Chapter 1: Introduction
In the field of international development, cashew cultivation has become the subject of widespread interest for development agencies, producer governments and advocates of sustainable economic and environmental development. As a resilient and drought resistant tree that is adaptable to poor soil conditions, cashew offers environmental benefits in the fight to combat deforestation and soil erosion, especially in Sub-Saharan Africa. The tree and its by-products offer medicinal benefits from traditional malaria treatment to a rich source of nutrition. Most importantly, its cultivation and exploitation are regarded as economically promising for both rural growers and urban industrial processors in terms of employment generated and value added to emerging economies.
Senegal , an economically and environmentally challenged West African country, is the world’s tenth largest producer of raw cashew nuts. More than 90% of its cashew production comes from the Casamance, the country’s richest agricultural region that is better known as the scene of a long-running separatist conflict. Rapidly over the last decade, cashew cultivation has become the single largest source of revenue for the majority of the region’s farmers from the dry woodlands of Kolda to the lush fields and jungles of Ziguinchor, and production levels are steadily increasing. Where once tourism ranked as the most promising sector for the region’s development, cashew cultivation for raw export and increasingly, as will be shown in this paper, local processing and marketing have begun to take centre stage in economic development.
Although cashew cultivation is one of the most important areas of agricultural development in Senegal , other than the forestry office distributing seedlings to farmers little has been done in terms of the crop’s formal promotion: much of its growth has been due to responses by farmers to market demands in the context of a very open and liberalised sector. More than 95% of harvested raw nuts are sold for export to India , where they are processed into kernels and sold to Europe, Asia and the U.S. The chain from producer to exporter suffers from speculation and severe price fluctuations. There is a lack of synergy between elements in the value chain that often results in lower prices for growers and traders. However, for the past few years, several international and local initiatives have been trying to develop the commercial organisation of the crop in an effort to increase the economic returns to growers and other local participants. These efforts have focused on improving technology and organisation of cashew cultivation via the introduction of improved varieties and planting techniques, and assisting farmers to form associations to improve market linkages with buyers and exporters of raw nuts. Other efforts have involved the development a local processing industry in a bid to capture higher value added and generate employment at the local level. The most important of these interventions has been directed by Enterprise Works, a Washington-based NGO funded largely by USAID, which has introduced and adapted Indian and Brazilian processing technologies for small-scale production and retail in domestic and international markets. These initiatives will be examined in this dissertation.
The purpose of this paper is two-fold. The first objective is to examine the cashew sector in the Casamance and explain how the value chain works, its structures and dynamics. The second and most important objective is to analyse the prospects and experiences for upgrading in the form of local processing. Particular emphasis is placed on local processing within the Enterprise Works programme, with an analysis of the challenges and opportunities processors face and the implications processing has for development of the region.
While showing how the chain works is not an objective in itself, it helps to provide a context for understanding the interventions that have been conducted to develop the chain “horizontally” and “vertically”, as similarly espoused by Gibbon (2001). How are producers, exporters and other participants within the value chain acting and why? What are the constraints and opportunities for chain participants? Tackling these questions helps to answer the following set of questions related to upgrading the sector: what are the gains from processing for the participants in the value chain in the Casamance? How does processing contribute to development of the sector in the Casamance?
The value chain approach provides much of the analytical framework for this study. Value chain analysis was originally developed for manufacturing (Gereffi, 1994). Then, Gibbon (2001) emphasised the relevance of value chain analysis for agricultural commodities as well. The relevance for agricultural commodities became particularly clear when the approach became applied to high-value produce within so-called “buyer-driven” chains (Dolan, Humphrey, 2000) (Dolan, Humphrey, Harris-Pascal, 1999) (Ponte, 2001) (Kaplinsky, 2000) (Fitter and Kaplinsky, 2001). However, Carr (2001) noted that GVC analysis has not yet been applied to cashew nuts as a “trader-driven” commodity chain. Moreover, little academic research has been published on cashew nuts in West Africa and none in Senegal .
The questions addressed in this study are particularly significant in light of recent debates in the literature about whether or not developing countries should industrialise by processing agro-commodities. In light of many failed attempts across the African continent to maintain a competitive cashew nut processing industry, many pessimists, embodied by Mayer (1997), believe sub-Saharan African countries should focus more on horizontal development, i.e. concentrate on producing the raw material to improve economic returns and stimulate growth, as there are too many domestic and international constraints to industrial upgrading. More optimistic arguments espoused by Cramer (1997), Martin (1997) and McMillan and Rodrik (2002) acknowledge the potential for processing industries in these countries but remain sceptical in light of the failures in Mozambique and Tanzania .
However, both advocates and pessimists of processing in Africa base their empirical frameworks on traditional, large-scale and mechanical processing for export to northern markets that typified this industry across the continent until very recently. Their arguments do not focus on the semi-industrial methods introduced recently by organisations like Enterprise Works in the Casamance. The context within which these small-scale processors have emerged differs from that of Africa ‘s traditionally large-scale factories. While Enterprise Works has provided them with logistical and technical support, the processors started production based on demand in domestic and nearby markets – which are more lucrative than many industrialists and analysts had thought – and they have developed within a liberalised market and without significant external financial assistance. Drawing lessons from this experience is not easy because these processors have emerged (and continue to emerge) only recently and are still facing many challenges to establish themselves. Moreover, the Casamance processors’ ultimate success in terms of a sustainable, employment- and revenue-generating industry depends on a broad set of variables. However, it will be argued that these processors represent a viable strategy to upgrade from simple raw export to intermediate and final kernel processing.
Given the absence of literature on the cashew value chain in Senegal, three months of field research (April-July, 2003) were conducted for this paper. Based in Ziguinchor but also involving forays into Guinea Bissau, field visits and interviews were taken with as many actors of the value chain as possible: farmers, harvesters, traders, exporters and processors. Sometimes discussions with farmers’ associations took the form of a village meeting with lively participation. At other times, only key members of these associations were targeted. Every processor affiliated with Enterprise Works’ Senegal programme was visited, as well as independent processors or those sponsored by other development programmes. Much information was triangulated with Eaux et Forets , the government forestry office, and NGOs, especially Enterprise Works, who provided considerable logistical and informational support, both in Guinea Bissau and the Casamance. Photographs and videos were taken to help document the research and complement the study.
The paper is divided into six chapters. Chapter 2 is contextual and introduces the world cashew nut market and Senegal ‘s place within it. Chapter 3 provides an analysis of the cashew chain in the Casamance and how it has developed over the last decade. The lack of chain coordination manifesting itself in speculation and severe price fluctuations that undermine gains for all participants is discussed along with the efforts being undertaken to counter it. Of particular interest are recent efforts to form farmers’ associations to develop the cashew sector horizontally at the producer level. With regard to vertical development of the cashew sector, Chapter 4 initiates the examination of the merits and pitfalls of moving into processing. It begins with a review of the literature on the arguments for and against developing processing industries in sub-Saharan Africa , largely outside the domain of value chain analysis. The verdict on whether or not processing is a possible avenue for upgrading is shown to depend on a host of factors. Consequently, in Chapter 5 the Enterprise Works programme in the Casamance is examined with its small-scale and semi-industrial approach to processing as opposed to traditional, large-scale and export-driven industries. Portraits of the processors and their enterprises are presented and analysed, showing that there is a great deal of differentiation, both among village-based farmer-processors and urban entrepreneurs. Particularly interesting is the effect the processing units have on their communities and the benefits they bring in terms of local employment and/or contributing to developing other elements in the value chain at the producer level. Chapter 6 reflects on the future development of Senegal ‘s embryonic processing industry. Guinea Bissau, where semi-industrial processing has developed over a longer period of time, is presented as a model for comparison to offer clues and insights as to how the Casamance processors can and should develop, especially as production grows and the domestic market becomes saturated. The main challenge for the Casamance is exporting to competitive Northern markets. There are difficulties involved in accessing northern markets due to distribution-, infrastructure- and market-related constraints, and export strategies must be designed around them. It will be shown that at least for the near future, Casamance processors can continue to develop their domestic market and explore small niche markets in Europe and other markets in Africa as an alternative to seeking large-scale export.
One notable exception was the PASA project (“Projet Anacardier Senegalo-Allemand”), which introduced the crop in the Fatick and Kaolack regions north of the Gambia in the 1980s.
By horizontal development we mean the strategies taken to upgrade the sector qualitatively at the producer level to increase gains in terms of production levels, quality and commercialisation of raw cashew nuts for export. By “vertical” development we mean upgrading through processing and capturing higher value added through an increased share of the value chain.