Cashew nut processors in Ivory Coast have asked for government aid and protection from competition coming from deeper-pocketed Asian exporters that they say are driving them towards bankruptcy, according to a letter seen by Reuters.
The Ivory Coast Cashew Industry Group (GTCI), which represents 15 cashew processors, said in a letter to the sector regulator on June 23 the companies have only purchased around 37,000 tons this season, or around 15% of their capacity.
It attributed this to Asian exporters’ ability to offer higher prices to farmers because of their scale, lower cost of production and access to state aid. It did not name specific companies.
Asian exporters, many in Vietnam and India, export about 80% of Ivory Coast’s roughly 800,000 tons of annual cashew output.
The multinationals “have a virtual monopoly on purchases and exports of raw cashew nuts, leaving a small portion to local actors who are squeezed out of the supply chain,” the letter said, warning that several companies face bankruptcy.
The companies, which have an annual processing capacity of around 250,000 tons and employ 2,300 people, asked the government to give them exclusive rights to purchase the first two weeks of the season’s harvest in order to access the best quality raw nuts.
They also asked the regulator to help domestic companies export premium quality almonds, which are highly prized in Western markets, and to make available additional financial aid announced for exporters in response to the COVID-19 pandemic.
Ivory Coast’s cashew sector regulator declined to comment.
Alex Guettia, a member of an industry group that represents 40 companies that buy nuts for Asian exporters including Vietnam’s T&T Group, acknowledged the companies have benefited from state aid during the pandemic but emphasized their success securing outside funding.
“We don’t know how the [domestic] processors work, but if they can’t buy the cashew, it’s not because of us,” Guettia told Reuters. “Unlike processors, we know and master trading so it’s easier for us to know how to avoid problems.”
GTCI president Lucman Diaby said many domestic companies are nearly bankrupt or in severe financial difficulty because of the competition from Asian exporters.
“Our Asian competitors … have much lower production costs. It is impossible compete with them,” Diaby said.
Aboubacar Toure, the director general of the Novarea processing firm, told Reuters domestic processing was unprofitable because of the high cost of production, including energy, industrial equipment and maintenance.
“For each kilo processed, we lose 160 francs CFA,” he said, urging the government to double certain subsidies.
Source: Voice of America