AfricasheW450 - June 2020 Market Analysis
Cashew Market Outlook
By: Jim Fitzpatrick
(Please note that all views expressed in the “Cashew Market Outlook” section are those of Mr. Fitzpatrick and do not necessarily reflect the view of the African Cashew Alliance)
In a typical year, the RCN season would be almost finished by mid-July. This is not a typical year. Shipments from most of the West African countries are lower than expected so far, even though the demand for cashew kernels from international markets is at very good levels.
The trade in raw cashew nuts has picked up in recent weeks. Prices have remained stable despite a reduction in the quality available. Processors in Vietnam are running very tight for processing stock. Imports of RCN from West Africa are down by up to 50% depending on the origin. Vietnam’s exports of kernels were up by 15% for the year to mid-June. Some traders say that Vietnamese processors have left it too late to buy and that there will be a shortage of kernels for September shipment. Meantime speculators are offering kernels for delivery next year at prices below cost and below levels seen for ten years. One cannot help wondering if the two are connected. Or are some of the biggest names in the business again prepared to roll the dice on the sector’s future for the possibility of a fast win?
Kernels imports and consumption are at record levels. Even in India, a country where COVID19 infections are on a strong upward curve, demand for wholes grades is good. Demand for broken grades, mainly used for processed products, is less positive. Consumers in Western countries are increasingly turning to edible nuts to provide a range of food benefits. In Germany, Europe’s largest market, 63% of consumers intend to reduce their consumption of meat and there are 8.2m vegetarians, about 10% of the population. One in five British consumers describe themselves as “flexitarian” , a largely vegetable based diet occasionally supplemented by meat. Edible nuts offer an attractive source of nutrients and protein. Cashews offer both a healthy treat and a flexible ingredient, as Indian consumers have known for generations. The drivers of these trends are healthy eating and conscience driven consumerism. Sometimes described as the “new retail therapy”, conscience driven consumption is driven by people making purchasing decisions that have a positive social, environmental, or economic impact. It is not a new idea. It has been around for 50 years but it has now gone mainstream. Environmentalism is the strongest thread globally. According to Nielsen, a global measurement, and data analytics company, 73% of consumers say they would definitely or probably change their consumption habits to reduce their impact on the environment.
These trends have been good news for consumption of tree nuts. Cashews, lacking in promotion at a global level, have benefitted from research and promotion of other nuts like almonds and walnuts. If we look closer, our sector may not be as much “on trend” as it should be. Shipping 2m tonnes of RCN a combined 30,000km every year are not good for the environment when it could be processed at origin, reducing the carbon footprint by as much as 30%. Subjecting smallholder farm families to extreme price volatility, failing to provide an infrastructure to allow preservation of the quality they produce, paying farmers late or short, stop/start jobs in processing plants and poor working conditions in some processing plants are reminders of another century (and I do not mean the twentieth). “Greenwashing”, the process of giving a false impression through corporate environmental claims, is common. Corporate social responsibility is treated as a marketing ploy by some of the largest actors in the sector. It seems that it will be only a matter of time until these issues come back to haunt the industry. The consequences may be irreversible in an era when, due to the pandemic, people’s awareness is heightened.
In Africa, there is an opportunity to create a cashew processing sector aligned to international consumer trends whilst making a positive social and environmental contribution. And yes, a profit. Emerging success stories can be found across a number of countries including Cote d’Ivoire, Benin, and Burkina Faso. Others are sure to follow. Professional management, sensible government regulation and long term thinking are essential. According to Wholefoods, the giant US retailer, foods from West Africa, nut butters, plant based products and regenerative agriculture are all in the Top 10 Trends for 2020. Are you ready for this?
