Tanzania: Processors Defend Their Inability to Process Cashew Nut Locally

Mtwara — LACK of capital is among the reasons forcing investors to turn the cashew nut processing factories they bought from the government a decade ago into warehouses, the Cashew nut Processors Association (CPA) has said.

CPA Secretary General Mr Joseph Haule told The 'Daily News on Saturday' that many members of the association, among them those who bought the factories, could not afford it because cashew nut processing factories require heavy investments. "Heavy investments are needed and our local banks have no capacity or they are afraid to venture into cashew nut business because of strict regulations given by the Bank of Tanzania," Mr Haule said.

Mr Haule said because of that commercial banks have in the past asked them to provide evidence of collateral, preferably buildings, with the value equal to the amounts they were seeking for investment. All ten factories that were built by the government through a World Bank loan of $184 Million (285bn/-) during the 70s and 80s are not working and have been turned into warehouses for cashew nut and other crops.

This has resulted in calls including from the Chairman of the Parliamentary Public Accounts Committee (POAC) Mr Kabwe Zitto for the government to repossess the factories and give to other serious investors because the current holders have violated sale agreements.According to the Director of Chimbuli Trading Company Ltd Mr Yasin Nair, whose factory was turned into one of the biggest cashew nut warehouse, investment in factories will not be achieved without the government guaranteeing investors on getting bank loans.

"Just imagine, forget about the factory machines, just to buy 1000 tons of raw cashew nut you need 1.5bn/-, where are we going to get this money if not from banks?," Mr Nair queried. For companies such as Olam Tanzania Ltd which operates at a full capacity of 15,000 tons per year, it uses more than 30bn/- to buy the crop every year at farm gate price of 2000/- per kilo.

Mr Nair said if the government can provide guarantees to primary cooperatives, it should also consider doing the same to the investors in cashew nut processing industries. According to Mr Haule, other problems that have hampered them to utilize fully the opportunity to develop the factories was lack of technical staff to run the factories because there were no technical colleges to groom Tanzanians in the area of cashew nut.

Haule also cited regular changes of cashew nut supervision due to changes in ministries responsible for crop marketing. "Lack of cashew nut processing policy for the past 50 years has led to minimal local processing of the crop caused by uncoordinated processing, use of irrelevant technology and politicians interference in setting cap prices," Haule said.

He said during the 2010/2011 season, four companies, Olam Tanzania Ltd, Agrofocus (T) Ltd, Export trading Group Tanzania Ltd and Micronix Systems Tanzania Ltd together processed only 18,519 tons. Last year, Tanzania produced 130,000 tons of cashew nuts, with the remaining quantities being sold as raw to India.

This year's production reached a record high of 157,000 tons. He said other companies which did not process a single kilo include METL, SONEL of Mikindani, Premier Cashews (T) Ltd, Mtwara Cashew Company (2006) Ltd, Kibaha Cashew Factory, River Valley Foods (T) Ltd, Lindi Farmers Co. Ltd and Buco Investment Holdings Ltd.

Source: http://allafrica.com/stories/201204010111.html