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The cashew industry in Côte d'Ivoire is full of investment opportunities, and domestic investors can look for business opportunities in the areas of production, distribution and processing. The country's cashew processing factories offer small investments and quick returns, and can produce year-round, provided that a stable supply of raw materials is ensured.
Key features and opportunities include:
1. The world's largest cashew producer and exporter: Côte d'Ivoire is the world's largest cashew producer and exporter, with abundant cashew resources.
2. Encountering bottlenecks: Despite being the largest exporter, Côte d'Ivoire's cashew industry faces a number of development bottlenecks that require measures to improve.
3. Reform measures: In order to solve the bottlenecks in the industry, Côte d'Ivoire is implementing a series of reform measures to promote the sustainable development of the industry.
4. Standards and Price Determination: Investors involved in the cashew industry in Côte d'Ivoire should understand the country's cashew quality standards and price determination mechanism.
5. Investment Opportunities: Ivorian cashew processing factories are characterized by small investment and quick return, which is an attractive opportunity for investors.
6. Into the Chinese market: Côte d'Ivoire's cashew industry is expected to enter the Chinese market, which provides investors with a new space for expansion and market prospects.
The world's largest cashew producer and exporter
Côte d'Ivoire, located on the west coast of Africa, is known for its abundance of agricultural products, including cocoa, cashew nuts and cotton. Originally introduced as a crop in the country as a strategy to combat desertification, cashew nuts have become an important pillar of the country's economy. Cashew cultivation is widespread in the central, northern and north-western parts of Côte d'Ivoire, involving some 350,000 farming households. The government attaches great importance to the cashew industry and has formulated a series of supportive policies and improved relevant laws and regulations. Since 2008, Côte d'Ivoire has become the world's largest cashew exporter. In the next seven years, that is, by 2015, Côte d'Ivoire surpassed Vietnam and India to become the world's largest cashew producer, with an annual output of more than 3 million tons. Of this, about 2 million tons of cashews are exported. Due to limited domestic processing technology, cashew nuts are usually shipped to countries such as India, Vietnam and Brazil for processing. Cashew has become a representative of Côte d'Ivoire's exports of agricultural products, its exports accounted for about 40% of the global market.
Encountering bottlenecks
In 2013, the government of Côte d'Ivoire carried out a series of reforms to promote the development of the cashew industry, which has benefited participants in both production and distribution. The price of cashew nuts has also improved significantly, with the price per kilogram increasing from 200 CFA francs (approx. RMB 2.35) in 2005 to 715 CFA francs (approx. RMB 8.24) in 2017.In 2013, the government set a guaranteed minimum price of 440 CFA francs (approx. RMB 5) for cashew growers, which was formally implemented.
In 2018, however, Côte d'Ivoire faced one of its most challenging years since the reforms. Although the government initially set a guaranteed minimum price of 500 CFA francs (approximately RMB 5.76) per kilogram, the market subsequently declined. The CIF price of cashew nuts from large cashew producing countries such as India and Vietnam fell sharply during the year, from US$2,200 per ton at the beginning of the year to US$1,500 per ton at the end of the year. Côte d'Ivoire was affected by this and had to reduce its selling prices. 2020 saw the onset of the epidemic, while cashew exporters suffered significant losses due to the high incidence of lost cargoes arriving at destination ports and problems with contract fulfillment. At the end of the year, a huge backlog of cashew stocks led banks to stop lending and factories and stores to close down.
Reform measures
The Government of Côte d'Ivoire took a series of strong measures to improve the situation. They set about expanding the area under cultivation and improving the quality of the product, tackling the problem in two ways. First, they introduced advanced production techniques from overseas to increase production. Secondly, to make full use of the cheap labor in the country to expand the scale of processing, and to provide more preferential policies to the existing cashew processing factories, such as the construction of new factory buildings, tax relief, etc. The government allows cashew nut processors to directly import cashew nuts from the country. The government allows cashew nut processors to buy unpeeled and shelled cashew nuts directly from growers, and subsidizes raw nut processing and exempts export taxes, making domestic processing factories much more profitable and competitive. In this way, cost-price overtaking of India and Vietnam has been achieved. Finally, it has expanded sales channels by diversifying exports and tried its best to solve the problem of product backlogs.
In 2021, in order to allow price space for exporters, the government set the protected price of cashew nuts purchased in the field free of foreign substances, dried and selected at 375 CFA francs (about RMB 4.32) per kilogram, compared with 500 CFA francs (about RMB 5.76) per kilogram in 2020, which is a reduction of 25 percent. For cashew processing, Côte d'Ivoire processed close to 69,000 tons in 2020, up 53 percent year-on-year, but slightly below the target of 100,000 tons.The target for 2023 is 130,000 tons of processing, and there is already plant capacity of 122,000 tons. In order to increase the processing rate, the Cotton Cashew Commission is building a processing plant in Yamoussoukro called the "school factory".
Standards and price determination
In terms of standards for the cashew industry in Côte d'Ivoire, the Côte d'Ivoire Normalization and Certification Agency (Côte d'Ivoire Normalisation) classifies cashews produced in the country into three grades based on a number of factors, such as water content, seed saturation, etc. These grades are currently used mainly on the domestic market. These grades currently apply mainly to the domestic market, and for domestic processors in Côte d'Ivoire, cashews exceeding the specified moisture content (more than 10%) cannot be used for export and are not allowed to enter warehouses.
In terms of price determination for cashew nuts, unlike other agricultural sectors such as coffee beans, cocoa and millets, there are no internationally standardized pricing criteria. Currently, prices are determined based on a combination of factors such as producer discretion, negotiation between the two parties to the transaction, information from specialized magazines, and online intelligence.
The global cashew price has been rising continuously since 2001, which is closely related to the increasing consumption level of people. In particular, the decline in nut production (mainly including cashews, pistachios, and almonds) in California, U.S.A., in 2019 has created an urgent need for large imports to meet consumer demand. It is expected that the cashew market gap in the United States will reach 150,000 tons in 2024, while the global market gap is even more than 600,000 tons. This has led to a further increase in the price of cashews, which is expected to be in the range of $5.2-5.5 per pound in 2024.
One of the reasons for the rise in cashew prices is that African countries like Côte d'Ivoire only provide the raw material for cashews, but the processing technology is backward. The raw material needs to be exported to countries like India and Vietnam for processing, which increases transportation costs and labor costs, which in turn pushes up the final selling price. In order to obtain a more competitive price, establishing processing factories in the origin of cashew nuts such as Côte d'Ivoire is an effective way. This will allow you to enjoy the benefits of cheap local labor and save on the cost of export processing.
Investment Opportunities
