April 29, 2016 / 10:32 AM / in 4 years

Ivory Coast cashew prices climb on demand, competition from smugglers

KORHOGO, Ivory Coast (Reuters) - High global demand for cashews is pushing up prices in Ivory Coast, the world’s leading producer of the nut, where local exporters are battling with smugglers for supplies, farmers and exporters said on Friday.

A man collects cashew seeds at a warehous Bondoukou June 20, 2014. REUTERS/Thierry Gouegnon

Ivory Coast, already the world’s top cocoa producer, surpassed India for the first time last year as production leapt more than 24 percent over the previous season to 702,510 tonnes of nuts.

Cashews, a popular snack in Europe and North America, is an essential ingredient in Asian cooking and is increasingly used in products such as dairy-free ice cream.

In the northern city of Korhogo, a purchasing hub where dozens of new warehouses have opened in the past five years, buyers said there was intense competition for supplies.

“We’re under pressure from our (exporter) clients,” local buyer Meyeregue Soro said. “Unless you pay 500 CFA francs ($0.86) per kilogram, the farmers won’t even look at you.”

Ivory Coast’s government set a minimum farmgate prices of 350 CFA francs per kg for the 2016 marketing season, up from 275 CFA francs last year. But buyers said they were paying between 500 and 550 CFA francs per kg to secure stocks.

An Abidjan-based exporter said the reasons for the rising prices were two-fold.

First, he said Ivorian output was expected to drop by as much as 20 percent this year due to weather conditions despite a forecast from the Cotton and Cashew Council, the national marketing board, that production would rise to 725,000 tonnes.

But he said new taxes on exporters amounting to 45 CFA francs per kg were also fuelling smuggling as some traders sought to circumvent the new levy by shipping Ivorian cashews via other regional ports.

“The smuggling is continuing,” the exporter said. “(The government) has been able to constrict the flow into Ghana, but now it’s going into Burkina Faso. They’re shipping out of Accra (Ghana) and Lome (Togo).”

He said he expected to see around 40,000 tonnes of nuts illegally exported this season.

The taxes do not apply to companies with local processing facilities.

The trafficking was confirmed by local buyers in northern Ivory Coast, the West African nation’s cashew-growing heartland.

“We are aware that there is contraband towards the border with Burkina Faso where some people are sending cashews on moto-tricycles,” said Korhogo-based buyer Abdoulaye Cisse as workers dried nuts in front of his warehouse.

“We are hearing that sellers over there are earning 100 CFA francs (per kg) more than here,” he added.

Just a decade ago, Ivory Coast was a middling cashew producer, growing around 80,000 tonnes of raw nuts per year.

But with output growing by an average of over 10 percent annually, the sector has attracted thousands of farmers in the impoverished north where many have abandoned cotton, the area’s traditional cash crop, in favour of cashews.

In the village of Sohouo, some 15 km from Korhogo, most local farmers now grow cashews.

“The lives of farmers have changed a lot here in the village these last three years because cashews pay well,” said Lacina Silue, standing front of a small, neat house with a satellite dish on the roof.

“All my children go to school now with no problem. Growing cashews is even less physically tiring. We think lots of farmers will switch from cotton.”

($1 = 578.8000 CFA francs)

Additional reporting and editing by Joe Bavier, editing by David Evans

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