The Nigerian cashew nut industry has grown significantly in recent years putting the country among the leading producers and exporters of the commodity globally. As a testament to the sector’s growth, Nigeria earned a revenue of approximately $250m from cashew nuts exports in 2022. This information was disclosed by the Minister of Agriculture and rural development Mohammad Abubakar.
In essence, cashew nuts export was responsible for about 10% of Nigeria’s GDP for 2022. Interestingly, early forecasts predict that Nigerian cashew export revenue should double by the end of 2023 bringing the earnings to $500 million.
Needless to say, the Nigerian cashew nut export industry has become a force to reckon with. However, the sector is nowhere near its ceiling yet. The growth opportunities for the overall cashew nut industry in Nigeria are massive and it still has an immense potential to expand even further. Here are some potential growth opportunities for the sector:
Growth Through Investment in Processing and Value Addition
Most of the revenue generated in the Nigerian cashew nut industry comes from exports. That is because the country trades a significant percentage of the product to buyers outside its borders. Most cashew nut producers and suppliers prefer to sell their outputs outside the country.
While exports have a significant contribution to foreign earnings, they typically fetch lower prices than the maximum value obtainable from the cashew nuts being exported. In most cases, exporting raw unprocessed cashew nuts brings just the minimum value for the seller.
As such, a major growth opportunity lies in cashew nut processing. By investing in value-addition initiatives for the product, the cashew nut industry’s profitability will improve as the players can now derive maximum value from their output.
Plus, investing in processing and value addition will create more jobs, make the economy more attractive to investors and provide a ready nearby market for the producers thereby encouraging increased raw material production and supply.
Expanding Production to Underutilized Areas
Cashew is a popular cash crop produced in many parts of Nigeria. However, the industry is still not operating at capacity in terms of production and supply.
There are still several communities that are not contributing to the value chain even though they have all the necessary resources for cashew cultivation. But the government and stakeholders can encourage increased output from these communities by incentivizing cashew production through investments in the sector.
The Federal government recently listed cashew as a priority crop. This and other similar initiatives encourage increased participation in the industry.
With an expansion in cashew production and supply, there will be enough raw materials to serve local processors and international off-takers.
Adopting Modern Farming Practices
The primary reason for the upturn in cashew production in Nigeria is the increased awareness of its value as a cash crop. However, most of the systems employed in cultivating the product are outdated and inefficient. Implementing modern improved farming practices is an excellent way to elevate cashew production from its current level.
Modern farming practices such as mechanization, the use of improved seedlings, and effective pest control can significantly increase the yields and quality of Nigerian cashew nuts. And of course, the higher the yield, the more the supply from the base to the summit of the value chain.
Diversifying Export Markets
While emphasizing the need to develop value-addition initiatives for cashew nuts in Nigeria, it is crucial to invest efforts into maximizing the export channels as well. Again, cashew nuts generate significant foreign exchange revenue for Nigeria, and it is one of the few products with the potential to become a primary non-oil export commodity.
To maximize the export channels, there is a need to widen the customer base for the product. Nigeria currently trades most (approximately 70%) of its cashew nuts products to India.
As such, Nigeria must diversify its export markets to maximize growth opportunities in the industry. By reducing its dependence on a single off-taker, the country will have better leverage with the product, more options in trades, and will ultimately increase its revenue from cashew nut export.
Red cashew fruits.
Promoting Research and Development
Akin to encouraging farmers to adopt modern farming practices, the government and major stakeholders can also contribute to the industry’s growth by investing in research and development to improve the quality of cashew nuts being produced in Nigeria.
Increasing quality adds to the value of the product and ultimately increases the demand for it. Higher demands put the industry in a position to demand higher prices on the commodity and maximize profits.
In addition, research in processing and value addition can help in the discovery of more cashew derivatives. Currently, cashew nuts are predominantly used as snacks, food and cereal ingredients, cashew butter, cashew oil, and cashew milk thanks to its many health benefits. The by-products can also be used for bio-fuels and other interesting use cases.
Through research and development, more use cases can be discovered which will ultimately increase the value and demand for the product.
The Nigerian Cashew Industry Has a Bright Future
The Nigerian cashew nut industry has an interesting growth prospect, with immense potential for expansion and scalability. By investing in processing and value addition, expanding the industry to new areas, and adopting more growth initiatives, Nigeria can create more jobs, increase its revenue, and solidify its position as a leading producer and exporter of cashew nuts.
