Feed the Future Mozambique Agricultural Innovations Activity (FTF Inova) Cashew Strategy Summary

The initiative focuses on higher value export markets in the European Union and the United States, which require traceability back to the producer. This approach is expected to increase profitability and productivity for Mozambican processors. Current market conditions in the cashew industry are characterized by reduced competition for purchasing raw cashew due to an export tariff on the export of raw cashew. Processors typically target the lower risk, lower value export market and the tariff protection ensures a margin of profitability in this market. However, this approach keeps the market from growing as processors maintain a low risk strategy and smallholder farmers remain price takers with no reason to invest in production beyond gathering raw cashews for some additional income. As a result, cashew factories are working at less than 70% capacity and only 60% of cashew trees are productive, with the rest either diseased or too old to produce. The average yield of a cashew tree is only 3.0 kg per tree, even though there is potential to yield up to 15 kg per tree. The cashew development initiative will intervene in the cashew market by working with processors to upgrade their factories to meet British Retail Consortium (BRC) Global Standard for Food Safety Certification or the Food Safety System Certification (FSSC) 22000. This certification will allow processors to access higher value markets and require an investment in smallholder farmers to ensure traceability. Condor Nut has been identified as a lead firm that is willing to invest and which the initiative can partner with to test this approach in one factory. The project will also work with firms that can provide certification services to market the certification to other processors. The initiative will also work in the cashew agro-inputs industry to increase marketing of products and services to smallholder farmers. Interventions in the first year are expected to demonstrate the value of investing in the higher value market and lead to experimentation by processors in new business models to meet the requirements of the higher value market. The initiative will continue to seek opportunities to work with processors to test business models that increase cooperation with smallholder farmers. The cashew development initiative aims to increase cooperation between producers and processors in the cashew market, leading to increased profitability and productivity for Mozambican processors. By upgrading factories to meet higher value market standards and investing in smallholder farmers, the initiative seeks to shift buying relationships in cashew from competition between processors and smallholder farmers to more cooperation.