The African Cashew Initiative (ACi)
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1 The African Cashew Initiative (ACi)
2 List of abbreviations ACA - African Cashew Alliance ACi - African Cashew Initiative BMGF - Bill and Melinda Gates Foundation BMZ - Federal Ministry of Economic Cooperation and Development CNSL - Cashew Nut Shell Liquid FBO - Farmer Based Organisation FMS - Fairmatch Support GIZ - Deutsche Gesellschaft für internationale Zusammenarbeit GmbH KOR - Kernel Outturn Ratio M&E - Monitoring and Evaluation MT - Metric Ton NGO - Non Governmental Organisation PPP - Public Private Partnership RCN - Raw Cashew Nut SME s - Small and medium enterprises TNS - Technoserve USD - US Dollar VC - Value chain
3 The African Cashew Initiative (ACi) 7th Annual African Cashew Alliance Conference In partnership with ACA
4 Talking about cashew. Dear Reader, Partner and Supporter of the African Cashew sector! Cashew trees provide nuts, fruits, wood, shade, and mitigate climate changes. Cashew nuts taste good with a continued increasing demand. Yet, production in Africa reaches only about ¼ of Asian and Brazilian yield levels. To satisfy the growing demand, Africa needs to increase its production annually by 9%. Also, in-country processing of Cashew Nuts has reached 10% of the production levels, meaning that 90% of the 1 million tons produced in Africa still are leaving the continent as raw cashew nuts. What a huge potential for African farmers and the young processing industry! As we proceed to a 2nd Phase, I m proudly presenting you some highlights of the successes the African Cashew initiative (ACi) and its team has achieved in the 5 countries since we have started work in We at ACi and our partners believe that the best way to achieve a truly sustainable reduction of poverty in Africa is to empower people with the knowledge and skills they need to increase their income and living on their own. Our focus is therefore on a competitive and growing cashew industry linked to international markets and offering farmers, workers and entrepreneurs in rural areas the chance to profit from Africa s growing cashew sector. To accomplish that, we have relied on and appreciate the support and expertise of our partners from the private and public sector, and of you the active and interested actors in the African cashew industry. This joint learning, exchange and mixture of experiences makes this project unique and more importantly, sustainably successful and replicable. Building on lessons learned in the last 3½ years, ACi has launched a Cashew Matching Fund to further accelerate a strongly private sector driven development of the African Cashew sector. Enjoy the reading of what we jointly achieved, and where our business journey continues to. On behalf of the ACi team and partners, I wish you a rewarding and interesting ACA Annual Conference 2012.
5 Background of African Cashew Sector About 90% of the estimated 1.5 million cashew farmers in Africa are poor and live in deprived rural areas. Their annual income is low, at USD. Cashew production contributes 20%of their household income. Nearly 40% of the global cashew crop is produced by these small-hold African farmers. This unevenness and low income results from a number of factors; including low yields, poor quality nuts and a lack of business skills. About 90% of the estimated 1.5 million cashew farmers in Africa are poor and live in deprived rural areas. Their annual income is low, at USD. Cashew production contributes 20% of their household income. Nearly 40% of the global cashew crop is produced by these small-hold African farmers. This unevenness and low income results from a number of factors; including low yields, poor quality nuts and a lack of business skills.
6 Objective of ACi The main goal of the African Cashew initiative (ACi), implemented by four partners; TechnoServe, African Cashew Alliance, FairMatch Support and GIZ, is to increase the competitiveness of African cashew production and achieve a sustainable reduction in poverty in the five project countries: Benin, Burkina Faso, Côte d Ivoire, Ghana and Mozambique. The target of ACi Phase 1 were to train 150,000 farmers, adding at least US$100 to their annual income within four years. Create 5,500 new jobs in cashew nut processing 70% of them for women providing an average annual income of US$900 per job, link up stakeholders in the supply chain, including linking some farmers to the specialty market and provide enabling environment for cashew business in the project countries. In Phase 2, ACi will be targeting increased income for 330,000 farmers.
7 Strategy of ACi Improve nut quality and production Success in the global marketplace depends on the production of a high volume of superior nuts. Therefore, ACi focuses on helping African cashew farmers meet international quality standards by providing advice and training on every stage of the production process. Increase the amount of local processing Expanding the amount of cashew processing that takes place in Africa will result in higher incomes and more jobs, particularly among women. Therefore Technoserve provides business advise to 20 processors in West-Africa to increase performance and scale. Facilitating access to finance remains part of the crucial business linkages. ACi targets cashew nut farmers who work near processing units in order to encourage linkages between the two. Expand supply chain linkages the global market is growing at an annual rate of 2.5% 4% and has a turnover of more than 1 billion Euros each year. Linking African smallholder farmers to this market through improved data information systems and the promotion of African brands will enable them to increase their income substantially. Strengthening organization the cashew sector The African Cashew Alliance (ACA), a supranational platform of public and private partners involved in the cashew value chain, assists in the global marketing of African cashews, and FairMatch Support, a nonprofit organization based in the Netherlands, helps farmer groups access specialty markets.
8 Key outcomes for Phase 1 ( ) Production: 240,053 individual farmers trained, of which 27% are women Impact model of ACi estimates that the total annual net income obtained by ACi farmers rose from 15.75mio USD in 2010 to million USD in 2011 Increase in national average production volumes of RCN of all ACi countries rose from 555,784 MT in 2009 to 613,151 MT in 2011 Processing: More than 3,917 additional jobs in processing were created by June, 2012, of which 70% for women Installed capacity for ACi assisted processing is 45,000MT with average 43% capacity utilization to date Supply chain linkage: 29,000 farmers have been organized into official groups supplying to conventional and specialty markets and 10,000 certified and linked to fair trade market. Sector organisation: ACA membership rose 56% over the last year
9 Outcome Phase 1 - Production 240,053 farmers were trained Number of farmers trained actual planned Target ACi started with a target of training 150,000 farmers. To date, 240,053 individual farmers were trained.
10 Outcome Phase 1 Production To assure higher yields, ACi introduced the use of improved planting materials to its farmers 2000 The Number of Established Mother trees established Benin BN Burkina BF Faso Côte d Ivoire CI Ghana GH Together with research institutions in project countries, elite mother trees were selected in Benin, Burkina Faso and Cote d Ivoire. Ghana and Mozambique before ACI selected elite mother trees for multiplication. Further research is on-going and clonal gardens are being created per country. The objective is to increase the current low yield of the existing farms (4-5kg/ tree) to minimum of 20 kg/tree. In addition, farmers and private nursery operators were trained to multiply the improved planting material for the establishment of new farms and topworking on existing lower yielding trees.
11 Outcome Phase 1 Processing By-Product processing was piloted By-product processing of Cashew Nut Shell Liquid (CNSL) was piloted by 3 processors. and cashew apple processing into juice were piloted. 10 cooperatives and 2 commercial juice processors started a pilot on 30 MT cashew apple processing in Benin, Ghana, and Burkina Faso. The business case and good consumption projections trigger further interest from cooperatives as well as industrial processors. Potential for cashew apple processing: In Africa, every year approximately 10 million tons of cashew apples are produced. These apples are mainly discarded after the raw nuts are collected. In comparison, Brazil uses about 15% of its cashew apples for fresh fruits, juices, jam and other products.
12 Outcome Phase 1 Processing Kernels worth $40 million were exported from ACi supported processors Installed capacity to date is 45,000MT, with 43% utilization 3,917 staff employed by processors Cumulative financing of 11 million USD has been facilitated for processors 18,457 MT of kernels have been delivered to European and US markets, worth $147 million of which ACI supported process contributed 5.046MT worth $40.33 million
13 Outcome Phase 1 Processing The SAP-ACi partnership Virtual Cooperatives provides solutions related to market linkages and transparency within the Cashew production and processing value chain. It was started in 5 field pilots in Ghana and Burkina Faso for cashew and shea nuts, involving 5,000 small scale producers. 850 tons of produce were recorded with 10,000 jute sack transactions. The smart ICT system can increase contractual buying volume and increase the income of the farmer by eliminating agents, thus capacity and transparency is created. Farmer scanning cashewbag with smartphone
14 Outcome Phase 1 - Supply chain linkages 29,100 producers organized in official groups for conventional and specialty markets; 10,035 are certified 75,000 farmers are organized in Farmer Based Organizations About 40% of the farmer groups are linked directly to a processor 5,538 MT RCN for specialty markets traded, which is worth $ 3,764,000 (incl. premiums) Producers linked to the organic and Fair Trade market achieved a premium of $ 227,255 for 2012
15 Outcome Phase 1 - Sector organization Growing awareness amongst public and private actors Awareness and knowledge about cashew and its potentials is increased within governments and sector stakeholders National and regional organization of private sector actors along the value chain improved (ACA, processors associations, exporters associations, producers associations). Sector dialogue between private and public actors enhanced, e.g national stakeholder platforms; joint policy and strategy development ACA seal development supported and introduction started Contributions to establish ACA cashew conference as a major international event for the global cashew sector (120 participants in 2007 to 500 participants in 2012).
16 Outcome Phase 1 Since 2009, ACi supported the cashew industry in 5 countries in its fast development Trainings of farmers are conducted in the areas where the processors source their RCN. Overall processing capacity of existing processors in Oct ,000 MT (with 40% utilized) Processing in Africa is steadily growing and value added in country. Financing remains a major limiting factor for the local processing industry. The farmer training activities are located in the main growing and sourcing areas.
17 RCN flow to processors Districts with ACi Nurseries Processing of cashew apple juice Other medium and large scale Processors ACi Processors Clients (20) Locations where farmers have been trained In Mozambique the support of processors is not part of ACi activities.
18 Overall vision for the African cashew industry - by end 2015 I Sustainable growth in production and farming income Sustainable success of the African cashew industry II III VI Sustainable success in local processing Develop sustainable supply chain Strengthen the organization of the cashew sector
19 At least 1/3 West African cashew farmers realize gross revenue from cashew of more than $700 per annum (represents ~40% increase) At least 1/3 West African cashew farmers yield more than 700 kg/ ha At least 20% West African cashew farmers are organized 25 medium scale processing facilities exist across West Africa (up from five when ACi began), equating to ,000 MT installed capacity Medium scale processors achieve 50% capacity utilization, equating to 45-70,000 MT RCN processed, and 9-12,000 MT kernel delivered to the market (up from 240 MT when ACi began) Organized smallholders provide 60% (27-42,000 MT) of the RCN required by processors in West Africa Lively R&D results in significant increase in availability of improved planting material (specific measure and target to be identified African Cashew Alliance is financially self-sustaining
20 The ACi Roadmap Phase 2 The ACi Roadmap Phase 2* continues with the three forces from Phase 1 and adds Force 4 on strengthening the organization of the cashew sector I Sustainable growth in production and farming income II Sustainable success in local processing Sustainable success of the African cashew industry III Develop sustainable supply chain *Note: The reviews process for funding for phase 2 is underway at Bill&Melinda Gates Foundation and BMZ. Implementation is contingent on approval and could be adjusted. VI Strengthen the organization of the cashew sector
21 Increase production income Small-scale processing income Higher processing volume Matching quality demanded Sustainable outputs Financial viability Enabling environment Supply chain relationships Strengthen the Development of ACA Strengthen The National Stakeholder Associations Coordinate donor and project support
22 Outlook Phase 2 Production Consolidation of farmers trainings and knowledge transfer to local extension services 330,000 farmers targeted by end of Phase 2 for further training in good agricultural practices and aspects of economics Use of innovative media for farmer training would continue A regional Master training program would be introduced.
23 Support to local actors to develop and disseminate improved planting material Development and dissemination of improved planting material would continue as part of matching fund projects implemented by national research stations.
24 Outlook Phase 2 Processing Consolidate support in processing Continue business and technical advice to the selected 20 processors (e.g. technology, management, food safety, and access to finance). Build capacities of local service providers in business advice to cashew sector
25
26 Learnings Phase 1 - Supply chain linkage To assure stable supply, processors must apply a linkage mechanism / loyalty package which is of interest and benefit for the farmers Potential inclusion in loyalty package: Knowledge/Training: GAP, post-harvest, economics, certification, organisation Inputs: Jute bags, improved planting material/ nurseries Community storage / warehouse Traceability / certification Prefinancing, e.g. for agrochemical Linkage to market information
27 Benefit to farmer: Know how for better quality and thus better prices Higher quality and quantity; thus better prices Bulk sales for increased prices; potential speculation Premium Finance input allowing increased production and for personal needs Better prices through competition Increase in income for cashew farmers
28 Outlook Phase 2 - Supply Chain Linkage The new instrument of a matching fund ($4 mio) will ensure private sector ownership and thus sustainability Principles Tender principle Budget lines to be determined (earmarking for different topics possible) Countries: ACi 1 (BMGF funding) + Africa wide (other funders) Co-funding of other donors intended Matching mechanism:$1 ACi to $1.5 private or government funds (minimum) Topics Supply chain linkages Improved planting material Impact 1. Stronger linkages between farmers & processors & buyers 2. Long term relationships: Quality +Know-How transfer - Transaction costs - Cost of intermediaries Accompanying Technical Assistance from ACi Support development of proposals Supporting implementation (e.g. Training of Trainers for processors or service providers) Support Farmer Based Organizations in becoming reliable business partners Monitoring and Evaluation services for all project partners Management of Fund Reporting to board of funders Eligible Partners Processors and buyers: ACi Core Partners plus new ones Governments (esp. for improved plantingmaterial)
29 Outlook Phase 2 Sector Organization Support performance and growth of sector organizations and knowledge transfer Support continued performance and growth of ACA and to national associations and platforms: Set up an temporary Information unit for public actors for increased support to cashew sector: Document and disseminate existing know-how on production, processing and supply chain linkages
30 ACi - Partners Implementing partners: ACA The African Cashew Alliance (ACA) is a business association promoting a globally competitive African cashew industry that provides benefits to the value chain from farmer to consumer. FairMatch Support is a NGO based in the Netherlands. It contributes to ACi by helping farmer groups access high-end specialty markets, such as the fair-trade and organic markets. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) is an international cooperation enterprise for sustainable development that supports the German government in achieving the objectives of its development policy. As the lead organization for ACi, GIZ manages all training activities at the farm level. TechnoServe (TNS) is an international NGO that works to reduce poverty by empowering farmers and entrepreneurs to build businesses and industries. On the ACi project, TechnoServe provides training and technical assistance to cashew processors and works to link them to buying and retailing companies. Core Partners: ACA
31 ACi contact Want to know about the project? Get more information on ACi African Cashew Initiative Cashew House 32 Nortei Ababio Street Airport Residential Area Accra, Ghana T: +233 (0) T: +233 (0) E:
32
33
34 Notes
35 Published by: African Cashew Initiative Cashew House 32 Nortei Ababio Street Airport Residential Area Accra, Ghana T: +233 (0) T: +233 (0) E:
36
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