According to Minister of Industries and Trade Cyril Chami, the move seeks to stop export of raw cashew nuts and resolve the market crisis that has engulfed the industry this season where piles of nuts went unsold.
“The cashew nuts factories are among the privatised firms that closed shops since they were sold at the expenses of the nation,” Dr Chami, whose ministry conducted a study on the said companies, told the 'Daily News'.
The Minister, who is an economist, said currently experts are looking into ways of repossessing the factories without putting the nation into extra costs when terminating the sales agreements. “Another option, if the repossession failed, is to force them to resume production, so as to add value on our cashew nuts,” Dr Chami said.
“The outcome will be announced after the exercise is done.” In the just ended season, the country produced 157,000 tonnes out of which only 72,000 tonnes were bought by traders at warehouse prices of between 1,500/- and 2,000/-. “High prices are to blame for the crisis… but if the nuts were processed locally, that could be another story,” Dr Chami said as the sideline of inauguration of new TanTrade Board of Directors.
For instance, companies such as Olam Tanzania which operates at a full capacity of 15,000 tons per year uses more than 30bn/- to buy the crop every year at farm gate price of 2,000/- per kilo. But unfortunately, all ten factories that were built by the government through a World Bank loan of 184 million US dollars (about 285bn/-) between 1970s and 1980s are not working and have been turned into warehouses for cashew nut and other crops.
The Chairman of the Parliamentary Public Accounts Committee (POAC), Mr Kabwe Zitto, called for the government to repossess the factories and give them to serious investors after the current ones’ violation of sale agreements. Report from the Cashew nut Processors Association (CPA) shows that in 2010/2011 season, four companies, Olam, Agrofocus, Export Trading Group and Micronix Systems together processed only 18,519 tons out of 130,000 tonnes.
On the other hand, companies which did not process a single kilo include METL, SONEL of Mikindani, Premier Cashews, Mtwara Cashew Company (2006), Kibaha Cashew Factory, River Valley Foods, Lindi Farmers Company and Buco Investment Holdings. The CPA Secretary General, Mr Joseph Haule, told the 'Daily News’ in Mtwara that many members of the association, among them those who bought the factories, are capital constrained as cashew nut processing requires heavy investments.
It’s estimated that apart from machine investments, to buy 1,000 tonnes of raw cashew nut you need 1.5bn/-. CPA also cited regular changes of cashew nut supervision due to changes in ministries responsible for crop marketing which include lack of cashew nut processing policy for the past 50 years.