Tanzania's Director of Cereals and Produce Board, Dr Hussein Mansoor
(left) and Kenya's Indopower Solutions CEO Mr Brian Mutembei sign the
100,000 tonnes of cashewnuts sale deal at the EAC in Arusha on January
30, 2019. Looking on are (from left) Minister for Industries and Trade,
Joseph Kakunda; Minister for Constitutional and Legal Affairs, Prof
Palamagamba Kabudi; deputy Minister for Agriculture, Dr Innocent
Bashungwa; and Kenya's ambassador o Tanzania Mr Dan Kazungu. PHOTO |
TANZANIA FOREIGN MINISTRY
Tanzania will earn $180.2 million from its stock of cashewnuts
after it entered into an agreement with a little known Kenyan-registered
firm, Indo Power Solutions Ltd, for the purchase of 100,000 tonnes of
the product last week.
The deal was signed on January 30 between the Cereals and Other Produce Board director Hussein Mansour and Indo Power’s chief executive Brian Mutembei.
Also
at the signing, at the East African Community headquarters in Arusha,
were Minister for Justice and Constitutional Affairs Palamagamba Kabudi,
Industry and Trade Minister Joseph Kakunda and Bank of Tanzania
Governor Florens Luoga. It was not clear why the deal was being signed
there.
The Kenyan company was among nine private buyers
that bid to buy the crop from farmers last year. This was before
President John Magufuli ordered the Agricultural Development Bank to buy
the country’s entire output and sent the army to truck it into depots.
Indo
Power is not known to trade in or process cashewnuts. There is
currently no company in the region with the capacity to process 100,000
tonnes. The capacity of Tanzania’s factories to process cashews stands
at around 50,000 tonnes a year.
Indo Power will
directly pay the central bank for the raw cashewnuts and shipment of the
cargo to Kenya will begin this week, after the payments are made.
Mr Kakunda said there was another 113,000 tonnes of cashewnuts
in warehouses and the government was negotiating with 18 potential
buyers.
Tanzania produced about 240,000 tonnes of
cashewnuts during the 2017/2018 season, of which the government bought
213,000 tonnes for which it paid farmers Tsh416.4 billion ($180.2
million). Indo Power has offered Tsh418 billion ($180.89 million).
Cashew prices
Last
week’s deal came a day after the matter came up in parliament on
January 29, where Deputy Minister for Agriculture Innocent Bashungwa
told MPs that the government was planning to sell 200,000 tonnes of
cashewnuts as it looks for international markets.
He
was responding to a question by Mtwara Urban MP Maftaha Nachuma
(opposition CUF) who sought to know why the government’s pace of buying
cashewnuts from farmers had slackened.
Before President
Magufuli ordered the collection of the crop, cashewnut farmers —
growing the most valuable export crop for the country — had been holding
back from selling after prices fell below production costs.
President
Magufuli then ordered a 94 percent increase in the local price and told
government officials to buy the crop after private buyers baulked at
the higher price.
Military personnel ferried truckloads
of the crop to selected storage areas. The price of the commodity then
rose to $1.80 a kilogramme from $1.15 in less than 10 days. Global
kernel prices hit a high of $2.40 per kilogramme at the beginning of
2018, but as demand from the United States and Europe fell, they
declined to $1.60 in October.
Traders said they were
waiting to see how Tanzania, a top 10 global producer, would get its
cashews to the main buyers in India and Vietnam before the end of the
year, after which harvests from other producers in South Africa and West
Africa would start entering the market.
The bulk of
the raw cashewnuts, which are yet to be shelled, are shipped from
Tanzania and other African countries to be processed, mainly in Vietnam
and India.
According to Bank of Tanzania, the
subsector brought in $340.9 million in foreign exchange in 2017 —
superseding earnings from coffee, cotton, tea, cloves and sisal combined
at $270 million.
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