Cashew BeninToward quality supply for the emerging local processing industry

Dahomey Cashew – District Unions of Cooperatives

Background

• Important cash crop for smallholder farmers (besides cotton) and source

• Annual production > 100,000 tons of cashew nuts; 95% is exported

• Cashew farming concentrated in the northern and central regions of Benin

• Local processing capacity has been reinforced (building new processing & upgrading existing plants) during the last years

Business relationship

• Farm: District unions of cashew farmers’ cooperatives

• Firm: Local processing plant “DahomeyCashew” (raw cashew kernels for export)

• Mostly informal supply arrangements

• Competition between local processors and foreign exporters

Challenge area 1: Product & Market

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← Disagree Agree →

Challenge area 1: Product & Market

Farmers Firm

Quality criteria are known by

farmers

Quality criteria are easy to comply

with

Prices offered by other buyers are

more interesting

Information on world market prices

is easy accessible and trustworthy Convergent views

Divergent views

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← Disagree Agree →

Challenge area 3: Farmers' Organization

Farmers Firm

Challenge areas 2 & 3: Firm & FarmerOrganisation

Farmers and firm agree that

there are opportunities for the firm to provide embedded

services to farmers

Farmers are well organized to discuss

and organize supply

Leaders regularly consult members and

take in account members’ interests

FOs are willing to promote quality

standards and support traceability

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← Disagree Agree →

Challenge area 4: Farmers

Farmers Firm

Challenge area 4: Farmers

Farmers are able to supply the required

volumes when prices offered are competitive

Farmers use appropriate production

technologies (volumes)

Farmers and collectors use appropriate

post-harvest technologies (quality)

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← Disagree Agree →

Challenge area 5: AgriBusiness System

Farmers Firm

Challenge area 5: Agribusiness System

Farmers have easy access to

(public) extension services

Farmers can easily supply

themselves with quality inputs

Farmers are satisfied with (public)

extension services

Farmers can easily supply

themselves with storage bags

Seasonal credits are vital for

regular and quantity supply by farmers

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← Disagree Agree →

Challenge area 6: Communication and Planning

Farmers Firm

Challenge area 6: Communication & Planning

Farmers agree with the prices offered by

the firm

FO members agree on sales conditions as

decided by FO which takes appropriate measures to respect ‘contract’

The mechanism for fixing prices is

satisfactory

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← Disagree Agree →

Challenge area 7: Delivery and Performance

Farmers Firm

Challenge area 7: Delivery & Performance

On-time payment to farmers by firm

Side selling by farmers

Side selling is a necessity for

farmers

Conclusions (1)

• Prices– Firm and farmers agree that other buyers often offer higher prices;

hence ‘side selling’ by farmers

– Farmers are not satisfied with the price setting mechanism and feel that they aren’t well informed about market prices

• Quality– Firm thinks that farmers know about quality criteria but don’t apply

good agricultural practices

– Farmers think the opposite

• Joint opportunities for the way forward– Share information on fluctuation of market prices

– Negotiate with MFIs seasonal credits for FO (buying from members)

– Develop premium mechanism for rewarding quality, volume & on-time supply

Conclusions (2)

• Agribusiness system– Farmers have access to public extension but firm and farmers

agree that this isn’t providing relevant & quality services

• Organisation of farmers as suppliers– Farmers and firm agree that information flows within FOs and

decision-making involves members

– Firm thinks that the FOs are able to improve organisation of supply

• Opportunities for the way forward– Develop extension services (firm, third party or FOs) with focus

on inputs and practices that determine ‘quality’

– Support FO for developing economic services for members

FDOV/PPP “Cracking the Nut”http://www.rvo.nl/subsidies-regelingen/projecten/cracking-nut