Marketing Cashew Nuts
Although small-scale rural plants are efficient processors, they lack both the know-how and resources to market their products, which involves developing and maintaining communications and commercial relationships with foreign buyers, as well as branding, promoting, and advertising efforts. Export markets require container-size shipments of uniformly graded and sorted cashew nuts, which is easier to do on a large scale. TechnoServe took the lead in developing AIA, a service company privately owned by some of the cashew processing companies. Located in the northern port city Nacala on Africa’s eastern coast, AIA is the primary marketer of the processed cashew nuts of its owners, as well as some non-owners. It acts as a final quality-control agent and exporter, organizes bulk purchases of equipment and consumables, and offers limited training and technical assistance to its members. With “pro bono” assistance from the advertising agency Young & Rubicam, AIA has developed a brand, Zambique, to communicate the superior qualities of AIA-branded cashew nuts and to control product quality. AIA is also assuming from TechnoServe the leading role in negotiating with the government policies that affect the industry. AIA has begun to provide on a for-profit basis many of the services that TechnoServe provided in the first several years.
TechnoServe has also worked with the industry to resuscitate the trade association AICAJU as a broad industry advocate. It released a key staff member to work as a private consultant to assist the government of Mozambique in strategic planning for INCAJU, the government agency responsible for promoting the cashew nut industry. With TechnoServe’s guidance, AIA is working with the government to design and implement policies favorable to the cashew industry (e.g., by advocating a gradual reduction of the protective export tax on raw nuts, which penalizes the farmers and undermines real long-term industry competitiveness). When the processors needed working capital to purchase their year’s supply of raw material during the brief harvest season, TechnoServe worked with INCAJU to design a loan guarantee program supported by the government. Needs rapidly expanded beyond INCAJU’s resources. USAID then supported a loan guarantee program offered by the Ministry of Industry and Commerce. In 2009, efforts began to have a local commercial bank take over the loan program without a guarantee.
In 2008, the factories in Mozambique processed 23,700 tons of cashews. TechnoServe’s 16 client cashew-processing plants bought nuts from over 100,000 small-scale producers and had total sales revenues of $12 million, employing over 4,700 people and paying $1.6 million in wages.
In 2008, TechnoServe, having achieved its original intention of reviving the domestic processing industry in Mozambique, ceased its direct support. Having subsequently spread some of the lessons learned in Mozambique into its cashew sector work in Tanzania, Kenya, and South Africa, TechnoServe is now replicating the approach through a large program working with West African cashew processors in Benin, Burkina Faso, Cote d’Ivoire, and Ghana.