By Unekwuojo Augustine Edime  

Nigeria is currently revisiting the possibility of restricting or banning the export of raw cashew nuts to accelerate domestic processing. While the goal of industrialization is legitimate, policy must be grounded in economic reality rather than aspiration alone. Industrialization cannot succeed if trade is restricted before domestic processing capacity is ready to absorb national production.

The Smallholder Reality

Cashew farming in Nigeria is overwhelmingly driven by smallholders, with over 90% of farmers cultivating less than one hectare. For these households, cashew is a “survival economy” that supports education, healthcare, and rural livelihoods.

Under current market conditions, the costs associated with producing and delivering one metric ton of raw cashew nuts are significant:

• Production and Farm Maintenance: ₦325,000 – ₦390,000 

• Post-Harvest Handling: ₦195,000 – ₦260,000 

• Farm Evacuation (Remote Areas): ₦325,000 – ₦390,000 

• Transport and Aggregation: ₦130,000 – ₦195,000 

• Financing Costs (High Interest): ₦325,000 – ₦390,000 

• Total Estimated Cost per Ton: ₦1,300,000 – ₦1,625,000 

Any policy shock that reduces demand below sustainable levels will immediately push farmgate prices toward or below these production costs, directly threatening rural income stability.

The Processing Gap

Nigeria produces approximately 400,000 to 450,000 metric tons (MT) of raw cashew annually. However, the domestic processing landscape reveals a stark utilization gap:

• Installed Processing Capacity: 120,000 – 150,000 MT 

• Active Processing Capacity: 30,000 – 60,000 MT 

• Effective Utilization Rate: 7% – 15% 

This indicates that 85% to 93% of Nigeria’s cashew output currently depends on export markets for absorption. If export channels are suddenly restricted, the domestic market cannot absorb this surplus, leading to oversupply, a sharp decline in farmgate prices, and reduced incentives for production.

Structural Constraints and Lessons from Global Leaders

Leading cashew processing economies, such as Vietnam and India, did not build their dominance through export bans. Instead, they invested in stable electricity, affordable financing, industrial clusters, and mechanized production.

In contrast, Nigerian processors still face severe structural constraints, including high energy costs and expensive credit (often 25%–35%). Historically, policy instability has proven costly; in 2017, cashew prices collapsed to roughly ₦130,000 per ton, forcing many farmers to reconsider cultivation entirely—a setback that takes years to recover from.

A Sustainable Path Forward

Nigeria must avoid a situation where policies intended to promote industrialization end up undermining the farmers who sustain the industry. A balanced approach should maintain open export markets while aggressively building domestic capacity.

A sustainable strategy must focus on:

• Expanding production and improving yields.

• Developing rural infrastructure and evacuation networks.

• Providing access to low-cost financing and reliable energy for industrial clusters.

• Gradually scaling domestic processing capacity in parallel with production.

By focusing on these structural foundations, Nigeria can build a strong cashew sector that benefits both the national economy and the rural smallholder.

Unekwuojo Augustine Edime is a Cashew Master Trainer (MTP) and Agro-Industrial Strategist wrote in from Abuja.