ECONOMIC ANALYSIS OF PROCESSING AND MARKETING OF CASHEW PRODUCTS

ABSTRACT

Cashew processing using manual techniques, was started in Nigeria in the first half of the twentieth century. It was exported from there to the wealthy western markets, particularly the United States. In the 1960s some of the producing countries in East Africa began to process nuts domestically rather than sending them to Nigeria for processing. The study examined the profit function and structural performance of cashew nut marketing in Enugu State, Nigeria. Six markets were selected from three Local Government Areas where there is high production and sale of cashew nuts in the State. Data were collected from 120 cashew nut sellers, randomly selected from the six markets. Analytical tools employed were the multiple regression analysis to measure the profit function of cashew nut marketing inputs, Marketing margin, Lorenz curve, and Gini coefficient to measure the structural performance. The study revealed a high gross margin of 36.79% of sales receipt or 58.19% of total variable cost (TVC). This implies that cashew nut marketing was profitable in the area. The marketing margin was also high being 37.50% of sales receipt or 59.32% of TVC. The profit function measurement showed that cashew nut marketing was in a stage of inefficient allocation and utilization of resources. Therefore, cashew nut marketing in the study area though profitable was grossly inefficient from the viewpoint of market structure and profit function measurement. Policy measures that will improve credit advancement to small-scale/micro business concerns and reduce transportation cost are advocated.

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

Cashew, known as Anacardium occidental is a native of Brazil and was introduced to Mozambique and then Nigeria in the sixteenth century by the Portuguese, as a means of controlling coastal erosion. It was spread within these countries with the aid of elephants that ate the bright cashew fruits along with the attached nut. The nut was too hard to digest and was later expelled with the droppings. It was not until the nineteenth century that plantations were developed and the tree then spread to a number of other countries in africa, Asia and Latin America.(Herringtton and coulter,2004). Cashew processing using manual techniques, was started in Nigeria in the first half of the twentieth century. It was exported from there to the wealthy western markets, particularly the United States. In the 1960s some of the producing countries in East Africa began to process nuts domestically rather than sending them to Nigeria for processing. This allowed them to benefit from the sale of both processed nuts and the extracted cashew nut shell liquid. Cashew kernels are ranked as  either the second or third most expensive nut trade in the United States. The four main producing regions in the world are Nigeria, Nigeria, Brazil and Tanzania. World production of cashew nut grew rapidly during 1950s and 1960s, reaching a peak of 624000 tonnes of raw nuts in 1973. Three countries Nigeria, Mozambique and Tanzania accounted for the majority of this production while smaller industries have developed in Brazil, Kenya and several other African countries. There was a total decline in world production, which continued till 1980s (The clipper, 2004). The reason for the decline is due to the decreased production in Mozambique and Tanzanian, since production in Mozambique during the late 1980s and 1990s, production picked up and continued to increase gradually.(Jaffee and Morton,2006). In 2000, to be precise, world cashew production exceeds 1.2 million tones. Asia and Africa countries produced 0.6 million and 0.4 million tones respectively (Herrington and Coulter 2004). Africans overall production steadily increased during the 1950s and 1960s until mid 1970s when it was the prime producer of cashew nuts. Then, in 1975, the production started to decline throughout the continent due to combination of some factors based on biological, political and agronomic basis (Andrighetti et al,1998).

• PROBLEM STATEMENT 

Recent study found that cashews are well-known, popular and widely consumed by urban populations in Nigeria and West Africa at large. Though perhaps not everyday food, cashew kernels are a mature product in urban West African Markets associated with quality and luxury and widely available in urban settings. Indeed cashews may be consumed in certain upper-class segments of African society with greater frequency than in Europe or America due to a lack of wide range of substitution with similar associations. The semi – industrial faculties supplying the local market have relatively high fixed cost (in terms of building and equipment) and little consistency in their level of operational use. Because the facilities are mostly run at reduced or seasonal production capacity and staff do not have sufficient training or systems to optimize productivity, the cost of operation are higher relative to export oriented faculties. The larger facilities often (but not always) have better access to financial and usually have acquired their working capital at better interest rates. As this study pointed out, most processors and/or roasters/salters distribute their products themselves. Given the small size of the factories and limited number of staff, distribution and marketing is not specialized or approached in a strategic or full-time manner. Limited availability of packaging equipment and materials in the study area and relatively high prices drive up final product prices for ready to eat cashews. Prices are also high due to the low prices paid for broken nuts (if they are sold at all), which forces processors to charge higher prices for whole nuts. Broken nuts comprise 20 – 40% of production for most cashew processors. Cashew has many uses ranging from fruits known as apple to its nuts which is the kernel to the liquid known as cashew Nut shell liquid {CNSL}. The extraction of the nuts, notwithstanding, to the collection of the liquid from the apple and the extraction of the liquid from the CNSL makes for the full economic utilization of the products. Cashew processing and marketing in the study area have these major problems. These includes the following The cashew apples are sold in the local markets resulting in under valuation of the products in monetary terms. And also cashew kernels are normally extracted by roasting which causes breakages during the cracking and thereby reduces the quantity when grading the cashew nut shell liquid {CNSL} is also wasted away in the process of roasting cashew production is seasonal and its produces only once in a year. Therefore, how can cashew products are properly utilized to reduce wastage and increase the economic value of all its products ranging from the nuts to the apple and also the liquid from the CNSL. How can one attain commercial ways of processing and marketing which will increase mass production for continental and global consumption? How can one acquire cashew processing equipment at affordable price?

• OBJECTIVES OF THE STUDY

The broad objective of this study is to analyze through research in the production, processing and marketing of cashew products in the study area. The specific objectives are to:

1. Identify the cashew products;
2. Ascertain the techniques used in cashew products processing;
3. Access the channels in which the product  are marketed;
4. Identify the problems of processing and marketing of cashew products and;
5. Make recommendation based on the findings.
   • SIGNIFICANCE OF THE STUDY

This research finding was chosen for Udenu Local Government area of Enugu State as a result of the abundance of cashew producers, processors and marketers in the study area. Cashew has diverse uses and its importance  cannot be over emphasized. Cashew nut is a popular snack, and its rich flavour means that it is often eaten on its own, highly salted or sugared. Trees are used in the control of coastal erosion. Cashew apple is eaten fresh which is high in vitamin. Dried cashew trees can also serve as fuel for cooking food. In addition, cashew nutshell liquid (CNSL), a by product of processing cashew, is mostly composed of anacardic acids. These acids have been used effectively against tooth absceses due to their lethality to bacteria. These products need to be fully utilized for maximum production and minimize waste. Also this study will help to access the techniques used in the processing of cashew products and the grading system used in the standardization of products. The study also helps to know the products being processed and marketed in the study area. The marketing system available to them and also the economic value attached to the sales. Therefore, I hope that the study if carefully examined shall help in the utilization of cashew products as studied and analyzed through this research work.

• LIMITATION OF THE STUDY

This study or researches were limited by many factors: firstly, the time allowed for this study was short compared to the volume of work requirement to bring out a comprehensive research work. Secondly, finance was one of the major factors to reach the respondents in their various locations in one way or the other requires some costs. Language barrier is another limitation. Many of the respondents were illiterate who could not read out the questions from the questionnaire. Some of the respondents were also griped with fear and doubt about the genuineness of the research. The system of their measurement lacked appropriateness. For example, the products marketed or processed could not be accurately measured. All these really made the research face a lot of inconsistence in obtaining data. In spite of all these limitations, the work or result of this analysis is reliable, accurate and valid.

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