THE MOZAMBICAN CASHEW INDUSTRY
With its ideal growing conditions, trade policies that now favor local processors, and de facto lack of foreign nuts entering the supply chain, Mozambique is uniquely well-positioned to become the most competitive global provider of traceable, sustainable, high-quality cashew. On-going investments in improved technologies and management practices are making the industry not only more productive and efficient, but also more ethical and transparent. These changes are priming the industry to provide large quantities of safe, high-quality cashew nuts to millions of cashew consumers globally, as well as raise farmer incomes through increased yields and premium marketing.
The cashew industry plays an integral role in the Mozambican economy, particularly in the rural areas of the north. More than 40% of Mozambican farmers - over one million households - grow and sell cashew, and the processing sector provides formal employment to more than 8,000 individuals. Mozambique consistently ranks as one of the top global producers of cashew nut, and is currently the second largest producer in East and Southern Africa. Mozambique's cashew industry follows international standards in labor and environmental sustainability, which provide the foundation for its linkages with premium export markets, including the United States and Europe.
History of Cashew in Mozambique
For much of the twentieth century, Mozambique was the world's leading producer of cashew nut. Africa's first industrial cashew processing plant was established in Mozambique in 1960, and the domestic processing industry began to thrive soon thereafter. Mozambique quickly built a reputation for quality production and efficient processing, which created a strong export market and supported the livelihoods of millions of cashew farmers.
After independence from Portugal in 1975, Mozambique's plantations and processing factories were nationalized, causing many Portuguese owners and managers to abandon their factories. In 1987, the Government of Mozambique issued a ban on the export of raw nuts that was intended to keep cashew in the country and spur domestic processing. The aftermath of decolonization and the turmoil of a 20 year civil war, however, greatly hampered both production and processing and output declined drastically. After the civil war ended, farmers began returning to their lands and cashew production slowly began to increase. Hoping to raise production to higher levels and revitalize the domestic processing sector, the government removed the export ban and replaced it with a high export tax. Slowly, large mechanized factories began to reenter the industry.
Unfortunately, the industry's renaissance was short lived. In 1995, the World Bank - as part of its structural adjustment plan for Mozambique - required the removal of the export tax on raw nuts. World Bank economists argued that the domestic processing industry in Mozambique was unsustainable, and it would be more efficient and profitable to export the nuts as raw material for processing in other countries. This ultimately became a self-fulfilling prophecy; the policy compounded the post-war low levels of investment in the industry, effectively making the domestic processing industry uncompetitive. Within a few years nearly all mechanized factories throughout Mozambique had closed down.
During the early 2000s, Mozambique's cashew industry witnessed yet another revival when the government, with strong support from the NGO TechnoServe, introduced a new, more profitable business model for cashew production and processing. This new model focused on smaller scale, semi-mechanized factories owned by individual entrepreneurs in rural areas of Northern Mozambique. These factories quickly proved profitable, and led to the resurgence of cashew exporting.
Since 2009, however, the industry has witnessed increased consolidation among raw cashew nut buyers and larger processors, which has forced out some smaller processing facilities. This trend, however, is reversing. Thanks to increasing global demand for traceable and sustainable cashew, smaller processors now have a chance to compete and Mozambique is well-positioned to become a long-term global leader in the export of traceable, single-origin cashew kernel.