September 28, 2005
USAID is supporting an innovative partnership of cashew processing companies, a large multinational trading firm, the Government of Tanzania, and TechnoServe, a US based non-governmental organization, to transform how the cashew trade works in Tanzania.
This transformation, when it is complete in several years, will lead to 30,000 new jobs and over $15 million in increased exports for the country. All of this will be leveraged by a $393,000 USAID Global Development Alliance grant to TechnoServe. The other members of the alliance include Olam International, one of the world’s largest commodity trading firms, and several Tanzanian based processing companies. Under the current situation, over 80% of all cashews produced in Tanzania are shipped raw to India for processing. In order to help change this situation and ensure that cashew processing profits stay in Tanzania, earlier this year, the groups noted above and under the leadership of TechnoServe, lobbied the Government of Tanzania to adjust the taxes and fees placed on the cashew processing business in Tanzania. Previous to this move, processing fees and taxes had been prohibitively high, which discouraged Tanzanians from processing nuts within the country’s borders.
The new and highly successful agreement, formalized in a Memorandum of Understanding and signed earlier this year, calls for the Ministry of Finance to adjust its tariff structure so that local processing is competitive with the cost of sending the nuts overseas to be processed. Key to this early success was the commitment of the processors, through their trade association, the Ministries of Finance and Agriculture, and the Cashew Nut Board of Tanzania, that something had to be done to reverse the trend of processing the high-value nuts overseas.
Directly as a result of this policy victory, Premier Cashew Industries has reopened their large processing factory that had been closed for over one year. The factory now employs over 1,200 Tanzanian workers. In addition to its work to promote local processing the new activity will work with the Cashew Nut Board and growers to help increase yields, the quality of production, and reduce input costs through optimal use of farm management skills. New varieties of trees will be made available to growers, to help increase production in the long term, and to ensure a steady supply of raw nuts for the processing firms.
This alliance will help to raise incomes and transform the lives of most of the estimated 280,000 farming families who rely on their cashew trees as a source of family income.