Tanzania's government plans to sell around 150,000 tonnes of surplus cashew nuts to private buyers as factories will be unable to process all the stock bought up by government from farmers, its agriculture minister said.
Last month President John Magufuli ordered a 94 percent increase in cashew nut prices, to at least 3,000 shillings ($1.31) per kilogramme, to protect farmers from low prices and told his government to buy all of the harvest after private buyers refused to buy at the higher price.
Some factories had closed amid the lack of demand but were now reopening after the government pledged to buy up stock.
"So far, local factories including the ones we are now reviving, can process about 100,000 tonnes. This will make an excess of about 150,000 tonnes of cashews of which we are likely to sell to private buyers," Tanzania's minister of agriculture, Japhet Hasunga, told Reuters in an telephone interview.
The government had not yet decided the price at which it will sell the surplus production, he said.
Hasunga said he expected all factories to be fully operational by March but they would not be able to process the whole stock.
Factory Capacity
"Our analysis has shown that local factories might not have the capacity to process the whole stock bought by the government this year and this will likely require us to sale part of it to private buyers," Hasunga said.
"We don't want to sell under small quantity arrangements like 5,000 or 10,000 tonnes but if someone comes and expresses interest in 100,000 tonnes that’s fine, we can talk business."
Hasunga said the government planned to attract investment in the industry.
"We also welcome local and foreign investors to invest in processing industries and in modern processing equipment ... we are ready to talk to them," he said.
The government has already paid 206 billion shillings ($90 million) to 100,534 farmers and said that as promised the price was 3,300 shillings per kilo, he said.
As of Dec. 24, the government had acquired 188,799 tonnes of nuts.
The government initially estimated that this year's produce was likely to be 210,000 tonnes.
Price Declines
Falling prices had prompted Tanzanian farmers to halt cashew nut sales, saying operational costs were higher than what was offered for the produce.
Tanzania usually exports 75 percent of East Africa's cashew crop, the International Nut and Dried Fruit Council Foundation says and its export revenues doubled to $540 million last year from $270 million in 2016, official data shows.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
