The Tanzania Cashew Sector: Why Market Reforms Were Not Sustained
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The new system has also not allowed farmers to participate in the increase in global prices of raw cashew nuts that occurred in 2007 and 2008, when export prices rose by 46 percent and 40 percent, respectively, while farm gate prices rose 12–13 percent.
Conclusions Cashew marketing reforms introduced in 1991 allowed the private sector to buy raw cashew nuts directly from farmers and their primary societies in competition with cooperative unions. Prior to that time, cashew farmers were required to sell to their primary societies for onward sale to cooperative unions, which then delivered the cashews for export to the government parastatal. The reforms got off to a shaky start due to the lack of a clear policy from the Ministry of Agriculture, weak support from local government, and resistance from cooperative unions trying to protect their vested interests. Nevertheless, by the end of the decade, the private sector largely replaced the primary societies and cooperative unions as cashew buyers. The share of export prices received by farmers increased, and the price of Tanzanian exports rose relative to the world market as quality improved. In addition, farmers were paid in cash instead of after substantial delays, as was common when primary societies and cooperative unions were the sole buyers. Production rose from just 17,000 tons in 1989–90 to 120,000 tons in 2000–01. However, high local taxes, disruptions to marketing by the Cashew Nut Board, and volatility in international cashew prices led to policy reform in 2007 that reversed the liberalized marketing introduced in 1991. The new policy prevents the private sector from buying directly from farmers or their primary societies, and returns marketing exclusively to primary societies, which then transfer the cashews to cooperative unions for sale at auction. The policy to liberalize marketing introduced in 1991 was poorly planned and executed and appears to have been more a response by the government to collapsing production rather than a desire to expand competition and the role of the private sector in marketing. The Ministry of Agriculture did not actively support or defend the reforms and allowed local authorities in cashew-producing regions to dictate the policies and exploit the reform by charging high fees for licenses from the private sector. In an effort to protect their vested interests, cooperative unions caused delays in registering private traders and placed restrictions on where traders could operate and the quantities they could purchase. The government