptera: Miridae), a major sucking pest of cashew (Anac- onor, J.B. (2008) ardium occidentale Linn), Journal of Cell and Animal Biology, Vol. 2 (3)pp 055-062

Investigations on Oecophylla longinoda (Latreille) (Hymenop- Dwomoh, E.A., Afun, J.V.K., Ack- tera: Formicidae) as a biocontrol agent in the protection of High onor, J.B., Agene, V.N. (2008) cashew plantations, Pest Management Sc. 2009: 65:41-46 41

Credibility Usefulness of Infor- of Data/ Author(s) Title of Document/Material mation Informa- tion

FAO (2001) (S H Azam-Ali and E C Judge, ITDG, Schumacher Centre for Small-scale cashew nut processing Technology and Development)

Ghana Investment Promotion Doing Business in Ghana Centre (2007) High Value Chain Analysis and “Making Markets Work for the Poor” GTZ (2006) (M4P) - Poverty Reduction through Value Chain Promotion. High Grant Proposal: Competitive African Cashew Value Chains for GTZ (2008) Pro-poor Growth

Ghana Statistical Service Revised Gross Domestic Product (2008)

Outdated because of current poverty Ghana Statistical Service Pattern and Trends of Poverty in Ghana 1991 -2006 situation - uses the (2007) consumer price index as an indicator

Ghana Statistical Service Ghana Living Standards Survey (2005 -2006) Outdated Medium (2006)

Update on popula- Ghana Statistical Service Summary Report of Final Results-2000 Population & Housing tion for 2009 would (2002) Census h a v e b e e n m o r e u s e - ful

Gyedu-Akoto, E., Oduro, I., Amoah, F.M., Oldham, J.H., Ellis, Locational and maturity effects on cashew tree gum production High W.O., Opoku-Ameyaw, K., Ha- in Ghana, Scientifi c Research and Essays, Vol. 2(11) pp 499-501 keem, R.B. (2007)

Gyedu-Akoto, E., Oduro, I., Amoah, F.M., Oldham, J.H., Ellis, Quality estimation of cashew gum in the production of chocolate Brand new W.O., Opoku-Ameyaw, K., pebbles, African Journal of Food Science Vol. (2) pp 016-020 High A s a n t e , F. , B e di a k o , S . ( 2 0 0 8)

Gyedu-Akoto ,E. , Oduro, I., Amoah, F.M., Oldham, J.H., Ellis, P h y s i c o - c h e m i c a l p r o p e r t i e s o f c a s h e w t r e e g u m , A f r i c a n High W.O., Opoku-Ameyaw, K., Ha- Journal of Food Science, Vol.(2) pp. 060-064 keem, R.B. (2008)

Ghana: Ghana Root and Tuber Improvement Programme, IFAD (1977) High Appraisal Report Vol. 1

Min i s t r y o f Fo o d & A g r ic u lt u r e Food & Agricultural Sector Development Policy High (2002)

Medium, since the National Development Planning Growth and Poverty Reduction Strategy (GPRS II) - Volume 1 current government Medium Commission (2005) Policy Framework is updating the strategy

National Development Planning Ghana Poverty Reduction Strategy 2003-2005: An agenda for Medium Medium Commission (2003) Growth and Prosperity, Vol.1

R e p o r t o n t h e I n t e r n a l A s s e s s m e n t o f t h e C a s h e w D e v e l o p m e n t Nkum Associates (June 2009) High - brand new High Project 42

Credibility Usefulness of of Data/ Author(s) Title of Document/Material Information Informa- tion

Nyamekye-Boamah K. (1996) Ghana : Cashew Nut Supply Base Study Medium Medium

Low, since the status of Status of cashew production in Ghana and agronomic options for the cash- Osei Akoto, S., Topper, C.P., increasing production by smallholder farmers. Paper presented Medium ew indus- Swatson, E. (2005) at Ghana Institute of Horticulture Annual Conference. try has changed signifi - cantly

Low, since above Improving the growth of cashew (Anacardium occidentale) Opoku-Ameyaw, K., Appiah, ground seedlings interplanted into mature sheanut stands in Northern Medium M.R. (2000) competi- Ghana, Ghana Jnl. Agric. Sci, 33:159-164 tion is be- ing dis- played

Opoku-Ameyaw, K., Amoah, Determination of optimum age for transplanting cashew (Anac- F.M., Oppong,F.K., and Agene, V. a r d i u m o c c i d e n t a l e ) s e e d l i n g s i n N o r t h e r n G h a n a , A f r i c a n J o u r - High High (2007) nal of Agricultural Research, Vol. 2(7) pp296-299

The survey was re- Rural livelihood in Ghana. Preliminary survey to create outcome stricted to a few dis- PPMED (2007) and impact indicators data base and to measure targeted devel- tricts in the various Medium opment programmes agro-ecological zones

Red River Foods Inc. Highlights of the cashew industry Medium High (www.redriverfoods.com)

SRID (2007) Annual Survey Report Medium Medium

(no title available) SNV (2006?) High High Comprehensive study on the cashew sector in Ghana

Topper C. P., Osei-Akoto, S., Top-working unproductive mature cashew trees in Ghana. Paper Medium Medium Swatson, E.. (2005) presented at Ghana Institute of Horticulture Annual Conference

USAID, West African Trade Hub Cashew Processing, Marketing and Consumption in West Africa High High (2007) Appendix II: Further Sources of information 43

Adu, Kwaku, Farmer, Wenchi, September 2009

Das, M., Exporter/Trader, Accra, September 2009

Gallant, K., Processor/Roaster, Accra, September 2009

Gariba Justus, Processor, Bole, September 2009

Gyan, Peter, Farmer, Drobo, September 2009

Gyammera, K., Agro-chemical Supplier, Accra, September 2009

Nyamekye Amankwa, Processor, Awisa-Wenchi, September 2009

Smith, E.W., Processor, Afi enya, September, 2009

Appendix III: Co-operative Unions

Contact details for district cashew co-operative unions

No. Name of Union Contact Address

P. O. Box 109 Sampa 1. Jaman North District Coop. Cashew Producers/Market Union Ltd. Brong-Ahafo Region

P. O. Box 2 Nsawkaw 2. Tain District Cooperate Cashew Farmers & Marketing Union Ltd. Brong-Ahafo Region

P. O . B o x 4 3 K i n t a m p o 3. Kintampo North District District Coop. Food Farmers & Marketing Union Ltd. Brong-Ahafo Region

P. O. Box 2 Jema 4. Kintampo South District Coop. Cashew Farmers & Marketing Union Ltd. Brong-Ahafo Region

P. O. Box 224 Wenchi 5. Wenchi Municipal Coop. Cashew Farmers & Marketing Union Ltd. Brong-Ahafo Region

P. O. Box 5 Drobo 6. Jaman South Coop. Cashew Producing Processing & Marketing Union Ltd. Brong-Ahafo Region

P. O. Box 65 Sombo Via Kaleo 7. Nadowli District Coop. Cashew Farmers & Marketing Union Ltd. Upper West Region

P. O. Box 1 Jirapa 8. Jirapa District Coop. Cashew Farmers & Marketing Union Ltd. Upper West Region

P. O. Box 1 Yendi 9. Yendi Municipal Coop Cashew Farmers & Marketing Union Ltd. Northern Region

P. O. Box 14 Bole 10. Bole-Bamboi District Coop. Cashew Farmer & Marketing Union Ltd. Northern Region

P. O . B o x 2 1 S a w l a 11. Sawla-Tuna-Kalba District Coop. Cashew Farmer & Marketing Union Ltd. Northern Region 44 Appendix IV: Comprehensive Illustration of the Cashew Value Chain and Marketing in Ghana

Trade/Com- Specifi c Inputs Production Processing Processing Trade/Quality Processing Trade Consumption merce Quality

Provide seeds, Plant, grow Purchase RCN, Sorting, Transport, Roasting, Export equipment, agro harvest Sorting, Transport, Quality Packaging, Market chemicals, Cracking, Qualty Control, Control Selling Consumers Packaging ma- Peeling, Dry- Trade/ terials ing, Grading, Export Packaging Exporters

Specifi c Small Processing Retailers Transport Input scale Centres, Consumers Companies providers producers Packaging Quality Control Micro Large scale Co- producers operatives Value Chain Operators

District Co-operatives, District Cashew Farmers Unions

Service Provicders, Brokering, Cocoa Research Institute of Distr. Agric. Dev. Units/NGO, Technoserve, TPCEE, Business linkages Ghana, Universities, Crop ADRA, R&C (Extension Services) Research Institute, Savanna Research Institute, Soil AfDB Projects- Cashew Development Project, MESO Research, (Research Activities) Afram Plains Agric. Dev. Project Service Providers Financial Institutions - National Investment Bank, AgDB, EDF, Rural Banks (Provide Grants)

GTZ - African Cashew initiative

Dept. of Feeder Roads, Electricity of Ghana, Water Companies (provision of infrastructure)

Chamber of Commerce and Industry, Ghana Export Promotion Council, Ghana Investment Promotion Centre (Promot Exports)

Metropolitan, Municapal & District Assembles, national / Regional House of Chiefs (Provide infrastructure and Access to land) MACRO (enabling Ghana Standard Board, SGS, COCOBOD - Quality Control Division ( Regulatory Bodies, set standard of inspect) Environment)

Development Partners - USAD, AfDB, GTZ (Fund, Advice, rural capacities)

Government Ministries (MoFA, MOTI, Regional Coordinating Councils) (Formulate policies and coordinate) Notes 45 46 Notes

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