Mozambican Cashew Industry Analysis - Squarespace · Mozambican Cashew Industry Analysis Siddhant...

Mozambican Cashew Industry Analysis

Siddhant T. Mishra

Whitney I. Martin

August 2016

• Global Market Context

• At ~3.2mn MT, global RCN production continues to grow at stable rate; Africa is ramping up and set to outgrow Asia

• Despite production expansion, Africa in infancy stage of processing while India and Vietnam process >90% of RCN

• Quality conscious markets such as EU & US collectively constitute one third of global kernel consumption

• These western markets projected to grow at 6% and reach ~350k MT by 2020, as global demand reaches 1.1mn MT

• As global demand outstrips supply, market kernel prices are expected to stabilize ~$3.5/lb, ensuring a healthy price for

African cashew

• Both Asia & West Africa, which contribute majority of production, follow northern cycle, resulting in a ~15-20% premium

for southern cycle RCN

• Strategic Context for Mozambique

• Annual commercialization stagnant in the range of 63-83K MT*; significant quantities attributed to unofficial exports

• At current level of support, aged trees and inefficiencies are projected to limit production at current levels

• Domestic processing is operating at ~70% utilization facing significant supply-side challenges; willingness to install

additional capacity is low

• Growing kernel sales will require meeting western markets’ need for improved quality, traceability, and global

certifications

• Cashew sector susceptible to certain uncontrollable risks and must plan for damage, but can actively lobby to combat

risks around subsidies, availability of investment capital, and labor concerns

• Chemical subsidies and seedlings program burden consumes majority of Incaju budget, must be used efficiently to lift

production

• Competitiveness Overview:

• Once a leading RCN producer, Mozambique accounts for <3% of African RCN; Tanzania has significantly outpaced

Mozambique in East Africa

• Mozambique has the lowest quality RCN within Africa due to its old acreage and recurrent disease outbreak; lower RCN

price parallels lower quality

• Total processing cost lowest in Mozambique due to cheaper RCN procurement prices; but poor quality results in lower

kernel yields and subsequently one of the lowest top lines among African processors

• Domestic policies must support business players throughout value chain to protect against heavily protected players that

command market

Executive Summary

Technoserve | 2

• Value Chain Assessment

• In the current scenario, 49% of the value in the chain is captured if cashew is processed domestically

• Large inefficiencies lie in the upstream value chain and processing; significant value lost as nearly 45% RCN not being

processed in-country

• Interventions aimed at boosting production and processing in country, while reducing inefficiencies can unlock significant

value

• Recommendations

• Seven key interventions focus on the transformation of production in Mozambique to better supply exporters and

processors alike:

1. Producer groups to increase producer cohesion to increase efficiency, information symmetry, and their

commitment to cashew over other crops

2. Vouchers to improve traceability and efficiency in distribution of subsidy, while laying the foundation for a private

market

3. Research and development to plant new highly productive seedlings and eliminate disease for the long term

viability of domestic RCN production

4. Training assistance to improve cashew production techniques through sustained commitment to cross-training

within communities

5. Public Information system to improve communication, channeling feedback to government and price/care

information to producers

6. Processor initiatives to increase volume of RCN processed in Mozambique to create more jobs and capture more

value in-country

7. Lobby efforts to better position Mozambican cashew in global market while improving business conditions for

processors and producers

• Proposed interventions are aimed at solving some of the critical gaps that today are faced by stakeholders across the

cashew value chain

Executive Summary

Technoserve | 3

• GLOBAL MARKET OVERVIEW

• MOZAMBIQUE’S MACROECONOMIC OVERVIEW

• BENCHMARKING ANALYSIS

• CASHEW VALUE CHAIN OVERVIEW

• STRATEGIC PLAN FOR STAKEHOLDERS

Contents

Source: Multiple sources; Technoserve analysis

0

200

400

600

800

1000

1200

1400

1600

1800Africa RCN Production by Country (k MT)

Ivory Coast Guinea-Bissau

Tanzania Benin

Nigeria Mozambique

Other African Nations

Most of growth is attributed to the Ivory Coast and

Benin; Mozambique is losing market share

12%

CAGR

708

0

500

1000

1500

2000

2500

3000

3500RCN Production by Geography (k MT)

Asia Africa Latin America

-2%

CAGR

2019

2114

2301

2356

2562

2318

2536 2723

2850 3

213

Africa is growing at 4x the rate of Asia

2951

At ~3.2mn MT, global RCN production continues to grow at stable rate;

Africa is ramping up and set to outgrow Asian output

11%

3%

594

759 848 9

52

993

1152

1227

1263 1393 1

554

3%

9%

8%

14%

5%

7%

Technoserve | 5

0

500

1000

1500

2000

2500

3000

3500

Quantity of RCN Processed (k MT, 2015)

1673

1265 32 8 6.5 35 17 15161 3213

East African Nations

~47

West African Nations

~67

Asia

~2938

Notes: All values are approximate figures calculated based on inputs of multiple stakeholders across processing sector

Source: Multiple sources; Technoserve analysis

Despite production expansion, Africa in infancy stage of processing while

India and Vietnam process >90% of RCN

% share in

processing 52% 39% 1% 0.2% 0.2% 1.1% 0.5% 0.5% 5.1%

Technoserve | 6

302

57

17 16 9 8

146

1329 26

11 11 10 818

76

0

50

100

150

200

250

300

350

2015 Kernel Consumption

% share

Per capita

kg / year**

40% 8% 2% 2% 1% 1% 19% 2% 4% 3% 1% 1% 1% 1% 2% 10%

0.09 0.12 2.09 0.12 0.12 0.13 1.28 0.70 1.25 1.73 0.28 0.47 0.55 0.58 1.41 -

*Others category has been created as country values reported by INC did not match overall Kernel consumption; the difference has been considered as ‘Others”; **2013 figures

Note: INC reports India’s kernel consumption at 50,005 MT for 2013 which is too low; his has been corrected to 2,50,000 MT as reported by every other source

Source: International Nut Council; International Trade Centre; Lit. Search

Quality conscious markets such as EU & US collectively constitute one

third of global kernel consumption (~755k MT in 2015)

Assumptions

• Values have been calculated based on 2013% consumption share of countries

• Average kernel conversion ratio has been assumed to be 23.5%

Asia

409k MT

Americas

159k MT

EU

87k MT

Other

102k MT

Technoserve | 7

Note: Kernel consumption figures are approximate values calculated based on inputs of multiple stakeholders; 2016-2020 forecasts calculated based on current growth rate of each region

Source: International Nut Council; International Trade Centre; Lit. Search

These western markets projected to grow at 6% and reach ~350k MT by

2020, as global demand reaches 1.1mn MT

-

100

200

300

400

500

600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Th

ou

sa

nd

s

Kernel Consumption, MT

India America Europe Middle-East Australia Others

ForecastedCAGR

(‘15-’20)

10-12%

4-6%

6-8%

6-8%

4-6%

3-5%

IND

US

ROW

EU

ME

AU

Major trends up to 2020

EU & US markets are expected to grow and retain their overall consumption share at ~30%

While India, US & EU remain robust markets, Middle-East (fall in oil prices), Russia (depreciation of Ruble) and China (slowing

economy) markets may experience slowdown in kernel consumption

India will continue to dominate the global kernel consumption, poised to consume ~50% of all kernels by 2020

With prices of all other nuts falling (including almonds), cashew kernel prices may remain within same range for coming years

Technoserve | 8

1500

2000

2500

3000

3500

4000

4500

Quantity of RCN, k MT

RCN Production

Consumption

As global demand outstrips supply, market kernel prices are expected to

stabilize ~$3.5/lb, ensuring a healthy price for African cashew

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Africa Market - Average Kernel Price, $ / lb

ForecastForecast

Note: Global demand projected on current growth in key markets; Production projected based on past growth rates in main producing regions; Kernel price projections based on TNS analysis

Source: Lit Search, Cashew Info, Stakeholder Interviews, Technoserve Analysis

Major trends up to 2020

Upward trend in Global Kernel Prices attributed to increasing demand supply gap

Key markets for African kernel: US & EU expected to grow at a healthy rate of ~5% CAGR

The African kernel price may see volatility attributed to how Vietnam (another leading supplier to western markets) performs

As processing ramps up, Africa might offset the over-dependence of Western markets on Vietnamese kernel. Indian kernel

will continue to mainly cater to domestic demand

Technoserve | 9

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Both Asia & West Africa, which contribute majority of production, follow

northern cycle, resulting in a ~15-20% premium for southern cycle RCN

Regions Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Asia

Vietnam, Philippines, Thailand, India, Sri Lanka

West Africa I

Ghana, Benin, Burkina, IVC, Togo, Mali, Nigeria

West Africa II

G. Bissau, Guinea Conakry, Senegal and Gambia

East Africa

Tanzania, Mozambique, Kenya, Madagascar

Latin America

Brazil & Others

Major trends

About ~83% RCN production comes from the northern crop as West Africa and Asia both follow the northern cycle

Brazil, one of the larger southern cycle producers, is increasingly catering to domestic demand and witnessing stagnancy

East Africa, due to its off cycle production and proximity to Asia commands a significant premium for its RCN

In current state, Asian processors willing to pay ~15-20% premium for African RCN as Indian market is protected and can

negotiate higher kernel prices

Source: Technoserve Analysis; ACi Report

Crop Cycles

Northern Crop: Feb - Sept (8 months)

Southern Crop: Oct - Jan (4 months)

Technoserve | 10






Contents

Annual commercialization stagnant in the range of 63-83K MT*;

significant quantities attributed to unofficial exports

Technoserve | 12

24.5 27.8 25.9 28.3

27.5

38.730.9 28.9

13.0

16.6

6.314.3

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015

Annual Commercialized RCN (k MT)

Processing Exports (Official & Unofficial)

Regional/Domestic Consumption**

65

83

6372

56.2

11.8

0

10

20

30

40

50

60

70

80

Commercialized RCN by Region (k MT)

South

Central

North

Total annual commercialization ~75-80k MT

with ~30k MT being processed domestically

Most of commercialized RCN from North;

Other regions consume RCN domestically

Majority of RCN exports through informal

channels to avoid 18% export duty

72

5.511.7 7.1 6.5

21.9

2723.7 22.4

0

10

20

30

40

50

2012 2013 2014 2015

Annual Estimated RCN Exports (k MT)

Official Exports Unofficial Exports

Major trends

Annual RCN commercialization around 80k MT which is estimated to

be 70% of the total national output

Majority of commercialization comes from Northern provinces-

Nampula, Cabo Delgado and Zambezia

22-27k MT RCN traded/exported through informal channels

*Annual commercialization excludes informal market volumes within the country

**Regional/Domestic Consumption: The calculated quantity is based on Deloitte & Touche (1999)- Majority of this quantity is held back due to lack of market linkages and sold informally

Notes: Informal trade statistics are not published, values stated are based on interviews with industry stakeholders. Only commercialized RCN taken as given.

Source: Official Govt. Publications (Incaju); Literature search; Stakeholder Interviews- Processors and Producers; Primary Research; Technoserve analysis

0

20

40

60

80

100

120

Annual Commercialized RCN(k MT)

110K

69K

At current level of support, aged trees and inefficiencies are projected to

limit production at current levels

Technoserve | 13Assumptions: *Yield rates, level of adoption of seedlings, extent of chemical treatment based on field visits and stakeholder interviews

Notes: Since official statistics for informal trade are not published, values stated are based on consensus of key stakeholders. Only commercialized RCN taken into consideration set

Source: Official Govt. publications (Incaju); Literature search; Stakeholder Interviews- Processors and Producers; Primary Research; Technoserve analysis

Key reasons for stagnancy in production

As of 2016, the total number of cashew trees are estimated to be

~40mn, although only ~20-23mn are productive

Majority of trees are old- 25+ years old and are experiencing declining

yields and are susceptible to diseases

The lack of access to chemicals and diseases further impacting yields;

The government chemical program only sufficient for ~10% trees

Replanting, mainly aided by subsidies at current levels marginally

offsets trees going out of production

Lack of management practices (pruning, spraying etc.)

• Only 59% trees remain productive, of

which many trees are old and

declining in productivity

• Low kernel out-turn ratio (43-46),

lower than African and global

average

• Marginal land acreage

• Limited access to inputs

• Average yield/tree: 3.05 kgs

Snapshot on Mozambique’s RCN quality

Forecast 2020

Best case based on:

• Improved efficacy of current govt. subsidies

• As expected yields from new trees

• Sustained planting efforts nationally

Worst case based on:

• Average-low efficacy of govt. subsidies

• Lower than expected yields from trees

• Sporadic planting campaigns

The forecast takes into account yield rates

(2005-15), annual seedling adoption rates,

lifecycle of old trees, aggregate number of total

and productive trees among other factors

Difficulties in RCN procurement

• Reliance on informal trader networks

• Compete with illegal exporters

• Poor road networks in key provinces

• No regional markets

Lack of affordable finance

• High collateral required for financing

• Liquidity issues to finance operations

Labor laws & infrastructure

• High rates of absenteeism ~50-60%

• Inflexible labor laws

• Disrupted power supply

Quality issues

• Low kernel out-turn ratio

• Inconsistent RCN packaging

Technoserve | 14

Domestic processing is operating at ~70% utilization facing significant

supply-side challenges; willingness to install additional capacity is low

Issues with RCN procurement, financial liquidity, labor

laws & weak infrastructure handicap processing

Current installed capacity can process greater volumes

provided with adequate supply

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016*

RCN Processing Capacity*, MT

Utilized capacity Idle capacity

23.1K 24.2K 31.5K 34.0K 33.2K 41.9K 46.6K

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013 2014 2015 2016

Total No. of Jobs Created*

*Total No. of Jobs Created: The figure reflects total no. of jobs created as per government mandate- Processors estimate 50% absenteeism. Based on visits to processing plants

Notes: Since official statistics for informal trade are not published, values stated are based on consensus of key stakeholders. Only commercialized RCN taken into consideration set

Source: Official Govt. publications (Incaju); Literature search; Stakeholder Interviews- Processors and Producers; Primary Research; Technoserve analysis

After 2008, the processing sector has undergone

consolidation and has 4 dominant players

31%, Olam

32%, Condor

18%, Caju Ilha

15%, Korosho

4%, Others

Mark

et

Sh

are

2016*

Growing kernel sales will require meeting western markets’ need for

improved quality, traceability, and global certifications

$0

$20

$40

$60

$80

$100

$120

2010 2011 2012 2013 2014 2015

Mill

ion

s

Current Revenue Potential Revenue

Majority of kernel export customers in US,

only filling 2% of US demand

Mozambique losing 40% of potential revenue

from exporting RCN rather than kernel

Note: Potential revenue calculated considering loss of export tax on RCN as well as weight of RCN lost in processing.

Source: Incaju, RONGEAD for iCA, Technoserve Analysis

% RCN

Exported39% 47% 9% 14% 11% 9%

Lost Revenue

(mn)$45 $4 $22 $47 $23 $24

North America;

51%Europe;

26%

South Africa;

19%

Mozambique Kernel Export

Vietnam, India, Brazil,

etc98%

Mozambique2%

US Imports

India’s predominant method of home-based processing does

not meet safety standards, exposes workers to corrosive and

toxic liquid (cashew nut shell liquid)

Western markets interested in: organic products, fair working

conditions, traceability, recall mechanisms, allergen control,

raw and finished product testing, programs (environmental,

sanitation, food defense, audit, code of conduct training),

HACCP, GMP

Low delta because RCN export price

unusually high that year

($1,300 vs. $880 before and after)

Technoserve | 15

Cashew sector susceptible to certain uncontrollable risks and must

plan for damage, but…

Business Solutions to Poverty Technoserve | 16

A

IMPACT MITIGATION

B

C

RISK FACTOR

CURRENCY

EXCHANGE

RATE

• When metical is weak, chemicals

will cost more, export tax will be

worth less, suppliers demand

dollars, but “export surrender”

requirement demands 50% of sales

be converted to meticais

• Better for banks and processors if

loans are provided in dollars – protects

against currency fluctuations and

matches income denomination to debt

• Variation in temperature and timing

of rainy season can shorten length

of harvest

• Drought affects productivity of trees

WEATHER• Investment in new trees which can

produce earlier in the season would

extend the harvest into October and

September

• Incaju could develop better models

for predicting crop output based on

weather and conditions anticipated

• A number of fungi (like powdery

mildew) afflict Mozambican trees,

some incidence of pests

• These lessen production, lead to

death of trees, and can spread if

not managed correctly

• Preventative care in the form of

cleaning, sanitation, and chemical

treatment can reduce risk by 40-50%

• Research being done to create new

varieties resistant to these types of

diseases

DISEASE

Source: Stakeholder interviews, US State Department 2015 Investment Climate Statement, The Noun Project (graphics)

http://www.state.gov/e/eb/rls/othr/ics/2015/241674.htm

…can actively lobby to combat risks around subsidies, availability of

investment capital, and labor concerns


D

• Inconsistent attendance and high

turnover increases training costs

• Health issues and sanitation

concerns has deleterious effects on

quality of output

IMPACT

• Lending done in meticais has

become unaffordable for small

players

• Worker and food safety

compliance will improve

working conditions

• Use technology to make job

sustainable

• Examine compensation and

expectations of roles with

highest turnover

MITIGATION

GOVERNMENT

SUPPORT

FINANCINGE

LABORF

RISK FACTOR

• Currently Incaju supported in large

part by general government funds,

• Change in political power and

administration’s focus could damage

industry permanently

• Bad policy can kill infant enterprises,

especially within processing industry

• Make use of the funds available

through Sida through 2018

• Dedicate resources to supporting

producers in attaining fair lending

• Government requires clear context

and information on global market

and levers to take timely action

• Careful consideration for how to

deliver aid/subsidies which reach

intended recipients

(producers/processors)

Source: Stakeholder interviews, “Mid-term Performance Evaluation of the USAID-funded Loan Portfolio Guarantees through the Development Credit Authority Activity,” The Noun Project (graphics)

https://www.usaid.gov/sites/default/files/documents/1865/USAID Mozambique DCA_Mid-term evaluation_FINAL Report (1).pdf

• Produced 3.5mn

seedlings

• Distributed 1.7mn

• 31k farming

families benefited

• Produce and

distribute 4.2mn

seedlings

Largest expense is chemical treatments for pests

covering only 10% of trees, little spent on research


• Pruned 1.7mn

trees,

• Treated 5mn

• 85k farming

families benefited

• Treat 5mn

cashew trees

2015

Actuals

2016

Targets

Chemical subsidies and seedlings program burden consumes majority

of Incaju budget, must be used efficiently to lift production

Target is to repopulate 10-15% cashew trees, offer training

and loans for pruning, treating, harvesting and planting

Largest programs are hitting their targets, but production has not seen lift expected

Funded by 18% tax on RCN exports ($2mn in 2015), general

government budget, and grants

Source: Balanço 2015 Incaju, Incaju Budget Documents, The Noun Project (graphics)

Chemical Treatment

$2.2mn, 41%

Seedling Production

$1.2mn, 23%

Commercialization

$0.9mn, 17%

Research

$0.1mn, 2%

Other

$1.0mn, 18%

Incaju Budget 2015






Contents

India Ivory Coast VietnamGuinea-Bissau

Tanzania Nigeria Benin Senegal Moz'bique

Production 753 704 400 208 190 98 115 35 72

Exports - 670 - 205 182 95 130 47 29

0

100

200

300

400

500

600

700

800

RCN Production & Exports by Country (k MT, 2015)

Once a leading RCN producer, Mozambique accounts for <3% of African

RCN; Tanzania has significantly outpaced Mozambique in East Africa

% RCN

Exported0% 95% 0% 98% 96% 97% 113% 134% 41%

RCN Production

RCN Exports

Exports > production due to

cross border trade from

neighboring countries

Source: Multiple sources; Technoserve internal database

Technoserve | 20

RCN Price ($/ MT)

Mozambique has the lowest quality RCN within Africa due to its old acreage

and recurrent disease outbreak; lower RCN price parallels lower quality

Notes: Quality value depicted is an approx. value

Source: Stakeholder interviews; Technoserve analysis

Guinea-Bissau

India Vietnam Senegal Tanzania Benin Ivory Coast Nigeria Moz'bique

RCN Quality 52.5 52.3 52.3 50.5 50.3 47.8 47.6 45.3 45.0

RCN Price $932 $1,622 $1,504 $1,077 $1,208 $1,057 $876 $875 $855

800

900

1000

1100

1200

1300

1400

1500

1600

1700

40.0

42.0

44.0

46.0

48.0

50.0

52.0

54.0

Pounds / 80 kg

RCN Quality RCN Price

RCN Price ($ / MT, factory door)

Technoserve | 21

Total processing cost lowest in Mozambique due to cheaper RCN

procurement prices….

Notes: Figure assumes plant in third year of operation using 83% of its capacity Majority of the nations do not levy income taxes on new enterprises except Guinea-Bissau, Senegal & Vietnam

Source: Technoserve analysis

80% 81%

72%68%

59%

68%

61% 61%66%

9%9%

14%15%

19%

16%

20% 21%19%

8%8%

9% 11%16%

11%15% 13% 11%

4% 2%6% 6% 5% 5% 5% 5% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

India Vietnam Tanzania Senegal G.Bissau Benin IVC Nigeria Moz'bique

Total Processing Costs (per MT)

Income tax

Financial

Variable

Fixed

RCN Cost

$2036 $1856 $1681 $1589 $1574 $1550 $1437 $1431 $1339

Technoserve | 22

India VietnamGuinea-Bissau

Tanzania Senegal Benin Ivory Coast Moz'bique Nigeria

Kernel Output, MT 586.61 568.11 582.95 564.05 566.30 536.57 533.39 518.93 497.29

Revenue, $ / MT $2,170 $1,858 $1,746 $1,736 $1,729 $1,638 $1,617 $1,581 $1,514

Kernel Yields 24.1% 23.3% 23.9% 23.1% 23.2% 22.0% 21.9% 21.3% 20.4%

Kernel Price / kg $8.92 $7.83 $7.49 $7.69 $7.63 $7.63 $7.58 $7.62 $7.61

1500

1600

1700

1800

1900

2000

2100

2200

2300

2400

2500

40

140

240

340

440

540

640

Kernels produced (MT)

Kernel Output, MT Revenue, $ / MT

Revenue ($ / MT of RCN processed, FOB)

… but poor quality results in lower kernel yields and subsequently one of

the lowest top lines among African processors

Note: RCN processed 2,500MT assumed

Source: Technoserve analysisTechnoserve | 23

Domestic policies must support business players throughout value chain

to protect against heavily protected players that command market

Technoserve | 24

• 40% of formal

production processed

• A few small

secondary processors

• 18% RCN export

tax

• No export tax on

kernels

• Currently, no RCN

imports

MOZAMBIQUE

• Mix of domestic

consumption and

exports

• Hard to track

volumes in informal

market

• 1000 processors

• 40% of world’s

capacity (1.2mn)

• 2/3 imported from

Cambodia and Africa

(Ivory Coast)

• Discourages RCN

export with 20% tax

• Imports have 25%

tax, 5% sales tax –

840k tons in 2015

VIETNAM

• 0% export of RCN,

exported 300k tons

in kernel

• Domestic production

only covers 50% of

what is processed

• Import taxes

• Illegal imports

growing

• Producer prices

regulated

• 40% tariff on

imported kernels*

• >100% processing

• Export kernels and

fully processed/

packaged nuts to

other markets

INDIA

• 0% export of RCN

• Large domestic

market for kernel

range (25%-45%)

• Kernels retail for

20-25% premium

domestically*

Note: *Ease of doing business ranks all countries according to established metrics – the values in the figure display each country’s rank

Source: Delcredere Ducroire; World Bank Ease of Doing Business; Sampat 2001; UNCTAD 2001; World Bank Study

Po

lic

yE

xp

ort

sP

roc

es

sin

g

Political RiskDirect

Investment

Short

term

Med-long

term

Transfer

risk

India 2 3 3

Vietnam 4 3 3

IVC 4 6 6

Moz’bique 6 7 7

0

50

100

150

200

Starting abusiness

Gettingelectricity

Getting creditEnforcingcontracts

Constructionpermits

Ivory Coast VietnamMozambique India

Less risk and better business policies

exist in competing countries*

http://www.delcredereducroire.be/en/country-risks/#focusCountry=BJ&focusContinent=&filter=ExpropriationRisk&min=0&max=7&tab=1

http://www.doingbusiness.org/rankings






Contents

In the current scenario, 49% of the value in the chain is captured if cashew

is processed domestically

Mozambique’s Cashew Value Chain, 2015

Value added at each stakeholder level

Selling

price*$3.60 $4.25 $7.38 $8.50 $11.50 $15.00 -

Value

added*$3.60 $0.65 $3.13 $1.12 $3.00 $3.50 $25.00

*per kg

Domestic value add 49% Foreign value add 51%

Notes: Producer Prices shown are kernels per kg (Assumption: Kernel yield is 20% of RCN); Farm Gate prices as reported by key processors; Retailer prices based on key retailer reported shelf prices

Source: Primary research; stakeholder interviews; Technoserve analysis; Incaju

Re

tail

price o

f w

hole

ke

rnels

Technoserve | 26

In-C

oun

try

(40%

RC

N)

Producers

As-Is Value Chain (2015)

Traders

x% Value w/in country

En

d C

us

tom

er

*Trader Margins: Based on interviews with processors and stakeholders; **Exporters’ Value: Based on the assumption that export & import duties were paid; Based on import price of RCN in India;

**- India is the biggest imported of RCN- No import duty is added to Mozambican exports as Mozambique is among the LDC (Least Developed Countries) Index and is exempt from import taxes in

India

Notes: Percentages for each channel based on average annual commercialization of RCN (`80k MT); Value share based on 2015 (as reported by key processors)

Source: Primary research; Stakeholder interviews; Technoserve analysis

Processing / Exports

Large inefficiencies lie in the upstream value chain and processing;

Significant value lost as nearly 45% RCN not being processed in-country

ProducerLarge

traderSmall trader

ExporterExport

Duty**

Foreign

Processors

Domestic Processor

55% 8% 37%

Producers $750 USD

Crop protection,

Harvesting, Spraying

Pruning

Valu

e A

dd

(p

er

MT

RC

N)

Traders $105-175 USD*

Field logistics, transport

(port/factory), Bagging

Domestic Processors $500 USD

Warehousing, processing, labor,

infrastructure, admin, customs etc.

Exporters $100 USD**

Customs, warehousing, loading, admin etc.

Descri

pti

on

Secondary Processing

(Negligible)


(Negligible)

Roasting, seasoning,

marketing etc.

• 1mn households

• Most smallholder producers

• Dependent on govt for

chemicals & seedlings

• Aged trees & low yields

• 300-500 licensed traders

• Inconsistent pricing across

country

• High operating costs due

fragmented market

Domestic Processors

Compete with exporters for RCN, high

labor and infrastructure costs

Exporters

Illegal trading to avoid taxes

Negligible volume from

Sunshine & Africanut

• No access to inputs

• Govt. subsidy not

sufficient/effective

• No aggregation

• No price information

• Lack of technical skills

• No effective tracking of RCN

• Hoarding- illegal channels

• No economies of scale

• Undue leverage on price due

to information symmetry

Domestic Processors

Volatile annual procurement, high

operating costs, quality concerns

Exporters

Lack of monitoring, illegal exports

Gap

s

Little knowledge of

markets, experience,

marketing strategy

Lack of financing

options & low

willingness to invest

Ab

roa

d

(40-4

5%

)

Large

trader

Technoserve | 27

In-C

oun

try

(70-7

5%

RC

N)

Producers

Ideal To-Be Value Chain (2020)

Traders

En

d C

us

tom

er

Notes: Percentages for each channel based on average annual commercialization of RCN (`80k MT); Value share based on 2015 (as reported by key processors); *- India is the biggest imported of

RCN- No import duty is added to Mozambican exports as Mozambique is among the LDC (Least Developed Countries) Index and is exempt from import taxes in India

Source: Primary research; Stakeholder interviews; Technoserve analysis

Processing / Exports

Interventions aimed at boosting production and processing in country,

while reducing inefficiencies can unlock significant value

Producer

Trader

ExportersExport

Duty*

Foreign

Processors

Domestic Processors


Producer

Groups

TRAINING ASSISTANCE

Interventions

PUBLIC INFO. SYSTEM

PROCESSORS’ ASSISTANCE

PRIMARY SECONDARY

R&D INVESTMENT

Value Chain Vision 2020

In 2016, the Mozambican cashew value chain suffered from significant challenges: production throughput was low, low

economies of scale, poor backward linkages, multiple layers of trading, low levels of processing and inefficient subsidies.

This Industry Strategic Plan aims combat these challenges and proposes the following critical interventions:

• Formation of Producer Groups

• Voucher System for Subsidies

• R&D Investment

• Training Assistance

• Public Information System (PIS)

• Processor Support (Primary & Secondary Processing)

• Lobby Efforts

VOUCHER BASED

SUBSIDY

Ab

roa

d

(10%

)

DIRECT MARKET LINKAGES

Technoserve | 28






Contents

Seven key interventions focus on the transformation of production in

Mozambique to better supply exporters and processors alike


GOAL

Ensure long term Mozambique cashew production growth and align with target markets. Improve quality of

national RCN output while capturing more of the value chain within the country.

Intervention Objective ImpactBenefit

RealizationEffort Criticality

Producer Groups

Increase producer cohesion to increase

efficiency, information symmetry, and their

commitment to cashew over other crops

Very High 2+ years High Very High

Vouchers

Improve traceability and efficiency in

distribution of subsidy, while laying the

foundation for a private market

Very High 2+ years High Very High

R&D

Plant new highly productive seedlings and

eliminate disease for the long term viability

of domestic RCN production

Very High 5+ years Low High

Training

Assistance

Improve cashew production techniques

through sustained commitment to cross-

training within communities

High 1+ years Moderate High

Public Information

System

Improve communication, channeling

feedback to government and price/care

information to producers

High 2+ years Moderate Moderate

Processor

Initiatives

Increase volume of RCN processed in

Mozambique to create more jobs and

capture more value in-country

Moderate 2+ years Low Moderate

Lobby Efforts

Better position Mozambican cashew in

global market while improving business

conditions for processors and producers

Moderate 1+ years Low Moderate

Producer GroupsTargets, Description & Assessment

Technoserve | 31

Target Objective

Increase producer cohesion to increase efficiency, information symmetry, and their commitment to cashew over other crops

Target Issue

Lack of aggregation, high costs of procurement and weak last mile coverage in extension services

Commercialization, extension, information dissemination and subsidy programs

suffer from significant inefficiencies as producers continue to be isolated

stakeholders. Incaju will have to document such groups and assist new

implementation partners in avoiding replication of efforts and establishing micro-

entrepreneurs who can drive and sustain these groups.

Incaju, along with implementation partners, will have to identify high potential

clusters, develop micro-entrepreneurs and organize producers into groups. The

approach will be to create model producer groups, hand over operations to trained

micro-entrepreneurs and then scale efforts nationally.

Description

Aggregation

• Centralized point of transaction for traders and processors

• Economies of scale in procurement and quality segregation at source

• Extend processors’ support directly to producers (materials to improve storage, etc)

Training Extension

• Hub for information exchange and announcements

Input Distribution

• Greater control on inputs distribution

• Enable adoption of voucher systems and measure efficacy

Groups

Assessment Metric

Benefits Metric:

Impact: Very High

Benefit Realization: 2+ years

Beneficiary Stakeholder:

• Producers (Primary)

• Traders, Processors, Incaju (Secondary)

Effort Metric:

Level of Effort: High

Mobilization Horizon: 2 years

Responsibility: Incaju, Dept. of Agriculture,

Implementation partners

Criticality: Very High

Supplemental production

• Increase ground nut planting to improve soil quality

• Juice and process cashew apples at community level

Notes: Approach finalized in consensus with industry and Technoserve stakeholders

Source: The Noun Project (graphics)

*Scale Definition: Impact, Effort, and Criticality Scale:

Low/Moderate/High/Very High; Benefit Realization: Earliest

measurable impact; Mobilization Horizon: Minimum time to

operationalize key features/pilot

Technoserve | 32

Groups

CURRENT BARRIERS

• Organization of producers

at scale does not exist

• Lack of producers’

database

• Lack of business

education in communities

• Identification of micro-

entrepreneurs

• Lack of management

resources

• Isolated village networks

IMPACTBENEFITS Case Studies*

Past efforts in organizing producers

in Mozambique include:

• NCBA CLUSA: In partnership

with Oxfam- producer co-

operatives and trading

companies were established in

Northern Mozambique

• IKURU- Producer co-operatives

in Nampula & Zambezia

providing extension and harvest

services, and access to inputs

EFFORT REQD.

Database

• Create credible producers’ database

• Identify pilot clusters

Capability

• Identify & train micro-entrepreneurs

for clusters

• Identify warehousing & utllities

Mobilize

• Communicate & operationalize

producers into groups

• Develop market linkages

• Maintain records on group creation

POSSIBLE APPROACH

• Building mobile extension

database (Commcare etc.)

• Training extension to micro-

entrepreneurs

• Tie-ups with state warehouses

• Use PIS to mobilize producers

• Link processors

• Hand over group

documentation to Incaju

• Economies of scale for procurement

• Better turnout for trainings

• Greater levels of commercialization

• Better post harvest handling

• Increased processors’ support to

producers

• Reduced hoarding, improved nut

availability throughout season

• Improved pricing coordination

• # groups created & documented

• # producers organized

• RCN volumes traded via groups

• # transactions done with groups

• Training attendance in groups

• $ value support extended by

processors

• RCN price throughout country

Producer GroupsEffort, Benefits & Impact

STAKEHOLDER

Incaju (1-2 years)

Implementation

partner;

Micro-

entrepreneurs

Incaju

Implementation

partner & Incaju


Source: *: LINK 1, LINK 2, The Noun Project (graphics)

http://www.ncba.coop/mozambique

https://feedthefuture.gov/article/new-partners-invest-mozambique%E2%80%99s-farmers

Technoserve uniquely positioned to assist in creation of producer

groups through local micro-entrepreneurs

Technoserve | 33

As a part of developing producer groups, implementation partners can develop micro-entrepreneurs, who can make these

producer groups profitable and sustainable in the long run.

Once identified, these entrepreneurs will be trained on agronomic practices, business practices and community engagement.

These entrepreneurs will assisted in managing identified producer groups.

• Centralized large plots provide space to store inputs,

plant new seedlings, and test other crops

• Distribute inputs from trusted sources in local villages

Groups

Technoserve Experience

TechnoServe (TNS) has partnered with large corporations, multilaterals and governments to provide life changing support in a

variety of settings. TNS’s entrepreneurship experience extends to East Africa, Latin America & India.

In 2015 alone, TNS’s work benefited more than 4,000 businesses (62% women-led) in the developing world, generating $33.8

million of incremental revenue attributed to its intervention.

Having been involved in the Mozambican cashew value chain since 2000, TNS understands the realities in country and has

effective ground presence to identify entrepreneurs for the intervention.

• Modules designed specific to aggregation, accounting

and cash management

• Develop value add practices such as quality evaluation,

segregation and packaging

• Hone ability to engage and organize local communities

• Establish business relationships with other stakeholders

- producers, traders, processors, & exporters



Training in

Business

Pilot Area for

Tested & New

Interventions

Community

Engagement

Managers

Preferred Outcomes

• Micro-entrepreneurs will find success in

their business endeavors, serving as

an example and motivation for other

local producers

• Training provided to micro-

entrepreneur will result in improved

business and agriculture practices in

their area

• More producer groups will be created

• Production and quality will increase in

areas where there are micro-

entrepreneurs

• More micro-entrepreneurs will enter the

space and act as community leaders

Training in

Agronomics

• Detailed training modules on cashew specific practices -

spraying, pruning etc.

• Training modules in other complimentary crops such as

groundnut, soy and mango

VouchersTargets, Description & Assessment

Business Solutions to Poverty

Technoserve | 34

Target Objective

Improve traceability and efficiency in distribution of chemicals, while laying the foundation for a private market for inputs

Target Issue

Full subsidy cannot be sustained nor scaled, distribution currently has many inefficiencies as well

Description

Phased Approach

• Phase I: Pilot in Cabo Delgado (greatest demand) and Nampula (greatest need)

• Phase II: Scale nationally

• Phase III: Introduce private market adjusting the pricing of vouchers in phased approach

Key Components

• Voucher design

• Distribution model

• Redemption model

Vouchers

Assessment Metric

Benefit Metric:

Impact: Very High

Benefit Realization: 2+ years (dependent on

scaling)



• Incaju & Chemical Companies

(Secondary)

Effort Metric:

Level of Effort: High

Mobilization Horizon: 1-2 years (for pilot)

Responsibility: Incaju, Dept. of Agriculture

Criticality: Very High





Vouchers will better enable Incaju to reach producers directly with the chemical

subsidies and improve their ability to track progress and productivity. These

methods are preferred among large donors. This system can then serve as a

platform for seedlings, other crops and subsidies in the future.

A private market for chemicals will be a more scalable and efficient approach to

cashew treatment, but this cannot be achieved overnight. Vouchers enable

producers to get the chemicals they require with minimal government intervention

and investment. Currently producers are overcharged by provedores using in-kind

payments, SMS vouchers will enable Incaju to better communicate fair practices.

Leveraging CommCare, Incaju can distribute vouchers in a few select regions to

test the concept and refine the process, then work to scaling it nationally. Once

implemented, a price can be introduced which slowly increases incentivizing the

entry of private companies to provide the chemicals directly to producers.

Notes: Approach finalized in consensus with Technoserve and industry stakeholders


Voucher program designed to consider components necessary

for a representative pilot and scalable solution

Technoserve | 35

Vouchers

Voucher design

Distribution model

Redemption model

Paper

Telecom based recharge

Digital ID

SMS

Internet based

In-house with Incaju

Hybrid approach

with implementation partner

Outsourced with

implementation partner

In-house with Incaju

Hybrid approach with provedores &


Outsourced with




SMS

• Moderate ability to track

• Moderately difficult to transfer

• Low servicing cost

• Moderate monitoring cost

• Moderate initiation cost

SMS pilot offers scalable solution with greatly increased traceability,

digital IDs provide more benefits at greater cost

Technoserve | 36

Detail

Provides a cost-efficient, simple, flexible way to issue vouchers.

Upon issuance a message will be sent to the recipient and issuer.

To redeem voucher, producer can bring SMS or provide phone number/ID card it was issued to.

Incentivizes producers to provide updated information about trees and contact information in exchange for chemical vouchers.

If budget allows (potentially with grant from Sida), digital ID cards can be created and issued for greater traceability and control.

Vouchers

Paper • Low start up costs

Telecom based

recharge

• Moderate ability to track

• Difficult to transfer


• Low monitoring cost

Digital ID

• Easy to track

• Difficult to transfer



Internet based• Low servicing cost


• Hard to track

• Easy to transfer

• Effort and cost increase with scale

• Expensive to monitor

• Moderately expensive to begin

program with Telecom company

• Rely on technology provider

• Very expensive to begin program,

print and distribute cards

• Only moderately positive in most

aspects

• Easy to transfer

• Hard to track

• Moderate initiation costs

• Producers have limited experience

Voucher

desig

n



Hybrid

approach with

implementation

partner

Distribution of vouchers should be done with trusted partners with a

focus on increasing direct distribution to producers

Technoserve | 37

Detail

Incaju should take control of and leverage CommCare database.

Past experience and current networks can be used to ensure success of pilot and roll-out.

Should producers not be enrolled or need to update their information in CommCare, there will be an enrollment period for them to provide this information.

Incaju will need to verify the data and update producers’ information before issuing the vouchers.

Districts selected for the pilot should isolated enough to avoid circumvention of voucher pilot.

Vouchers

In-house with

Incaju

Use current infrastructure /

network similar to today, but

distribute vouchers to be

redeemed by producers to

increase traceability and

monitoring capabilities

Outsourced

with

implementation

partner

Elect an implementation partner to

choose those who should receive

the vouchers - distribute, collect, and

test efficacy of new system

• Closest to current state

• Ease in monitoring

• Stakeholders familiar with this

process

• All stakeholder buy-in

• Leverage current procurement

models

• Improves traceability

• Efficiency

• Accountability for success &

tracking

• Better expertise / experience

Dis

trib

ution m

odel

Method Benefits

Identify implementation partner

for the annual distribution of

vouchers annually. The

maintenance of the database and

target beneficiaries done

collectively



Hybrid

approach with

provedores &

implementation

partner

Hybrid redemption approach leverages current strengths and

improves accountability and traceability

Technoserve | 38

Detail

Until private market is developed, chemical companies have little incentive to build out infrastructure.

Department of Agriculture and Incajucan use joint spaces to store chemicals and other materials for producers and producer groups.

The pilot should include districts from Cabo Delgado and Nampula to test the two distribution methods –to provedores and producers.

SMS code provided to distribution agent which is noted and validated against central system before issuing the chemicals. Receipt provided for both parties

Vouchers

In-house with

Incaju

Use on-ground government

capabilities to facilitate delivery of

chemicals for vouchers

Outsourced

with

implementation

partner

Agrifocus and/or implementation

partner to distribute chemicals

directly to producers as specified by

vouchers

• Direct control

• Warehouses could be leveraged

for additional materials for other

crops or trainings to improve

communication/support for

producers

• Accountability in last-mile

delivery

• Leverage government

warehousing capability

• Smooths transition to private

market by establishing network

for scaled operations

• More efficient

Redem

ption m

odel

Method Benefits

Government continues to buy

chemicals via contract to store in

their own warehouses.

Implementation partners are

selected for last mile delivery of

inputs and facilitate the receipt of

vouchers



Technoserve | 39

CURRENT BARRIERS

• Lack of reliable

producer information

• Geographically

disbursed recipients

• Illiteracy among

target population

• Different distribution

models in CD vs

elsewhere

IMPACTBENEFITSCase Study*

EFFORT REQD.

• Validate & update data

included in CommCare

database

• Identify warehouses for

chemicals to be stored

• Send vouchers via SMS

• Redeem vouchers

POSSIBLE APPROACH

• Announce voucher system for

3-4 districts in Cabo Delgado

and Nampula

• Allow remaining producers time

to enroll in CommCare, update

requisite information

• Work with mobile provider to

create secure distribution

messaging

• Issue vouchers, require

Agrifocus to collect and deliver

• Improved traceability

• Increased producers’ trust

• More value associated with

chemicals

• Lays groundwork for transitioning

away from subsidy

• More trees treated

• # / % of vouchers issued

and honored

• Volume of RCN produced /

sold to exporters &

processors

• # trees treated

• $ increase in producers’

willingness to pay

SMS Voucher Pilot DetailsEffort, Benefits & Impact

Vouchers

STAKEHOLDERS

• Mozacaju / Commcare

• Incaju

• Producers

• Agrifocus

• Telecom provider


Source: * Slides / Video / Analysis – can be designed with Mezzanine, The Noun Project (graphics)

PSI Movercado Mozambique

• Initiated in 2012 to increase availability of

medical supplies using SMS vouchers

• In 2014, ‘Troca Aki’ had 4mn messages

exchanged, 500k registered beneficiaries,

and 200k commodities exchanged

• Beneficiaries need only validate encrypted

code, goods can be distributed from any

local store, money transferred directly to

merchant for the purchase

• Call center provides support to beneficiaries

and vendors for any questions and concerns

http://www.slideshare.net/i_circo/movercado-eco-system

https://www.youtube.com/watch?v=6wx9YyOK94o

http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/04/M4D-mHealth-improved-nutrition_R1_web.pdf

http://www.mezzanineware.com/agriculture/

In 5 years, plan to introduce a private market with multiple chemical

providers to offer options and improved pricing for producers

Stages 2017 2018 2019 2020 2021 2022

Pilot

• SMS voucher design (unless donor available to

provide funding for digital ID cards)

• Hybrid distribution and redemption supplementing

experience of Incaju with implementation partner

expertise

Roll out program nationally

• Assess success and limitations of pilot

• Assuming success, extend geographical reach

• Introduce ability to purchase chemicals along with

voucher redemption

Introduce private sector competition

• Enable more chemical companies to begin to sell

• Introduce price for producers to pay for chemicals

Vision for the future

FAO “vouchers made fertilizer cheaper for farmers for two years, during which time they learned how to use it properly and

witnessed firsthand how it improved their crops. Two years after the end of the voucher program, farmers who received the

coupons had permanently changed their farming practices, using significantly more fertilizer, enjoying 15 percent higher yields,

boosting food consumption by nine percent and increasing assets and savings by 20 percent more than the control group.”

Source: Feed the Future,“Vouchers and Insurance Help Smallholder Farmers Build Confidence in Agricultural Technologies,” The Noun Project (graphics)

Vouchers


R&D InvestmentTargets, Description & Assessment

Target Objective

Plant new highly productive seedlings and eliminate disease for the long term viability of domestic RCN production

Target Issue

Low quality RCN, inconsistency in new seedlings’ productivity, gaps in agronomic practices

The Mozambican cashew lags significantly in quality when compared to cashews

from other regions. The acreage is old and susceptible to disease. Incaju has

made significant progress in R&D of seedlings but these efforts need to

diversified.

R&D investments in setting up regional nurseries with local varieties, chemical

selection, and elimination of old disease host trees should be made. R&D

investments towards adapting global practices into the Mozambican context need

to be further emphasized

Description

Local Seedlings

• Establish local regional nurseries to improve timing and transport of seedlings

• Identify and grow local high yield varieties adaptable to local environment

• Create micro-nurseries in producer groups

Elimination of Trees

• Quantify impact of disease and acreage age on production to help producers identify

which trees to eliminate

• Develop minimal effort techniques for elimination of trees

Chemicals Selection

• Benchmark chemical options for cashew treatment

• Identify most cost effective chemical options for the national program

R&D

Assessment Metric

Benefits Metric:

Impact: Very High

Benefit Realization: 5+ Years



• Processors (Secondary)

Effort Metric:

Level of Effort: Low

Mobilization Horizon: 0-1 years


Criticality: High

Technoserve | 41Notes: Interventions designed in agreement with industry and Technoserve stakeholders

Source: The Noun Project (graphics).





R&D

IMPACTBENEFITSCase Studies*

In Tanzania, sulfur dust is used

to control powdery mildew in

cashew trees.

The government commissioned

a detailed program to develop

best practices (time, quantity,

levels) and educate producers

to avoid unwanted effects of

chemical treatment and

maximize the yield improvement

through effective treatment**.

• Local resilient varieties

• Risk diversification on seedlings

• High yield new acreage

• Reduction in powdery mildew disease

• Renewed acreage

• Better chemical treatment

• # of local varieties studied

• # of region specific nurseries

• # chemicals evaluated

• # of old trees eliminated

• # studies in seedling & chemical R&D

commissioned and published

R&D InvestmentEffort, Benefits & Impact

Technoserve | 42

CURRENT BARRIERS

• Low visibility on

productivity of govt.

seedlings

• No measured impact of

chemical treatment

• High instance of diseases

• Land stress in few

provinces (ex: Nampula)

• Lack of options for

chemical selection

EFFORT REQD.

Local seedlings

• Identify high yield local varieties

• Establish regional nurseries

Chemical selection

• Benchmark other chemical

alternatives

• Calculate price premium for organic

• Establish link between chemical

treatment & productivity

Elimination of trees

• Identify old diseased trees

• Establish practices for elimination

POSSIBLE APPROACH

• Study through IIAM

• Establish nurseries via

producer groups

• Commission study to

benchmark chemical treatment

in other cashew producing

countries (especially Tanzania)

• Develop practices manual for

identification & elimination of

old diseased trees

STAKEHOLDER

• Incaju

• IIAM

• Producer groups

• Dept. of Agriculture

• Incaju

• Dept. of Agriculture

• Incaju


Source: * LINK, The Noun Project (graphics)

http://www.plantwise.org/KnowledgeBank/FactsheetForFarmers.aspx?pan=20147801013

Training AssistanceTargets, Description & Assessment

Technoserve | 43

Target Objective

Improve cashew production techniques through sustained commitment to cross-training within communities

Target Issue

Significant gaps in agricultural best practices, and inability to cope with old & diseased acreage

Despite cashew’s long history in Mozambique, producers today are grappling with

an old & diseased acreage. Yields are at an all-time low. Cashew, as a marginal

land crop, is often ignored and producers are unaware of best practices.

Training extension is critical to educate producers on agronomic practices and

new planting and incorporate the culture of efficient chemical treatment.

At a national level, a well trained extension force needs to be assembled that can

be leveraged by Incaju and various other implementation partners to provide

extension and consistent trainings.

Standardization of training material and archiving research is equally important. All

implementation partners can then focus on extension and not replicate efforts for

creating training material.

Description

Agronomic Practices

• Detailed and centralized catalogue on cleaning, pruning and soil management

• Identifying early indicators for flowering, harvesting, disease outbreak

• Selection and application of chemical treatment

Planting Seedlings

• Training and education on developing micro-nurseries

• Best practices for planting and nurturing new trees

Training

Assessment Metric

Benefits Metric:

Impact: High




• Incaju (Secondary)

Effort Metric:

Level of Effort: Moderate

Mobilization Horizon: 0-1 year

Responsibility: Incaju, Implementation

partners

Criticality: High

Business Knowledge

• Training on basic commercialization

• Training on business dynamics, benefits of aggregation, and producer rights







Technoserve | 44

IMPACTBENEFITSCase Study*

MozaCaju has been

instrumental in providing training

extension in the northern

provinces of Cabo Delgado,

Nampula and Zambezia.

Detailed trainings through a wide

network of trainers covering all

critical aspects- cleaning,

pruning & chemical treatment.

• Consistency in extension

• Improved extension coverage

• Effort reduction in training of

trainers

• No duplication of efforts by

implementation partners

• Better training material

• Areas covered by extension

• Reduction on time spent to

identify, train, and re-train

extension agents

• Increase in training attendance

• # of extension reports

• # of updates made on extension

literature and material

Training AssistanceEffort, Benefits & Impact

Training

CURRENT BARRIERS

• Few quality extension

agents

• No standard literature for

extension

• Low attendance in

trainings

• Lack of business sense

• Sporadic training coverage

• Low consistency in

trainings

EFFORT REQD.

• Develop a sizeable national trainers

workforce

• Standardize extension material and

literature

• Incorporate communication pre-

requisite for hosting trainings

• Incorporate modules on basic

commercialization and business

• Identify and set zones for training

• Mandatory reporting on training

extension

POSSIBLE APPROACH

• Document all extension agents

trained by all implementation

partners

• Mandatory material compliance

& reporting with Incaju

• Develop business modules for

training of trainers

• Implementation partners to be

assigned specific regions for

extension to avoid overlaps

STAKEHOLDERS

Incaju

Implementation

partners



http://www.mozacaju.com/about/

Public Information System (PIS)Targets, Description & Assessment

Technoserve | 45

Target Objective

Improve communication, channeling feedback to government and price/care information to producers

Target Issue

Significant information and knowledge gaps at the producer level (pricing, govt. programs/policies, training schedules etc.)

The Public Information System (PIS) will be a national communication tool

targeted towards eliminating information gaps at the producers’ level. The PIS will

enable producers to make more informed decisions and help in developing a

connection between the producers and government authorities.

Based on a central annual schedule of government programs (trainings, chemical

and seedlings), crop seasons, procurement seasons- producers will receive

information relevant to their area. The information will be relayed in region specific

languages primarily through radio and reinforced through mobile based SMS and

training programs.

Description

RCN Price Reference

• Long Term: 3- year forward looking reference prices

• Short Term: Real time price alerts during the buying season

Program Knowledge

• Information broadcasts on government schemes, rights and practices

• Introduction of new schemes such as vouchers

Grievance Redressal

• Area specific alerts on Incaju and sprayer contacts

• Complaint helplines for reporting illegal sales, hoarding etc.

PIS

Assessment Metric

Benefits Metric:

Impact: High




• Processors (Secondary)

Effort Metric:

Level of Effort: Moderate



Criticality: Moderate

Timelines

• Relay schedule for Incaju or Implementation partner training extension programs

• Relay timelines for spraying, harvesting and trading seasons







Technoserve | 46

PIS

IMPACTBENEFITSCase Studies*

Past efforts in PIS include**:

• SIMA, Mozambique: Agricultural

Information Market System alerts

producers on prices via simple

SMS short codes

• TEXTS, Malawi: Govt. of Malawi is

using Esoko, a technical provider,

to train producers on best practices

via customized SMS services

• SMS Extension, Kenya: Sugar

producers receive direct extension

via SMS services

• Eliminate/reduce price speculation

• Increase adoption of government

programs

• Increase extension outreach

• Business awareness among producers

• Facilitate adoption of new government

schemes such as voucher based

subsidies

• # helpline calls/grievances received

• Increase in training attendance

• # vouchers honored

• Farm-gate / RCN prices reported

• # messages broadcasted

Public Information System (PIS)Effort, Benefits & Impact

CURRENT BARRIERS

• Limited communication

capabilities

• No standard language of

communication

• No centralized schedule

for annual extension

• Limited technical

capabilities (pricing,

database mgmt.)

EFFORT REQD.

Communication

• Establish effective communication

channels

Scheduling

• Region-based time plans for

extension and subsidy distribution

Technical

• Create dedicated teams for pricing,

communications and database

management

POSSIBLE APPROACH

• Build relationships with radio

channels, mobile networks,

and SIMA*

• In-house annual scheduling of

activities

• Leverage Dept. of Agriculture

capabilities for pricing and

database mgmt.

• Develop multi-lingual

broadcasts

STAKEHOLDERS

• Incaju

• Communication

partners

• Incaju

• Dept. of

Agriculture

• Incaju


Source: *- SMIA: Agricultural Market Information System (SIMA) *- LINK 1, LINK 2, LINK 3, The Noun Project (graphics)

https://esoko.com/our-clients/clients-governments/

https://esoko.com/our-clients/clients-governments/

https://www.usaid.gov/div/portfolio/text-tips-increasing

Processor InitiativesTargets, Description & Assessment

Technoserve | 47

Target Objective

Increase volume of RCN processed in Mozambique to create more jobs and capture more value in-country

Target Issue

Instability of RCN supply, labor availability, and currency exchange rate reduce processors’ willingness to expand capacity

Volatile procurement, technological barriers, low worker turnouts and lack of

global markets context are key issues faced my major processors.

AiCaju (Processors Association) needs to step in and develop a more

comprehensive scope to assist processing. Processors need to equip themselves

to respond to critical needs from western markets- food safety, traceability and

stable long term contracts. By collecting the global publications on industry trends,

domestic processors can better align to compete against foreign processors.

Secondary processing can succeed in niche markets. Story based marketing and

increased traceability will provide opportunities with western markets to capture

more value in country with cashews produced and packaged in Mozambique

Description

Primary Processing

• Comply with certifications: HACCP (Food handling), BRS (Food safety) and others

• Assess technological upgrades, especially in mechanization of de-shelling

• Develop AiCaju capabilities: technical assessment, markets overview etc.

• Provide a monthly update on global market dynamics

• Increase CNSL (by-product) processing (Significant bottom line impact ~9% profits)

• Invest in national level brand consistent across domestic processors


• Develop a consistent niche market with fair trade/organic/traceable product lines

• Establish forum for exchange of ideas and capacity building

• Assistance in connecting with retailers and branding

• Institutionalize kernel procurement from primary processors

Processors

Assessment Metric

Benefits Metric:

Impact: Moderate



• Processors (Primary)

Effort Metric:











Technoserve | 48

IMPACTBENEFITS Case Study*

The Cashew Export Promotion

Council of India(CEPCI)

• Established by the Government of

India in 1955, with active

cooperation of the cashew industry

to promote exports of cashew

kernels

• Semi-autonomous association of all

major cashew processors in India

• The CEPCI acts as lobbying front for

processors, national information

hub, accreditation & certifications

and export assistance hub

• Improved understanding global

context and alignment among

domestic processors

• Up-to-date on kernel pricing

• Better visibility into

certifications

• Increased willingness to

upgrade equipment

• Improved RCN procurement

• Increase in average kernel prices

• # processing units certified on

HACCP, BRS etc.

• Investment made in technological

upgrades

• Volume of CNSL exported

• Increase in processing efficiency

• Volume of packaged fully

processed cashew

Processor InitiativesEffort, Benefits & Impact

Processors

CURRENT BARRIERS

• Low coordination among

processors

• Limited AiCaju capabilities

• Lack of global context

• Technological

obsolescence

• Poor market linkages

• Infrastructure

inconsistencies

EFFORT REQD.

Primary Processing

• Develop periodic newsletters for

industry

• Assess technological upgrades

• Increase CNSL processing

• Lobby for labor law reforms

• Acquire int’l certifications


• Develop a forum for information

exchange

• Develop backward linkages

• Identify and engage key retailers

POSSIBLE APPROACH

• Summarize global publications

(Cashew Info, Cashew Club,

Int. Nut Council)

• Study CNSL processing &

technological upgrades

• Develop roadmap for

certifications

• Host sessions by successful

secondary processors

• Develop retailer linkages

• Establish kernel procurement

STAKEHOLDERS

• AiCaju

• AiCaju

• Incaju

• Third party

stakeholders



http://www.cashewindia.org/

Business Solutions to Poverty

Lobby EffortsTargets, Description & Assessment

Technoserve | 49

Target Objective

Better position Mozambican cashew in global market while improving business conditions for processors and producers

Target Issue

Labor laws have not adapted to accommodate the developing agriculture and processing industries

Description

AiCaju

• In addition to working together to stay current and competitive in global market, AiCaju

should focus on three areas to improve policy: separate agriculture labor laws to enable

shorter shifts & improved productivity, ability to export RCN & kernel, increased trader &

export oversight

Incaju

• Use oversight capabilities to boost domestic efforts against foreign competition

• Partner with Indian government to better monitor illegal exports

Lobby

Assessment Metric

Benefits Metric:

Impact: Moderate



• Processors (Primary)

• All domestic stakeholders (Secondary)

Effort Metric:


Mobilization Horizon: Unknown

Responsibility: AiCaju, Incaju, Cashew

Committee


Cashew Committee

• Work together to address policy concerns of all parties, lobby government jointly

• Map the flow of commercialization together to see where foreign parties are extracting

value from Mozambique, plan together accordingly

Large volume of intermediaries are creating inefficiencies. Buyers are sitting on

RCN supply to increase their margins, reducing available RCN for processors.

Workers in processing have own sustenance farming that make it difficult to work

10 hour shifts consistently. Flexible shifts would allow producers to take care of

additional responsibilities and provide processors with necessary labor.

Currency requirements around foreign sales and dollar conversion to meticais

squeezes processors during periods of high exchange rate volatility. Lack of

available lending restricts ability to expand capacity.

There is significant resistance against changing RCN export taxes. Incaju

increasingly reliant on tax to operate.







Incaju is a critical player to ensuring Mozambique cashew production

increases in the next ten years…


• Phase out subsidies on seedlings and chemicals

• Increase oversight and monitoring capabilities

• Provide global strategy guidance for

Mozambican stakeholders

EFFORT & ACTIONS REQUIRED

• Introduce private market for chemicals

• Obtain and update information for all cashew

producers in central database

• Transition away from seedling subsidies towards

private market

• Increased efficiency in programs

• Improved performance of sector

IMPACT

Short term

(1-2 years)

Medium term

(3-5 years)

Long term

(5-10 years)

TIME PERIOD

• Establish local nurseries for seedling production

• Producer groups gathered

• Voucher pilot executed

• Central database established to collect producer

information in pilot areas (with CommCare)

• Selection of micro-entrepreneurs

• Business skills added to training program

• Network built with local radio stations for

information broadcasts

• More availability of chemicals

at lower price to producers

• Better monitoring and controls

for cashew production, export,

processing and sales

• Improved seedling distribution &

better quality varieties

• Inputs more reliably reach targets

• Procurement process improved for

all stakeholders

• Cultivation techniques improve

cashew nut quality

• Old cashew trees eliminated

• Decrease in diseased trees

…but all proposed interventions will require effort from additional

stakeholders to fill critical gaps across the cashew value chain


Stakeholder As-Is State Gaps To-Be State

Producers

Traders

• Majority smallholder producers

• Low willingness to invest

• Lack of information

• Dependent on govt. subsidies

• Lack of agronomic practices

• Old acreage

• No aggregation

• No price information

• No access to inputs

• Low agronomic extension

• Lack of business

knowledge

• Organize producer groups

• Establish information flow

• Greater willingness to buy inputs

(vouchers)

• Set up stage for private inputs market

• Partial renewal of acreage

• 300-500 traders

• High levels of intra-trading

• Regional monopolies

• Higher than average margins

• Low monitoring effects

• Bad road networks

• Poor warehousing

• Price speculation

• Stricter licensing for RCN trading

• Greater monitoring

• Align with government reference price

Primary

Processors

• Dominated by 4 big players

• Process ~40% domestic RCN

• High cost of financing

• Low labor productivity

• Uncertain RCN procurement

• Quality concerns

• Uncertain procurement

• Lack of strong brand

• No long term contracts

• Lack global certifications

• Lack of global context

• High barriers for entry

• Direct procurement linkages

• Quality segregation at source

• Accredited with all required food safety

and handling certifications

• Periodic update on global context

• National level branding

• Financial support for new entrants

Secondary

Processors

• Low scale

• Very few players

• Long lead times for clearances

• Significant financial requirements

• No prior experience

• Kernel procurement issues

• Lack of technical knowledge

• No relationships with

retailers

• No consistent branding

• Lack of experience on

demand markets’ choices

• Forum to support new secondary

processors

• Faster clearances and financial

guarantees

• Dedicated efforts to establish

relationships with US & EU retailers

Input

Providers• No private market

• National govt. subsidies

• Low willingness to pay

• High infrastructure costs

• Lack of strong business

case

• Develop delivery models

• Increase willingness to pay

• Reduce subsidy support

• Provide strong business case for

private market

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