Analysis of the Cashew Value Chain in MozambiqueAfrican Cashew initiative

Published by:Deutsche Gesellschaft fürInternationale Zusammenarbeit (GIZ) GmbHFondations internationalesPostfach 5180, 65726 Eschborn, GermanyT +49 61 96 79-1438F +49 61 96 79-80 1438E Ulrich.Sabel-Koschella@giz.deI www.giz.de

Place and date of publication:Mozambique, February 2010

Authors:Dr. Alois Große-Rüschkamp;Kathrin Seelige

Responsible editor:Peter Keller (Director African Cashew initiative)African Cashew initiative (ACi)32, Nortei Ababio Street Airport Residential AreaAccra, GHANAT + 233 302 77-41 62 F + 233 302 77-13 63

Contact: cashew@giz.de

Acknowledgement:This study has been implemented as part of the African Cashew initia-tive (ACi), a project jointly financed by various private companies, the Federal German Ministry for Economic Cooperation and Developmentand the Bill & Melinda Gates Foundation. ACi is implemented by the African Cashew Alliance (ACA), the German Development Cooperation GIZ, as a lead agency as well as FairMatch-Support and Technoserve.

This report is based on research funded by the Bill & Melinda Gates Foundation. The findings and conclusions contained within are those of the authors and do not necessarily reflect positions or policies of the Bill & Melinda Gates Foundation.

Design:creative republic // Thomas Maxeiner Visual Communikations, Frankfurt am Main/GermanyT +49 69-915085-60 I www.creativerepublic.net

Photos:© GIZ/ Rüdiger Behrens, Thorben Kruse, Claudia Schülein

& iStock, Shutterstock, creative republic

African Cashew Initiative is funded by:

and private partners

In cooperation with:Implemented by:

COOPERATIONMOZAMBIQUE

FEDERAL REPUBLIC OF GERMANY

Analysis of the Cashew Value Chain in MozambiqueFebruary 2010

4 Table of Contents

Executive Summary ...........................................................................................8

1.0 Introduction .................................................................................................14

1.1 Backgroundinformationontheproject..............141.2 Objectiveandfocusofthestudy.........................14

2.0 Analysis of the Mozambican Cashew Sector with a Focus on Nampula Province .............................................15

2.1 General Aspects of the Cashew Sector .....................................15 2.1.1 Globalaspects......................................................15 2.1.2 Developmentofcashewproduction

inMozambique...................................................15 2.1.3 Regionaldistributionofproductionandsales.....16 2.1.4 Selectionofaprovinceforthestudy...................17

2.2 Analysis of Cashew Production in Nampula Province ..............................................................................18

2.2.1 CashewproductioninNampulaprovince(statisticaldata)...................................................18

2.2.2 Generalaspectsofcashewproductionandmarketing.....................................................18

2.2.2.1 Farmingsystemsincludingcashew..............18 2.2.2.2 Environmentalaspects

ofcashewproduction...................................19 2.2.3 Thecashewvaluechain.......................................19 2.2.4 SWOTanalysisofthecashewsector.................. 22 2.2.4.1 Resultsoftheanalysis................................. 23 2.2.4.2 Opportunities............................................. 27 2.2.4.3 Threats........................................................ 28

3.0 Proposed Project Approach and Intervention Strategy ....................................................................32

3.1 Proposed Areas of Intervention and Fields of Activities...................................................................................32

3.1.1 OtherprojectsinthecashewsectorinMozambique....................................................32

3.1.2 Production-relatedaspects...................................32 3.1.2.1 Rejuvenationofthetreepopulation...............32 3.1.2.2 Improvedcropandpestmanagement............33 3.1.2.3 Improvementsinmarketing......................... 34

3.1.3 Economicaspectsandexpectedimpactsoftheproject........................................................35

3.1.3.1 Impactatthefarmlevel.................................35 3.1.3.2 Expectedimpactonpovertyreduction......... 36 3.1.3.3 Impactonthevolumeofproduction............. 38 3.1.3.4 Impactonthequalityofproduction............. 38

3.2 Implementation Strategy .....................................................................39

3.2.1 Methodologicalapproach.....................................39 3.2.2 Areaandorganisationalstructure

ofimplementation............................................... 40 3.2.2.1 Districtsproposedforimplementation......... 40 3.2.2.2 Organisationalstructure.............................. 40 3.2.2.3 Projectpersonnel..........................................41

3.3 Training Activities ....................................................................................42

3.3.1 Trainingoffacilitators......................................... 42 3.3.2 Trainingofextensionists..................................... 42 3.3.3 Trainingcontents................................................ 42

5

3.4 Estimated Costs of the Project ........................................................ 44

3.4.1 Costsofexperts................................................... 44 3.4.2 Investmentcosts.................................................. 44 3.4.3 Costsoftechnicalstaffattheprojectoffice

inNampulaandofficerunningcosts................... 44 3.4.4 Costsoftheextensiontechnicians........................45 3.4.5 CostsoftheFFSfacilitators..................................45 3.4.6 Traininginstitution.............................................45 3.4.7 Contingencies......................................................45

3.5 Next Steps ................................................................................................... 48

List of Acronyms ............................................................................................... 49

Executive Summary

Focus of the study and approach

ThisstudyisbasedonananalysisofcashewproductioninNampulaprovinceinMozambiqueconductedbytwoexpertsduringNovember/December2009.Thereportcontainstheconclusionsofthestudyandaproposaltoraisetheproductivityofsmallholdercashewproductionthroughasupportingproject,thefirstthreeyearphaseofwhichwillworkwithproducersinfourpilotdistrictsinNampula.

AfterabrieflookatthedevelopmentoftheglobalcashewsectorandMozambique’sroleinit,thecashewvaluechainandcashewproductioninNampulaprovinceareanalysedanddescribed.Thisdescriptionalsocontainstheresultsofthemission’sdatacollectioninthefield,specifyingthecausesoftoday’slowproductivity.

PossibilitiesforimprovingtheproductivityofsmallholdercashewproductionbasedontechnologiesreadilyavailableinMozambiquearethenpresented.Theseimprovementsincludechangesinthetreatmentandcareoftreesandspeeding-uptherenewaloftheoveragetreepopulation.Theeconomicfeasibilityoftheproposedimpro-vementsattheproducers’level(micro-economic feasibility)andtheirimpactontheincomeofsmallholderscom-pletestheanalysis.

Thecurrentcashewsectorpolicyisdiscussedandchangesareproposedtosupporttheproject’seffortstointroduceimprovements.Finally,aproposalfortheproject’sinterventionsisspecifiedandcosted.

The present situation

Sinceitsindependencein1975MozambiquehaslostitsplaceastheleadingexporterofcashewnutstoVietnam,India,agroupofWestAfricannationsandBrazil;countrieswhichhaveexpandedtheirproductioninlinewiththenearexponentialgrowthindemandforcashewnutsintheworldmarket.ItisonlyinthelastdecadethatMozambique’sproductionhasshownsteadygrowthagain-albeitwithstrongfluctuationsfromyeartoyearreflectingtheweatherconditions–accompaniedbyanincreaseofthepercentageofprocessednutsamongthecountry’sexports.Theincreaseofprocessingcapacityraisesthevalueaddedinthecountry.

8

9 An18%taxontheexportof raw cashew nuts (RCN)wasintroducedin2001toprotectthecountry’sgrow-ingprocessingindustry.ThesetaxrevenuesareusedbyINCAJU(National Cashew Institute/Instituto Nacional do Cajú),thestatebodyinchargeofthesector,tofinancemeasuressupportingproducers,andconsistingofex-tensionservices,seedlingproductionanddistributiontofarmersandsubsidisingpesticidesforsmallholders.However,thistaxandabanonexportsduringthefirstmonthsoftheharvesthaveloweredthepriceofRCNforsmallholders.

Becauseofinherentinefficienciesofthesubsidiesanddistortionsinthemarket,unwantedeffectshaveemergedinthedistributionofincomefromthetaxandsubsidies.Theseshouldbereviewedandaninvestmentfriendlyen-vironmentshouldbecreatedtoencouragetheprivatesectortoenterthisfield,forexample,inproducingseedlings.

Secondaryandprimarydatacollectedbytheteamshowsthatabout32milliontreesproduceroughly81,000tonsofRCNannually,resultinginanaverageoflessthan3kgpertree.About4.3milliontreesarebeingsprayedandcanproduceupto10kg/tree.

However,manyofthetreesareoldandneedtobereplaced.ThenumberofseedlingsproducedanddistributedbyINCAJUandsuccessfullyplantedisstillsolowthatnorejuvenationhastakenplaceandtheaverageageofMozambique’streepopulationcontinuestorise.StatisticsgivenbyINCAJUshowthatthegradualimprove-mentsinproductionarealmostexclusivelyduetothediseasecontrolactivitiesthatINCAJUpromotes.

Thecashewmarketingchainislong,involvingseveralactorsthatbuy,tradeandpartlyprocessRCNbe-forethenutsreachtheexporter.Thisisduetoastructureofproductionthatleadstohighmarketingcosts,wheremanyproducersfurnishsmallamountsduringa3-monthperiodinareas,manyofwhichareremoteanddifficulttoreachbytruck.

Althoughin200836%oftheRCNwereprocessedinMozambique,thefinalprocessingandpackagingofthenutkernelsfortheconsumerisalmostexclusivelydoneintheconsumingcountriesinEuropeand/orUSA.Thismeansthatlessthan20%ofthetotalvalueaddedaccruesinsideMozambique,andtheproducershaveashareofonly10%ofwhatthefinalconsumerspay.

Aboutonethird(10million)ofthenation’scashewtreesareinNampulaprovince.Duetothehigherpro-ductivityofthetrees(20%weresprayedin2008versus13%nationwide)halfofalltherecordedsalesofRCNinthecountryareinNampulaprovince,whichhasanevengreatershareintheexportofprocessedcashewnuts.

Economic analysis

Acashflowanalysisfortwotypesofgrowerwasundertaken:(1) assumingalllabourispaid(medium-sizedgrowers,i.e.from100to1,000trees)and(2)assumingalllabourisdonebyfamilyrelations(smallholderswithlessthan100trees;thestatisticalaverageisaround30trees).

Identicalproductionmethodsandyields(10kg/tree)wereassumedforthetwocases.However,thecalcula-tionassumesthatsprayingservicesarenotsubsidisedandamountto2,700MTs/ha(insteadofonly1,400MTs/hacurrently).Thecostofseedlingswasassumedtobe20MTs/treeseedlingwithwagesat50MTs/day.

Underthesecircumstanceslabourprovestobethelargestcostformedium-sizedgrowers,constituting80%oftheinstallationcostsofanewplantation,whichamountsto8,000MTs/haintotal,basedoncurrentprices.Thesecostsarenotaccruedbysmallholders.

Fromyear10to25,inwhichproductionpeaks,thecashflow(annualreceiptsminusannualexpenses)isposi-tiveandamountsto6,000MTs/hainthecaseofthesmallholderand2,850MTs/hawhenlabourmustbepaid.

Basedona25yearperiod,investmentinanewcashewplantationprovesveryprofitableforsmallholders.Theinternal rate of return(IRR) amountsto68%.Forthemedium-sizedgrower,theIRRturnsouttobe12%inthefirstcase.Ifnosubsidiesarepaidthecostofsprayingatreealmostdoublesfrom20toabout40MTs/tree.

Ifanexistingcashewplantationisassumedandsprayingisintroduced,theyieldcanbesafelyassumedtorisefrom3to8kg/tree.Consideringtheincrementalcostsof(subsidised)spraying,theincomeofthesmallholderfromcashewdoublesfromtheequivalentof70US$/ha(i.e.per70trees)to140US$/ha.However,sincetheaver-agesmallholderownsonly20to30trees,thedoublingofhisincomeisjustafractionofthisandthecontribu-tiontopovertyreductionmustbeconsideredminor.

Itshouldalsobenotedthattherearecompetingcrops,suchassesame,thatmaydeliverhigherabsolutenetcashflowsinfavourablecircumstanceswhenthewaterstressisnotexcessive,i.e.whenthecropsreceivesuffi-cientwater.

10 Impact on production

Theproposedprojectisexpectedtoreachabout10%ofthecashewproducersintheprovince,roughly30,000growers,duringitsthreeyearimplementationperiod.

Assuminganincreaseoftheaverageproductivityfromthecurrent3kg/treeto8kg/treewithpropermanagement,theproductionofatypicalgrowerwith30treeswouldincreasebyabout150kgperyear,whichismorethandoublethelevelofcurrentproduction.Ifallgrowersreachedbytheprojectdoubledtheirproduction,provincialproductionwouldincreaseby10%andnationalproductionbyabout5%.

Proposal for project approach

Inordertoreach10%ofthecashewproducersintheprovince,i.e.30,000growers,theprojectshouldbelaunchedinfourdistricts:Angoche,Magovolas,Moma,andMongicual.

ThemodelofFarmers Field Schools (FFS)wouldbeused,inwhichgroupsofabout25farmerscomparetherecommendedtechniqueswithtraditionalproductionmethodsonajointly-workedtrialfieldforoneyear.Thegroupsareledbyfacilitators(groupmemberswithleadershipqualities)whowillbetrainedbytheproject.

TheprojectwillemployaNational Coordinator,whowillworkfromanofficeinNampulaandbesupportedbyaDeputy Coordinator and a Specialist for supporting farmers organisationsandanOffice Manager(administratorwithsecretarialandaccountantduties).Adriverandguardswouldcompletetheteam.

TheNampulaofficewouldworkwith4 District Coordinators,oneineachdistrict,eachofwhichwouldconnecttobetween5and10extensiontechnicians.

Eachoftheextensionists(8inyear1and36eachinyears2and3)wouldinturnaccom-pany5to6facilitators,andeachofthefacilitators(40inyear1and120eachinyears2and3)wouldworkwiththreeFarmer Field Schools.Inthisway120FFScouldbeaccompaniedinyear1and540eachinyears2and3.Thissystemwouldreach3,000cashewproducersinyear1,13,500inyear2and13,500(different)cashewproducersinyear3,i.e.atotalof30,000producersduringtheproposedimplementationperiod.

The Project CoordinatorwouldbesupportedbyaGIZ Coordinator (juniorexpertinahalftimeposition)attachedtotheGIZofficeinMaputo.HewouldsupportandbackstoptheprojectintheadministrationoffinancialmattersandtherealisationoftrainingcoursesandM&E (Monitoring and Evaluation) activities.

OneInternational Short-Term Expertwouldberesponsibleforprovidingtechnicalback-stoppingandadviceoncurriculumdevelopmentand,specifically,oneconomicaspects.HewouldalsoorientthedevelopmentofanM&E (Monitoring and Evaluation)systemtomonitortheperformanceandassesstheproject’simpactatthefarmlevel.Hewouldalsoproposeandlobbyforapolicyenvironmentthatsupportsthedevelopmentofthecashewsector.

National Short-Term Experts,mostlikelymembersofresearchandeducationalorprofes-sionaltraininginstitutions(likeIIAM ),willberesponsibleforcurriculumdevelopmentandfortherealisationoftrainingcoursesforextensionistsandfacilitators,aswellastheimplemen-tationofrequiredfieldcomponentsforthemonitoringsystem.

11 Training aspects

Thetrainingcontentsforthefacilitators,extensionistsandDistrict Coordinatorsaretoalargedegreeidentical,sincetheycoveraspectsrelatedcloselywithcashewproductionandmarketing.

However,thetrainingoftheextensionistsandDistrict Coordinators includesaspecificmoduleontheeconomicsofcashewproduction.Thisissothattraineesunderstandaspectsrelatedtoproductivitynotonlyofcashewproduction,butalsothemethodologyfordetermin-ingthefeasibilityofinvestmentsandalternativecrops,whichwouldbebeyondthepresentcapabilitiesofmostsmallholders.

Theforeseenmodularconstructionofthetrainingcourseswillfacilitatetheeasyadaptationofthecoursecontentstothespecificneedsofthetrainees.

Theproposedtrainingoffacilitatorswillbebasedon4modulesof5dayseach,covering:(1)plantinganddiversification,(2)pruning,weeding,(3)integratedpestmanagement,and(4)harvestandpost-harvestactivitiesandmarketing.

Theextensionistswouldreceivetrainingingroupsof10byinternationalandlocalspecialists,consistingof5modulesof5dayseach,covering:(1)plantinganddiversification,(2)pruning,weeding,(3)integratedpestmanagement,(4)harvestandpost-harvestactivitiesandmarketing,(5)economicsofcashewproductionand(6)farmersassociations.

TheADPPStrainingcentreinIthuculoappearstobesuitablefortheforeseentrainingactivities.

Cost estimation of proposed project approach

Theestimatedprojectcosts(assuminganexchangerateof30MTs/US$)amountto:ÿ 441,660US$forlong-termandshort-termexperts,includingperdiemsÿ 106,500US$fortheacquisitionofvehiclesandofficeequipmentÿ 632,760US$fortechnicalstaffattheprojectofficeinNampulaandofficerunningcostsÿ 219,313US$forextensiontechniciansÿ 355,649US$fortheFFSfacilitatorsÿ Assumingabout10%forcontingencies,thetotalcostisestimatedat1,896,000US$.

Recommended first steps

OncethisprojectproposalhasbeendiscussedwiththeauthoritiesconcernedandaProjectAgreementhasbeensigned,thefollowingstepsshouldbeinitiated:

ÿ EstablishingaSteeringCommitteeanddefiningitstasksÿ Selectingimplementationpartners,defininganimplementationstrategyandproceduresÿ Contractingexpatriateandlocalstaffandestablishingtheofficeinfrastructureÿ Reachingagreementswithorganisationstoprovidetrainersÿ Holdingajointplanningworkshopwithrepresentativesofallstakeholdersandagreeing

ontheplannedactivitiesandestablishingaPlanofOperationsfortheentireimplementationperiodof3yearsandPlanofActivitiesforyear1and:• Trainingthefirstgroupsofextensionistsbyinternationalandnationalspecialists• IdentifyingandformingFarmer Field Schools (FFS(localities, members, facilitators))• Trainingthefacilitators• ActivatingfirstFFSsinthedistricts.

Apartfromthesekeysteps,theprojectneedstodevelopadditionalactivitiesto:ÿ Identify,afterapprovalbyINCAJU,privatesectorpartnersthatareinterestedin

theproductionofseedlingsandadvisethemonthestart-upoftheactivityÿ Supporteffortstoimprovesmallholders’accesstoformalcreditÿ Helpimprovesmallholders’accesstoinputs.

14 1.0 Introduction

1.1 Background information on the project

ThepurposeoftheAfrican Cashew initiative (ACi),whichisfundedbytheBill & Melinda Gates Foundation,istostrengthentheglobalcompetitivenessofcashewproductionandprocessinginfivepilotcountries(Mozambique,Ghana,BurkinaFaso,Coted’IvoireandBenin).

Thesupportactivitieswillassist150,000small-scalecashewproducerstoincreasetheirproductivityandgainanadditionalUS$15millioninincomeperyear.Furthermore,theproject’ssupportactivitieswilldevelop5,500newjobsinlocal,mediumandlarge-scalecashewnutprocessingindustries.

TheAfrican Cashew initiative (ACi)contributestoalleviat-ingruralpovertyandpromotingpro-poorgrowthinthepi-lotcountriesbyincreasingtheincomeofpoorsmall-scalefarmersandcreatingnewemploymentopportunities,espe-ciallyforwomen.Thepromotionoflocalmediumandlarge-scaleagro-processingindustriessupportsthediversificationofthenationaleconomyandincreaseseconomicvalue-addingamongthepilotAfricancountries–thelong-termvisionaimsfor60%oflocalcashewnutproductiontobeproc-essedbythepilotcountries.

Theprojectpursuesfiveobjectivesinordertoachieveitsoverallgoal:

ÿ Increasequalityandquantityofcashewnutproduction,thusensuringthecompetitivenessofAfricancashewproductiononglobalmarkets

ÿ Strengthenlocalmediumandlarge-scalecashewprocessingindustries

ÿ ImprovemarketlinkagesalongthevaluechainandpromoteAfricancashews

ÿ Supportanenablingenvironmentforcashewproductionandprocessing

ÿ Identifyandanalyselearningareasandimplementinnovativeprojectsonapilotbasis.

ThecashewprojectisimplementedbyGIZincooperationwiththreesub-grantees:Technoserve,aUSnon-governmentalorganisation;FairMatchSupport,anot-for-profitfoundationbasedintheNetherlands;andtheAfrican Cashew Alliance (ACA),asupranationalplatformofprivatepublicpartnersinvolvedinthecashewvaluechain.

1.2 Objective and focus of the study

TheobjectiveofthisstudyistoofferacountrystudyoncashewnutproductionandthecashewvaluechaininMozambique.SinceMozambique’sprocessingsectorforcashewnutsisrela-tivelywelldevelopedthankstothesupportithasreceivedformanyyearsfromTechnoserve,thestudywillfocusontheprimaryproductionofcashewnuts,ananalysisofthefarmingsystemofcashewfarmersinMozambique,reviewongoingsupportactivitiesandthusprovideacomprehensiveinsightintothenationalcashewsector.

Thetwomajorpurposesofthecountrystudyareto:ÿ AnalyseMozambique’scashewvaluechain(withamajor

focusontheproductionandprocessingofcashewnuts)ÿ Basedontheresultsofthevaluechainanalysis,review

ongoingsupportactivitiesandproposefurtherstepstobetaken.

ThisstudyconcentratesontheanalysisofcashewproductioninMozambiquewithafocusontheNampulaprovince,whichaccountsforabout40%ofthenationalproductionandalmost50%ofthevolumeofrawcashewnutsales.

BecauseofthistheprovinceisconsideredrepresentativeoftheremainingareasofproductioninMozambiqueandtheresultsoftheanalysisandthestrategyforreinforcingthesectordevel-opedonthisbasisareseenasapplicabletothewholecountry.

Thestrengthsandweaknessesofproductionareidentifiedintheanalysisandthepotentialsfortheenhancementofpro-ductionareexplored.Threatsthatmighthamperorimpedethedevelopmentarediscussed.TogetherthiscoversthefourelementsofaSWOT analysis (see chapter 3).

Inthesecondstep,andbasedontheanalysis,astrategytoimprovethequantityandqualityofproductionofraw cashew nutsisproposedandthestepsnecessaryforitsimplemen-tationaredeveloped.

Thisanalysiswasmadesomewhatdifficultsincenoreliabledataexistsonthecashewsector,andonprimaryproductioninparticular.INCAJU,thepublicentityregulatingandsup-portingthesector,onlycollectsdataatthetradingpoints,andhencedoesnotfurnishproductiondata.Datareferringtotheproducer’slevel(yield,costandrevenuedata)areonlyavailablefromtheTIA (Trabalho do Inquerito Agrícola – the annual agricultural sample survey).

Sold volume EPV (high) EPV (low) Potenziel (Sold volume)

tons

140.000

120.000

100.000

80.000

60.000

40.000

20.000

0

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2001/02

Mozambique West Africa Brazil India Viet Nam Other

tons

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

1972

1977

1982

1987

1992

1997

2002

2007

1965

% of Total 2007 Produktion

Viet Nam = 30%West Africa = 29%India = 19%Brazil = 6%Mozambique = 2%Other = 14%

15 2.0 Analysis of the Mozambican Cashew Sector with a Focus on Nampula Province

2.1 General Aspects of the Cashew Sector

2.1.1 Global aspects

Globalproductionofraw cashew nuts(RCN–whichreferstonutsintheirshell)hasinthepast25yearsexpandedfromaround0.5milliontonsto3.25milliontons(2007).TheshareofMozambique-onceaworldleaderincashewproductionandexportswithsharesofnearly40%and35%-hasrecededduringthistimetoamere2%ofglobalproductionasshownin the figures 2.1.

ReasonsforMozambique’sdecliningshareincludetheinter-nalconflictduringthe1980s,exportpolicychanges,afailedliberalisationattemptintheprocessingsector,thegeneraldif-ficultiesofintensifyingproductionsystemsbasedoncountry-widesmallholderownershipoftreesandthedifficultcontrolofvariouspestsanddiseases,aswellastherapidlyexpandingproductioninanumberofcompetingcountries.Vietnam,theregionofWestAfricaandIndiaproduced30%,29%and19%ofglobalproductionin2007,respectively,accordingtoFAO statistics.AttemptsarenowbeingmadeinMozambiquetorevivethesectorandrecoveralargershareoftheexpandingmarkettobenefitlocalproducers.

2.1.2 Development of cashew production in Mozambique

CashewproductioninMozambiquewasintroducedandmain-tainedbythePortugueseduringcolonialtimesanddeclinedafterindependence.Theagriculturalstatisticsof2005indi-cate32millioncashewtrees.

Figure 2.2 belowshowsthedevelopmentofcashewproductionduringthelastdecade;inadditiontotheregisteredsoldvol-ume(solidbars)thediagramsalsoshowsthetotal estimated production volume (EPV)assuming10%(orange line)and30% (green line)domesticconsumptionandthereforeunreg-isteredproduction.

Astheblack trend lineindicates,thesoldproducehasincreasedfromaround50,000 tonsperyear(2000/01)toabout80,000 to/year,with81,000 to/yearastheaverageduringthelastfourseasons,albeitwithoutmuchconsistencyordyna-mism.Thebigfluctuationinproductionfromyeartoyearhasbeencausedbychangesinweatherconditions.Productionishitespeciallyhardintimesofinsufficientrainfall,becauseallcashewtreesinMozambiquearecultivatedwithoutirrigation.TheslightincreaseinproductionisprobablyaresultofthepromotionofpestcontrolthroughasprayingprogrammesubsidisedbytheNational Cashew Institute,INCAJU,andtheincreasingdemandfromtheexpandingnationalprocess-ingindustrywhichhasoffsetthedecreasingyieldsofoveragetrees.Plantingratesareinsufficienttomaintainthepresentagestructureofthecountry’scashewtrees.Thereasonsforthisincludethelowreturnfromcashewsincomparisontothatofannualcropslikegroundnuts,maizeorcassavawher-everthesecanbegrownsuccessfully.Thuscashewismostlygrownonmarginalland.

Figure 2.1: Global production of raw cashew nuts

Figure 2.2: Sold volume and estimated production volumes (EPV) of cashew over time

Source: Technoserve, based on FAO statistics Source: INCAJU (see Table 1 in Annex 2)

16 2.1.3 Regional distribution of production and sales

Notrulyreliabledataexistsonthevolumeofproductionandtheprocessedand/orexportedvolumesofcashewnutsinMo-zambique.Thisisduetoseveralfactors:

ÿ ThefiguresofmarketedcashewnutsinthedistrictsarecollectedbytheextensionistsofINCAJUwhovisitlocalshopsandtraderstocollectinformationonthequantitiestheysell.However,shopkeepersandtradersmayworrythatthisinformationcouldreachthetaxauthoritywhichmightcausethemtoreportfiguresthatarelowerthanthevolumestheyactuallytraded.Hencethereisatendencytounderestimatethequantity.

ÿ Aportionofthecashewnutsareprocessedandconsumedbythefarmingfamiliesand/oraresoldtothepublicalongroadsides.Thispartofproductiondoesnoteitherappearinanystatisticaldata.Keysourcesestimatethatbetween10%and30%ofproductiongoestotheinformalsector,withdifferencesfromregiontoregionandbetweenfarmsofdifferentsize.

Theambiguityofthesefigureshinderstheexactestimationofyields,asonlymarketedvolumesarerecorded.Theexportedquantitiesalsoseemtobeunderestimated.Sincetaxesarepaidfortheexportofunprocessednuts,itissuspectedthatpartoftheexportsarenotdeclared.Hence,actualproductionmayexceedtheofficialfigures.

42%ofMozambicanfarmersowncashewtrees,albeitinsmallnumbers,withthestatisticalaveragebeingabout20treesperfarmer.Theexactnumberoftrees(estimatedtonumber32millioncountrywide)andthenumberoftreesinproduction(estimatedataround19milliontrees)areunknown.

Assumingabout32milliontreesandaproductionof80,000tonstheaverageyieldpertreeisabout2.5kg.Ifwesaythatproductionisunderestimatedby20%thentheaverageyieldisbetween2and4 kgpertree.Consideringwhathasbeensaid,theaverageyieldisestimatedat3kg/tree.Thisislowcomparedtothepotentialyieldof8to10 kg/treethatcanrealisticallybeachievedinacountrywithpropertree

management–sprayingincluded.Acceptingthefigureofabout19million productive trees,thepresentaverageyieldofthesetreesis4.2 kg/tree,basedonthevolumemarketedthroughthechannelsmonitoredbyINCAJU,and5kg/treewhenincludinghomeconsumption,nutsprocessedon-farmorsoldalongtheroadside.These figures are presented in the following table:

Table 2.1: National cashew average yield estimates, actual and potential yields per tree

Type Unit Value

Average total cashew nut production to/year 80,000

A) Average yield based on total tree population of 32 million

kg/tree 3.0

B) Average yield of ‘productive tree’ population of 19 million

ÿ based on registered marketed volume

ÿ including estimated home con-sumption and unregistered sales

kg/tree 4.2 5.0

C) Potential yield applying available production techniques

kg/tree 8 to 10

INCAJUhasbeenimprovingproduction,mostnotablybytryingtoovercomethelowlevelofreplantingthatpreventstheadequaterejuvenationofthecashewtreepopulation.However,in2005only5%oftreeownersreportedreplantingcashewtreesduringtheprevious12months.Since2004,increasingnumbersofgraftedtreeseedlingshavebeenpro-duced(1.34millionin2008)fordistributionwiththesup-portofdonorsandNGOs.

Additionally,INCAJUissupplying,atnocost,thechemicalsforsprayingtreestoprotectthemagainstpowderymildew.Thismeasurebenefited4.3milliontreesin2008–approxi-mately25%ofproductivetrees.

Nampula 48%

Zambézia 13%

Sofala 6%

Manica 7%

Gaza 7%

Inhambane 10%

Cabo Delgado 9%

Maputo 0%

17 2.1.4 Selection of a province for the study

AccordingtoINCAJU,40%oftheproductionofrawnutsisconcentratedintheNampulaprovince,withInhambane,CaboDelgado,GazaandZambeziaprovincesfollowingwithbetween21%and10%ofthetotalvolume.48%ofthenationalsalesvolumeofcashewnutscomesfromNampulaprovince.Thisshowsthatalargerportionismarketedherethaninoth-erprovinces.ThismightbeduetotheproximitytotheportofNacala,themostimportantpointofexportofRCNandprocessedcashewnuts,whileotherprovincesarefurtherfromconsumermarkets.Inthesouthernprovinces,informalmarketsmayalsoplayasignificantrole.Thefarmersand/orsmalltradersofGazaprovince,forexample,sellasignificantoftheircashewnutsdirectlytoMaputo.

BecauseofitsimportancetocashewproductioninMozam-bique,Nampulaprovincewasselectedasthepilotprovincetoimplementtheproject.Forthisreasonthestudyteamcon-centrateditsinvestigationthere.

Thenationalfiguresonthesaleofcashewnutsreflectthere-gionaldistributionofproductionandtheconcentrationofmarketingchannelsinNampulaprovince,wheremostoftherecentlyrevivednationalprocessingfacilitiesarealsolocated.Figure 2.3 on the rightillustratesthissituation:

Figure 2.3: Sales of raw cashew nuts 2007

Source: INCAJU 2009

Sold volume EPV (high) EPV (low) Potenziel (Sold volume)

tons

100.000

80.000

60.000

40.000

20.000

0

2005/06

2005/06

2006/07

2007/08

2003/04

18 2.2 Analysis of Cashew Production in Nampula Province

2.2.1 Cashew production in Nampula province (statistical data)

NostatisticaldatafortheprovinceofNampulafortheentiredecadecouldbeobtainedduringtheresearchofthestudy.Thevaluesfortheyears2003/04till2007/08areshowninfigure 2.4.

AcomparisonshowsthatthedevelopmentofsalesandtheestimatedproductionvolumeinNampularunparalleltothenationalfigures.Theaveragevolumeofsoldproductionduringtheperiodrepresented in the figure 2.4 is44,600tonsofrawnuts.

Basedonthisfigureandthenumberoftreesintheprovince,whichisestimatedtobe10 million,theaverageproductionpertreeiscalculatedatbetween4.5 kgto5.4 kg/treeifitisassumedthat20%ofthenutsmaydopassthroughtheofficialmarketingcannels.Thesefiguresarewellabovethenationalstandard.

Althoughthesefiguresareestimatesandunreliable,itcanbeassumedthatthefarmersinNampulaprovincetakebettercareoftheircashewtreesbecausetheydependmoreontheincomefromsellingcashewnuts,theironlycashcrop.

FiguresfromINCAJUonthesprayingratessupportthishy-pothesis:In2007and200818%and20%respectivelyofthecashewtreesinNampulaprovinceweresprayedasopposedtoonly10.5%in2007and13.4%in2008atthenationallevel.In200925%ofthecashewtreesinNampulaprovinceweresprayed–a5%increaseincomparisonto2008.Thetotalnumberoftreeswhichweresprayedin2009inMozambiqueisnotknown.

Figure 2.4: Sold volumes and estimated production volumes (EPV) – Nampula province

2.2.2 General aspects of cashew production and marketing

2.2.2.1 Farming systems including cashew

Today42%ofMozambicanfarmersowncashewtrees,albeitinsmallnumbersandwithbetween10to20treesperfarmeronaverage.InsomedistrictsofNampulatheshareoffarmerswhoowncashewtreesisevenhigherandreaches60%to80%.Mostofthesefarmersinheritedthetreesafterindependenceasindividualsorascommunitygroups.Cashewtreesarenotoftenamongthecropscultivatedwithinthefarmingsystem.Mostofsmallholdersaresemi-subsistencefarmerswhogrowmaize,cassava,beans,groundnutsorothercropsforhomeconsumption.Cashewtreesaremostoftenscat-teredthroughoutthefarmlandbutarenotactuallycultivated,evenwhentheyaretheonlyproductonthefamily’slandthatbringsincash.

Cashewisalsoanimportantsupplementarycropinsubsistenceproduction,especiallyindroughtyears,whenfoodisscarceamongthepoorerfarmers.ThecashewharvestinNampulastartsinOctoberafterthedryseason–forthesmallholderfamiliesacriticalseasonregardingfoodsecurity.Thereforefoodscarcefamiliesharvestthecashewnutsasearlyaspossi-bleandsellthemdirectlyinordertousetheincometobuystaplefoods.

Oneadvantageofcashewsisthatduringthefirsttwotothreeyearscashewtreesplantedwiththerecommendedspacingof12mx12mcanbeintercroppedwithstaplefoodcropsorwithothercashcropslikegroundnutsorsesame.Inthethirdorfourthyearthetreesproducethefirstfruits,providingthefarmerswithacashincome.

Becauseofthispossibleintercroppingfarmersdonotsufferfromaseverereductioninproduction.Thisevenmakesitpossibleforsmallholderstoestablishnewcashewplantationswhilealsoproducingenoughfoodforthefamily’sneeds.However,laterthecanopyofthecashewplantationclosesandintercroppingisnolongerfeasible.Productivecashewplanta-tionsarethereforealwayspurestandscomprisingofcashewtreesonly.

TherearethreeproductiontypesofcashewinMozambique:ÿ Asignificantpartofthecashewtreesareabandoned,

growingoncommunalland(bushland)anddonotbe-longtoanindividualfarmer.Thefruitsofthesetreesarepickedoccasionallybythelocalpopulation.Theproduc-tionandyieldofthesetreesarenotknown.

ÿ Cashewtreesarealsoownedbysmallholderswithabout10to20treesonaverage,rangingfrom5to10trees/smallholderuptoahundredtreesformedium-scalefarm-ers.Thesetreesdonotgrowaspartofaregularlyspacedpopulation,butarescatteredalloverthefarmlandor,Source: INCAJU and Fichas do Supervisor Provincial

19 morefrequently,nearhouses.Manysmallholdersdonotconsidercashewsasacrop,butjustharvestthefruitsreg-ularlywithouttakingmeasurestoincreasetheyieldand/ortoimprovethequalityofthenuts.Duetopoorreplant-ing,suchtreesarefrequentlytooold,manyolderthan30years,andassuchproducelessandlowerqualitynuts(thenutsofoldtreesandoldvarietiesaregenerallysmallerthanthoseofyoungtrees).Inadditiontothistheyieldandthequalityofthenutsarefurtherreducedbecausetherecommendedagro-technicalmeasuresarenotcarriedout.Inthesecircumstancestheyieldisestimatedtobeabout3 kgorlessofrawnutspertreeonly.

ÿ Finallytherearetreesthatbelongtofarmerswhotakecareofthem,spraying,weedingandpruningthemregularly.Mostofthesetreesarescatteredthroughoutthefarmlandandareofallagessincethesefarmersreplantthem,es-peciallyafteryearsofhighproductprices.Aportionoftheseyoungertreesareinplantationswithregularspacing.Theyieldofsuchtreesbetween8to25yearsoldcanbeestimatedat8to10 kg/tree.Somemedium-sizedfarmshavehundredsofcashewtrees.

2.2.2.2 Environmental aspects of cashew production

Cashewtreesaregenerallydeemedsuitableformarginallandthatcannotbeusedforannualcropsormoredemandingtrees.Duetoitsphysiologicalcharacteristicstheplantcansurvivedryspellsmuchbetterthanothercrops(e.g.citrus).Infact,theshadingofthesoilbythetreepermitsgrassestothrivewheretheywouldotherwisehavebeenscorchedbythesun.

Anotherenvironmentalaspectconcernsthepossibleimpactofclimatechange.Itisexpectedthatstormsandcycloneswilloccurmoreoftenandwillbestrongerthaninthepast.AnexampleiscycloneJókwewhichdestroyedbetweenonethirdtohalfofallcashewtreesinMongicualdistrictin2008,andwherefallentreescanstillbeseentoday.Asacountermeasure,theprojectwillpromotethesubstitutionoftall-growingtrees,recommendproducingonlyseedlingswithashorttrunk(half-trunk).Itwillalsorecommendplantingcashewasaplan-tation.Thishelpsminimisethedamagefromcyclonesashalf-trunkcashewtreesarelesspronetobeinguprootedbystrongwinds,especiallywhengrownaspartofaplantation.Anaddedadvantageisthefactthatitiseasiertocarryoutagro-technicalmeasuressuchaspruningorsprayinginplantationsofsmallertrees.

Itisunknownwhetherandhowclimatechangewillinfluencetheannualquantityanddistributionofrainfall.Butsincecash-ewismoreresistanttodroughtthanmostothercrops,lowerannualrainfallwillimprovethecompetitivenessofcashew.

Insummary,cashewisatreecrophighlyadaptedtotheeco-system(climate,soilandweatherconditions)inthenortherncoastalareasofMozambique.

2.2.3 The cashew value chain

AccordingtoarecentstudybyTechnoserve,only18%ofthevalueaddedwithinthechainfromtheMozambicanproducertotheconsumeroutsidethecountrytakesplaceinMozambi-que.ThisisduetotheongoinglowlevelsofRCNprocessinginMozambiqueandthefactthatroastingandpackagingforfinalconsumption(42%ofthevalueadded)isliterallynon-existentinthecountry.

Followingitsindependence,theprocessingofnutsinthecoun-trydeclinedandpracticallyceasedin2002.Duringthisyear,theentiremarketedproductionvolumeofabout50,000tonswasexportedasrawnuts.However,sincethentheprocessingindustryinNampulaprovincehasbeenrevivedwiththesup-portofforeignassistance.Anumberofprocessingfactoriesstartedoperating(again)in2001andin200836%ofthemarketedproductionvolumewasprocessedinMozambique.

Afteradisputeaboutminimumwagesinthecashewsectorwaseventuallyresolvedinfavouroftheprocessingindustry’sin-terests,andduetotheincreasedmarginsfortheprocessorswhichfollowed,thenumberofoperatingprocessingfactorieswasforecasttoincreaseto25in2008/09.Inthesameseasontheprocessingvolumeofcashewnutswithinthecountrywasforecasttoreach35,500tons.

Anumberofstakeholdersareinvolvedinproducing,market-ing,processingandexportingcashewnuts.UptosevenpartiescanbeinvolvedinchannellingtheproductfromthegrowertotheconsumeroutsideMozambique. Figure 2.6 on the following pageillustratesthecomplexmarketingchainofcashewnuts

TheupstreamactorsarenotincludedinthischapterasINCAJUistheonlyactorsupplyingtreeseedlingsinsignificantnum-bersaswellaschemicals(freeofcost)forsprayingthetrees.INCAJUisalsosubsidisingtheacquisitionofsprayers.There-fore,otherpotentialinputsuppliers(traders)playaninsignifi-cantroleandcanbeneglectedinthepresentcontext.

Anumberofnational and international NGOs and donorswereandstillareactiveinthesectoratthefarmers’level,or-ganisingtechnicalassistancetosmallholders,promotingpro-ducers’organisationsandtryingtoimprovemarketlinkagesandincomefromcashewproduction.InNampula,prominentNGOsinthesectorare,forexample,theCooperative League of the United States of America (CLUSA)aswellasAjuda de Desenvolvimento de Povo para Povo (ADPP).DonorscurrentlyworkingwiththefarmersinNampulaincludetheNetherlands Development Organization (SNV)andtheAgrifuturo ProjectfundedbyUSAID.

Othersorganisationshavebeeninvolvedinrecentyears.Apro-jectfundedbytheFrench Development Agency (AFD),forex-ample,workedwith43farmergroupsinNampulabetween2000and2006.

Foreign processor

Importer Processed exporter

Consumer

Roaster, Salter /Final Packaging

Retrail / Distribution

Cashew producer

Local shop owner

Farmer Associations

Broker

Processing factory

Raw exporterProcessed exporter

Production

Colection and transport

Processing

Exporting

FOREIGN

DOMESTIC

20

Raw cashew nuts (RCN) enterthelocalmarketwheretraders and buyersareinvolved.Dependingonthesizeofthefarmorproductionofcashewnuts,thelocation(near/farfromfac-toriesand/orroads)andthedegreeoforganisation,farmersselltosmalllocaltraders,biggertradingcompaniesordirect-lytothefactories.Inmostcases,severalbuyersarelocatedbetweentheproducerandthecashewfactoryortheexporter(see Figure 2.5).Thisstructureoftenreducestheprofitfortheproducersandalsothesmallerbuyerstoaminimum.Itshouldalsotobenotedthatnodifferenceisgenerallymadebetweengoodandpoorqualityraw cashew nuts.Somefactoriesstartedtopayapremiumforbetterqualityrawmaterialafteranini-

tialselectionatthefarmlevel,butnocomprehensivequalitysystemisinplace.Pricesvaryaccordingtotheseasonratherthantothequalityoftheproduct.

IftheRCNarenotdirectlyexportedforfurtherprocessingto–mostly–India,theMozambicanprocessing factoriescon-stitutethenextstepinthecashewvaluechain.Afterthebreak-downoftheindustry,manysmallerfactoriesopenedinthenorth(NampulaandCaboDelgadoprovinces)andthesouth(GazaandInhambaneprovinces).Theirnumbervariesfromseasontoseason.Everyyearsomesmalleronesstopprocessing(mostlyduetolackoffinancingforrawmaterials)andothers

Figure 2.5: The cashew marketing system

Source: Technoserve, ibid.

+ 42%

+ 40%

10%

+ 5%

+ 1%

+ 2%

100%

Only 18% of the value

added in the final

retailprice takes

place within Mozambique

Producers* Traders Processors Exporters Roaster & Packers

Retallers & Distr.

Total

Selling Price (per kg)

US$ 2.48 US$ 2.86 US$ 4.05 US$ 4.28 US$ 15.00 US$ 25.00

Value Added (per kg)

US$ 2.48 US$ 0.38 US$ 1.19 US$ 0.23 US$ 10.72 US$ 10.00 US$ 25.00

Domestic Foreign

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

21 Figure 2.6: Value added at each link of the value chain

(re)open.Approximately25canbecountedinthewholecountry,halfofwhicharesituatedinNampula.Theprocessingin-dustryhasbeen–andispartlystill–heavilysupportedbyexternal donors/NGOs.ThismostsignificantoftheseistheAmericanNGOTechnoservewhichhasgreatlyassistedfac-toriesduringoveryears.

Processedcashewkernelsarethenexportedthroughvariouschannels.Inthesouthofthecountry,exportsmainlygotoSouthAfricaviaroad.ThefewprocessingfactoriesinGazaandInhambanelooselycooperate,forexamplethroughshareduseoftrucks.InthenorthofMozambique,themajorityofprocessorsareorganisedintheassociation Agro Industriais Associados (AIA).ThroughitsofficeandwarehouseinNacala,AIAjointlyexportstheprocessedcashewkernelsofitsmembersthroughcontainerships.TheproduceofafewofthesmallerfactorieswithoutofficialAIAmembershiparealsomarketedthisway.OnlyoneofthelargerfactoriesinNampula–OLAM International –doesnotexportingthroughAIA.Theinterna-tionalcorporategroupusesitsownmarketingchannelsandapparentlyseesnocomparativeadvantageinjoiningAIA.

SinceAIAwasfoundedithassolditsexporttoonesoleclient,theDutchbroker Global Trading & Agency BV.Global TradingimportstheprocessedkernelstoEurope.AfterfurtherroastingandpackagingintosmallsachetsthecashewsaresoldontheEuropeanmarket.Mostofthevalueaddedisdonewith-intheselaststeps(see Figure 2.6).Asisshown,lessthan20%oftheconsumerprice(finalproductvalue)isgeneratedinsideMozambique(production,trading,processingandexporting),whileroastersandretailerssharethebulkofthevalueadded.Producerscapturedonly10%ofthefinalproductvalue.ThenumbersinFigure 2.6aboverelatetothesituationin2007/8.Evenifabsolutepriceshavechanged,therelativefig-ureshavenotalteredsignificantly.

FurtheractorsinvolvedinthecashewsectorinMozambiqueincludetheGovernmentbodyInstituto Nacional do Cajú (INCAJU),thenational association Associação dos Industriais de Caju (AICAJU)aswellastheAfrican Cashew Alliance (ACA).

Source: Technoserve, ibid

Table 2.2: Mozambican stakeholders in the cashew sector and their functions

Stakeholder Function

~ 1 million smallholders Production of raw nuts

Private service providers (most often themselves producers of cashew)

Provision of contracting services (spraying cashew trees)

Local and regional cashew traders Collection of raw nuts and sale to processors or raw nut brokers/exporters

Local processors (around 25) Processing of raw nuts; sale to export brokers; local sales

Brokers Brokerage of transactions between local and foreign stakeholders

AIA (Association of processors for joint marketing of processed nuts)

Servicing company focusing on exporting and marketing of processed kernels

Donors and NGOs, e.g. CLUSA, ADPP, SNV, USAID, AFD

Promotion of producers’ associations; technical assistance to producers and proces-sors; introducing value-added activities

AICAJU (Industry association) Promotion of industry interests, consistent policies and practices among its members

INCAJU (Governmental Cashew Institute)Policy setting; extension services providing seedlings and pesticides; provision of loan guarantees to processors; export tax collection

ACA (African Cashew Alliance) Marketing support to African cashew producers and processors on the world market

22 INCAJUisanindependentGovernmentinstituteresponsibleforthepromotionofthecashewsector.Theinstitutehasde-centralisedstructuresinthecashewregionsofMozambiqueandprovidesextensionservicestofarmersatthedistrictlevel.Ontheregionalandnationallevel,INCAJUisresponsibleforsettingpolicy.ItisfinancedbytheexporttaxonRCN,althoughintroducingINCAJUinthebudgetoftheMinistryofAgricul-tureiscurrentlybeingdiscussed.

Moremarginalactors–sofar–areAICAJUandACA.AICAJUisanassociationofindustrialplayersinthecashewsector.ItissupposedtorepresenttheinterestsofthoseactorstotheGovernment (INCAJU).However,AICAJUdoesnotseemveryactiveinlobbyinganditsorganisationalstructuresarestillweak.ACAconstitutesafederationofmanyactorsalongthecashewvaluechaininAfrica.Membershipiscross-national,anditsaimistosupporteffectivemarketingofAfri-cancashewontheworldmarkets.InMozambique,ACAisnotyetwell-established;anationalofficehasyettobebuiltup.ThefuturevisionofACAistosupportmarketlinkagesintradingprocessedkernelsandrepresentingAfricanprocessorsandproducersontheworldmarket.

Table 2.2liststhestakeholdersontheMozambicansideandtheirmainfunctions:

2.2.4 SWOT analysis of the cashew sector

Inordertogetprimarydataonproduction,toanalysethefac-torsunderlyingtheactualproductionfiguresandtodeterminestrengthsandweaknesses,themissioninspectedtreesandconductedgroupinterviewswithproducersinvariousdis-trictsoftheprovince,interviewedkeypublicandprivatesectorstakeholders,andcollectedandanalysedadditionalstatisticalandotherinformation.Somevagariescontinuetoexistinthedatacollected:

ÿ The exact age of the trees is often unknown. Manyproducerscouldonlyguesstheageoftheirtrees,especiallyiftheywereplantedbythepreviousgeneration.Suchtreesareusuallyover30yearsold.

ÿ The intensity of care of the trees varies considerably between owners and over time. In intensive treatment, trees will be pruned regularly (at least every 3 to 5 years), and each year unwanted new shoots on major branches will be removed (called limpeza by some).

ÿ The term limpeza is also used when referring to the weed ing of the immediate area below the tree, creating confusion of the true meaning of the respondent’s answer.

ÿ The level of home consumption and of production of nuts not sold through channels that are monitored by INCAJU can only be estimated and needs to be kept in mind when estimating the total yield of cashew trees.

23 2.2.4.1 Results of the analysis

Apartfromthegeneralweaknessthatmanysmallholdersac-tuallycollect cashewnutsanddonotreallycultivate them,theresultsoftheanalysiscanbesummarisedaccordingtothefourcriteriaofSWOT analysisaspresentedinthefollowingsub-chapters.

StrengthsSeveralconditionsregardingthecashewsectorinNampulaprovinceconstitutestrengths,atleastincomparisontootherregionsofthecountry:

There is a long tradition of producing cashew nuts in the region.ThecashewtreewasintroducedbythePortugueseal-readyinthe16thcentury.Duringthe1960sMozambiquealreadyexportedasignificantamountofcashewnutstoIndia,whereasduringthe1970sMozambiquewastheleadingproducerofcashewintheworldwithashareofbetween30%and40%ofglobalproduction.Asaconsequenceofthisthecountryhasagoodknowledgeofcashewgrowing,producingandprocessing.

The capacity to process part of the production volume is increasing. PrivatelyownedfactoriesinMozambiqueareca-pableofproducingabout30,000tonsto40,000tonsofraw cashew nuts.TheprocessingindustryisconcentratedinNam-pulaprovincewhichhasashareofabout65%inthenationalcapacity.ThisisduetothefactthatthemainexportpointforRCNandprocessedcashewkernelsistheportofNacalaintheprovinceofNampulawhichkeepsexportcostsrelativelylow.Foryearsthecashewprocessingindustryhasbeensup-portedbyUSAIDthroughtheNGOTechnoserve.

Due to the soil and climatic conditions and the general distance of consumer markets (in the country) there are few crops that can compete with cashew.Cashewisgrownmainlyintheprovincesanddistrictsalongthecoast.Thecash-ewtreeisrelativelyresistanttodroughtandhasnohighrequire-mentsregardingsoilfertility.Forthisreasoncashewtreesgrowonthemarginal,drysandysoilsatthecoast,whereotherfoodcropsdonotgrow.Inadditiontothis,NampulaprovinceissituatedfarfromMaputoandotherbigcitieswhichhavea

highdemandforcrops.Forthisreasonfreshcropscannotbemarketedeasilyandthenonlywithhightransportcosts,whereascashewnutsareexportedviatheportofNacala.Thismakescashewsmorecompetitive.

Cashew nuts are often smallholders only cash crop.ThevastmajorityofsmallholdersinNampulaprovincearesub-sistencefarmers.Theironlycashcropisthecashewtree.Forthisreasonthecashewtreeplaysabigroleinthelivelihoodofsmallfarmers.Thecashewharveststartsattheendofthedryseason,whichisthemostcrucialseasonforpoorfarmers’survival.Theyusethischancetoharvestthecashewnuts,sellthemimmediatelyandbuyfoodwiththerevenue.Cashewnutsarethereforealsoimportantintermsoffoodsecurity.

Production in the region benefits from its proximity to the port city of Nacala, the export harbour situated in Nampula province.Forthisreasontransportcostsand,asaconsequence,exportcosts,arerelativelylow,whichmakescashewproductioninNampulamorecompetitivethaninotherprovinces,eventhesouthofthecountry,whichoffersbetternaturalconditionsforgrowingcashew.Bythesametoken,itisassumedthatthisiswhytheprocessingindustryisconcentratedinNampulaprovince.

WeaknessesWhilethelistofstrengthsisgenericratherthanspecific,thelistofweaknesses(orconstraints)observedisexhaustive.Thefactorsrestrictingproductionhavebeengroupedintofiveareas.Also,whenidentifyingproblems,themissiontriedtoidentifyunderlyingrootcauses.Thedistinctionofcause-effectrelation-shipsformsabasicstepoftheassessmentmissionandallowstheformulationofsolutionstothemostsignificantconstraints.Thefollowingweaknesses/constraintshavebeenidentified:

Low productivity of smallholder cashew production. TheaverageyieldinMozambiqueisbetween2to4kgRCNpercashewtree.Thisisverylowtakingintoconsiderationthatyoungcashewtreesbetween10and25yearsoldhavethepotentialtoproducebetween10and15kgpertree,somewellmanagedtreescanevenproduceupto60kgperyear.

24 Low production potential of existing trees.ÿ Manyoldand/orabandonedtrees(strongdeclineofyield

afteryear25).Thecashewtreestartstoproduceinitsthirdyear,reachesitspeakbetweenthe10thand25thyear,andafterthe25thyearthereisadeclinefromyeartoyear(see Figure 4.1 in chapter 4).Itisestimatedthat25%to30%ofthecashewtreesinMozambiqueareolderthan25andupto40yearsold.Thesetreesproduceverylittleordonotproduceatall.Fromaneconomicperspec-tivethesetreesshouldbereplacedbynewtreeswithahigherproductionpotential.

ÿ Inadditiontolowproduction,theoldtreesproducerela-tivelysmallnuts,consideredtobeoflowquality.Asde-scribedabove,manyMozambicansmallholdersinheritedcashewtreesfromcolonialtimesanddonotreallytakecareofthem.Thereforemanytreesareabandonedandgrowinthebushareasoncommunalland.

ÿ Lowgeneticproductionpotentialofoldtreevarieties.Oldertreevarietiesdonotoftenhaveahighproductionpotentialsincetheywereplantedbeforeselectionorclon-ingwasintroduced.

Insufficient crop and pest management (low usage rate of ICPM).Mostsmallholdersdonotconsidertheircashewtreesasacroptobecultivated,butinsteadjustharvestorcollectnutstosell.Forthisreasonnospecificcultivationtechniquesareapplied,whichresultsinlowyields.Onlyabout2.5%ofthetreesareprunedregularlyand20%to25%ofthetreesaresprayed.Onlyabout25%offarmersweed.Also,noreliableinformationexistsabouttheeconomiceffectoftheseopera-tions.ItwasreportedthatneitherINCAJU,whichrecommendssprayingcashewtrees,noranyotherresearchinstitutionshavecarriedoutfieldtrialstodiscovertheeffectofsinglecultiva-tiontechniquesorofIntegrated Crop and Pest Management (ICPM).However,theyieldoftreesthatarenotyetoverage(treesyoungerthan30years)willincreasefromabout3 kg/treeto8-10 kg/treeifICPMisapplied,accordingtotheesti-matesofINCAJU’stechniciansandfarmerswhoappliedthesetechniques.Thismeansthatifthemajorityofthefarmersap-pliedICPM,theyieldandthereforetheproductionwouldeasilymorethandouble.

Damage to trees by fires. Throughoutthecountry,andinNampulaprovince,farmersburngrassandbushesattheendofthedryseasoninordertoclearthelandforthenextcrop.Thesefiresfrequentlygetoutofcontrolanddestroycashewtrees.Incaseswherenoweedingwasdone,suchfiresburnthecashewtrunksandthegrassburningunderthetreesdestroystheirleaves.Itisestimatedthat30%to50%ofthetreesaredamagedinthiswayeveryyear.Althoughmostofthemrecov-erafteroneortwoyearsthelossinproductionandconsequentdropinincomeinjustoneyearistremendous.INCAJUhastriedformanyyearstostopthispractise,butwithlittlesuc-cess,suggestingitwillcontinue.

Insufficient replanting rates. Asdiscussedabove,thereareabout10 millioncashewtreesinNampulaprovince.Ifitisassumedthatthetreesreach30years,1/30ofthetreesshouldbereplantedeveryyearinordertomaintaintheagestructure,about333,000trees.Assuminganimprovedsurvivalrateof75%oftheseedlingsafterplanting,thenabout410,000cash-ewtreesseedlingshavetobeplantedeveryyearinordertomaintaintheagestructureofthetreepopulation.

ThecapacityoftheINCAJUnurseriesinNampulaprovinceiscurrentlyabout700,000seedlingsannually,however,onlyabout230,000seedlingsareproducedannually.Furthermore,theactualsurvivalrateisestimatedatonlyabout50%,whichmeansthatonly115,000ofthecashewtreesplantedeveryyearsurvive. Theconclusionfromthesefiguresisthatthepresentplantingrateisinsufficienttoevenmaintainthegivenagestructure,whichisdeterioratingastheaverageageofthecashewtreesincreases.Thereisthereforeadangerthattheaverageyieldandthetotalproductionwilldecreasefurtherunlesstheeffectsfromtheagingtreesarenotcompensatedbyothermeasures,suchasanincreaseinsprayingand/orpruning.

Inordertosignificantlyimprovetheagestructureofthetreepopulationmoreoldtreesmustbesubstitutedeveryyear.Itisassumedthatonethirdoftheexistingcashewtrees,aboutthreemillion,areolderthan30years.Ifthesetreesaretobereplaced

25 duringthenext10yearsthenanadditional300,000treeshavetobeplantedeveryyear.Assumingasurvivalrateof80%,thenanother400,000seedlingshavetobeplantedinNampulaprovinceannually. Thesecalculationsshowtheneedofaprogrammethatensurestheproduction,distributionandsuccessfulplantingofabout800,000seedlingsannuallyduringthenext10years.

Lack of interest in planting cashew trees. Therearedifferentreasonsforthelowreplantingrate.Asdiscussedabove,oneimportantreasonisthelackofinterestinreplantingamongthosesmallholderfarmersthatdonotseecashewsasacom-mercialcrop.Inadditiontothisisthatmostsmallfarmersdonothavethefinancialmeanstobuyseedlingsand/orthefamilylabourisinsufficienttoclearfields,digholes,plantseedlingsandtakecareofthemproperly.Theabsenceofassistancebytheextensionserviceisanotherreasonbehindthelackofin-terestinplantingtrees,especiallyinremoteareas.

Restricted availability of good quality tree seedlings at the village level.

ÿ Insufficientinvestmentintreenurseriesÿ Inefficientmanagementofnurseriesÿ Weaknessesofthedistributionsystemÿ Noinvolvement(andinvestment)oftheprivatesector

duetomarketdistortion(freetreeseedlingsdistributedbyINCAJU )

TheproductionofcashewseedlingsisdoneexclusivelybyINCAJU,whichdistributestheseedlingstovillages.INCAJUalsoownsthemothergardensfromwhichtheclonesaretakentograftontoseedlings.Themothertreesareselectedfrommod-ernvarietieswithareducedtrunkheightandwithahighyieldpotential.Thishasadoublepositiveimpact:

(1)thepruningandsprayingcanbedonemucheasierandmoreefficientlyand(2)thesetreesarelessvulnerabletostorms(cyclones),whichaccordingtoforecastswilloccurmoreofteninthefutureduetoclimatechange.Inadditiontothis,thesevarietieshaveahigheryieldthantheexistingtrees.

SeedlingproductionbyINCAJUsuffersfromproblemsthataretypicalfornurseriesrunbystateenterprises.Managementofthenurseriesisgenerallypoor.Inonecasehalfofthegraftedseedlingsdidnotsurvivebecausethegraftingwasnotdoneproperly.Itisclearlytheresponsibilityofthemanagementtoseetoitthatlabourersaretrainedandmonitoredappropriatelysothatthequalityofworkissatisfactory.

NurseriesinMozambiquehavetoensurethatadequatemeansoftransportareavailablefordistribution,asfarmerscannotfetchtheseedlingsfromthenurseriesthemselves.However,INCAJUdoesnothavesufficienttransportcapacitiestodis-tributeseedlings.Asignificantportionofthemarethereforenotdistributedorarenotdistributedintimeorattherighttime.Clearlythismakesnosense.

Thesameappliestoirrigation.Inmanycasesthelackofanadequateirrigationsystemordisrepairwerebehindnurserieswhosecapacitieswereonly50%orless.

INCAJUgivesupto50seedlingstosmallholdersfreeofcharge.Evenifafarmerbuysmoreseedlingsheonlyhastopayanominalamountwhichcomesnowhereneartocoveringthecosts.Thismeansthattheproductionofseedlingsishighlysubsidised,whichisthemostimportantreasonwhythepri-vatesectorisandwillnotbeinterestedinproducingcashewseedlings.

Insummary,theanalysisshowsthatthereareconsiderablein-efficienciesinINCAJU’sproductionofcashewseedlings.Inthelongruntheproductionofseedlingsshouldthusbetrans-ferredtoprivatesectorenterprisesworkingundercompetitiveconditions.Thisstimulatesefficiencyandamarket-orientedproductionanddistribution.

Whenseedlingsareproducedbytheprivatesector,thefarm-ershavetopayforthem.AccordingtoinformationreceivedfromINCAJU,seedlingscostabout15MTsto20 MTstoproduce.With70seedlings/hathecostsfortheseedlingsamounttoabout1,400 MTs(48US$),whichisbetween10%and15%ofthetotalcostsofestablishingacashewplanta-

26 tion.Forthisreasonitisnotexpectedthatthesecostswillsignificantlyinfluencethewillingnessoffarmerstoplantcashewtrees.

Low rate of survival of planted tree seedlings. Asdiscussedabove,thesurvivalrateoftreesisestimatedtobeonlyabout50%atpresent.Thisisduetoreasonssuchasaninefficientdis-tributionsystemwhichresultsintoomuchtimebetweentheseedlingsleavingthenurseryandbeingplanted,atimeduringwhichtheyarenotwatered.Anotherconsequenceofthelackoftransportisthedelayindeliveringtheseedlingstovillages,whichmeansthatfarmerscannotplanttheseedlingattherighttime.Also,theplantinghastobedoneatthebeginningoftherainyseasonafterthefirstheavyrainfalls,otherwisetheseedlingsdiebecauseofwaterstress.Thisisonereasonforthelowsurvivalrateofplantedcashewseedlings.Anotherdifficultyforsmallholdersisthattheseedlingsareusu-allydeliveredtothevillage,whichisoftenseveralkilometresfromthefield.Theburdentobringtheseedlingtothefieldthenlieswiththesmallholderwhodoesnothaveanytransport.Insomecasestheseedlingsremaininthevillageforseveraldays–andinmostcaseswithoutwater–beforetheyareplanted.Thismeansthattheseedlingsareplantedwhileunderwaterstress,whichlowerstheirsurvivalratefurther.Insomeyearstherainfallisirregularwithdroughtsinbetween.Ifadroughtpersistsformorethanoneweek,theplantedseed-lingshavetobewatered,whichisaheavyworkloadforthefarmerbecauseveryoftentheyhavetocarrywateroveradis-tanceofseveralkilometrestothefieldandwatertheplantsbyhand.Thuswateringisnotdoneregularlywhichresultsinalargepercentageoftheseedlingsdying.Additionally,themajorityofthesmallfarmersdonotpossesstheproperplantingtechnique.Onemethodistoputorganicmaterialintotheplantingholewhichhelpstoretainwaterforalongertimeandmakesitavailabletotherootsoftheseedlings.Inthiswaytheseedlingsurviveslonger,evenwithoutrain.

Also,strongwindoftenbreaksthegraftedseedlings.Thiscanbeavoidedbytyingtheseedlingtoasupportingstick.

Low quality nuts. ThequalityofcashewnutsproducedinMozambiqueisrelativelylow.Thisresultsinanlowaverageprice.Reasonsforthisaremanifold:

ÿ Smaller nuts growing on older trees. Asarulethenutsfromoldtreesaresmallerthannutsfromyoungtreesortreesofmediumage.Thesizeofthenutsisoneimportantcriterionfortheirquality.SincethecashewtreesinMozambiqueareoverage,theaveragequalityofnutsisbelowtheinternationalaverage.Accordingtoproc-essors,thenutcountisoftenabove200nuts/kg,whichin-dicatesthattheyarenothighgrade(180nutsmaximum).

ÿ Trees affected by diseases. ThemostprominentdiseaseamongMozambicancashewsispowdery mildew disease (PMD),whichleadstoshrivellednutsandlowoutputratios.Thediseaseismoreprominentnearthecoastandintreeswhichhaveaclosedcanopyinwhichmoistureiscontainedandwherethetemperatureishigher.Treevarietieswhichareresistanttothisdiseasehavebeenfoundtoyieldlessthannon-resistantvarietieswhichhavebeensprayedproperlytocontainthedisease.However,presentlyonly20%oftreeshavebeensprayed.ApartfromPMD,otherdiseasesoccur,buttheyhavebeenoflittleimportanceuntilnow(e.g.anthracnose,afungalinfectionaffectingtreesinthenursery,andheli-opeltis,apestaffectingyoungshootsonexistingtrees).Also,wheninsectsdamagethenuts,thekernelisoftenpartlycolouredblackorhaveholes.Suchkernelscannotbesold.

ÿ Inadequate harvesting and post-harvesting techniques. Cashewnutsarenormallyharvestedtwotothreetimesaweekbycollectingthefruitswhichhavefallenfromthetrees.Ifhiredlabourersareused,theyarenormallypaidperkgofcollectednuts.Inordertoincreasetheirsalarysomejustpickthosefruitsthatareeasyandquicktopick.

27 Afterharvestingandseparatingthenutsfromthecashewapplesthenutshavetobedriedinthesunfortwotothreedays.Becausethenutslooseweightwiththedryingprocessfarmerstrytosellthemwithahighermoisturecontentthantherecommended12%to14%.Ifthesenutsarestoredforweeksorevenmonthstheywillstarttorot.Cashewnutsshouldalsobestoredinjutebagsinsteadofplasticbagsasisfrequentlydone,sincetheycannotbreathinplasticbagsandbecomemouldyeasily.

ÿ Highly inefficient marketing system. Smallholderssellsmallquantitiesofnuts,sometimesonlyafewkilograms,tolocalshops.Buttheselowsellingvolumesleadtohigherunitcostsforthebuyersthatcollectthenuts.Forthisreasonsmalltradersorshopsareneededtocollectthenutsandsellbiggerquantitiestomiddle-men.Insomecasesthesemiddlemencollectevenbiggerquantitiesandsellthemtowholesalers,whosellthemtoexportersortotheprocessors. Ateachstepmoneyisusuallypaidinadvancefromthefinalbuyertothosethatselltohim,sothatthosebuyingfromthefarmerscanbepaid.Ateachstepthelossofsomepercentageoftheadvancedmoneymustbeaccountedforinordertomaintaintheprofitmargin,whichalsodepress-esthepricepaidtotheonesselling,andfinallythatpaidtotheproducers. Insummary,thismarketingchainofseverallevelsisineffi-cientandreducesthefarmgatepricesforsmallfarmers.Duetopoorinfrastructure(suchasbadroads)transporta-tioncostsareveryhighfortraders,whichreducesthefarmgatepricesfurther,especiallyinremoteareas.InadditiontotheseinefficienciesthereistheexportbanonRCNatthebeginningoftheharvestseasonandtheexporttaxof18%whichreducesfarmgatepricesfurther.Marketinformationsystemsthatincludecashewhavebeenbuiltupwithdonorsupport,inwhichdataisregularlycollectedatthedistrictlevelwithinformationprocessedbyINCAJU (or MINAG’s Statistics Division) andthenbroadcastviaradio.

However,reliableindependentmarketinformationsystemsarecostly,andthereforeinformationcollectionmaynotincludealldistrictsorbedonewiththerequiredfrequency.Also,thecontinuationofdonor-initiatedactivitiesinthisareahasnotalwaysbeenguaranteed.Effortsaredependentonunderstandinghowtheagentsinthesystembenefittheproducers,benefitswhicharesometimesnotmeasura-ble.Inseveralcasesprioritiesinthedistrictshaveledtotheuseoffundsmeantforcollectingmarketinformationformoreimmediateactivities.Also,specificdifficultieswithdonorfundinghaveattimesimpededtheuninter-ruptedfunctioningofactivities.Smallholders,especiallythoseinthemoreremoteareas,havedifficultiesingettingindependentandreliablemar-ketinformation.Tradersoftenhavebetterinformationandthereforehavemoremarketpower.ThistooreducesthefarmgatepriceofRCN.

2.2.4.2 Opportunities

Theanalysisalsoshowsthatthereareopportunitiestoim-provetheproductivityandproductionofcashewnutsintheprovince.Thesefactorsinclude:

An increasing demand for cashew nuts on the world market. Theworldmarketforcashewnutshasbeengrowingsixfoldsincethe1980s,from0.5milliontonstoover3milliontonsin2006and2007.AccordingtoTechnoserve,thecompoundannualrateofgrowthwasstillover7%duringthefiveyearsleadingupto2007.

Expanding processing capacity in the country.Technoserveandotherdonorshavebeeninvolvedinpromotingcashewprocessingandthecountrynowhasaprocessingcapacityofnearly36,000 tons.Thereisevenawillingnesstoexpandtoaccommodatetheincreasinglocalproductionvolumesinceobstaclesthathamperedtheprocessingcapacitybetween2006and2008havebeenremoved.

28 Strong involvement of the private sector in processing. Whiletherewasjustoneprocessorinthe2001/02season,by2009thenumberofprocessorshadincreasedto25accordingtoTechnoservedata.Theseareprivateenterpriseswhichhavetocompetesuccessfullyintheworldmarket.Whileatpresenttheybenefitfromdonorsupport,INCAJUofferedbankguar-anteesandtheprotectioncreatedbytheearly-seasonbanonexportsofraw cashew nutsaswellasthe18%exporttaxonunprocessednuts,thereisachancethat,withastrongmana-gerialcapacity,severalmayprovestrongenoughtocompetesuccessfullyintheworldmarket.

Potential to exploit market niches (ex. Fair Trade).Thereisapotentialtoseekmarketnichesthathelptoattainpremiumpricesintheworldmarket,e.g.byproducingundertheFairTradelabelorinsimilarsetups.However,inordertobenefitfromthis,thesmallholdersneedtocreateorganisa-tionsthatcanplayaroleinmarketingandprovideextensionadvicesothattheycanmeettheconditionssetbymarketpartners.

Expected increase of the producer’s price. Increasedpricesamongproducerscanbeexpectedforthreereasons:

ÿ Increasing demand for cashew nuts in the world market. Asstatedinthepreviouschapters,theglobaldemandhasbeenincreasingalmostexponentiallyforovertwodecades.Theauthorshavebeenunabletofindastudythatprojectsthepasttrendsintothefuture.Suchastudywouldhavetoconsiderthemarketpotentialbasedonpercapitacon-sumptionintheimportingcountriesandmaybecomparethedevelopmentovertimewithsimilarproducts(e.g.Macadamianuts).Thedisruptingeffectsoftheworldwidepeakinagriculturalproductpricesin2008,andthesub-sequentdecreasethrougheconomicstagnationin2009,wouldneedtobetakenintoaccount.

ÿ Increasing demand by the local processing industry. Thishasbeendescribedinthepreviouschapters.Itmustbementionedthattheincreasingpercentageofrawcash-ewbeingprocessedinthecountrysignifiesareductionof

INCAJU’sincomeandhenceoftheGovernmentofMozambiquefromthetaxonexportsofrawnuts.

ÿ Potential to streamline the marketing chain. Thereisapotentialtoreducetransactioncostsinthemarketingchain,mostnotablybybetterorganisingtheproducersandthewaytheyselltheraw cashew nuts.However,farmerorganisationsneedsupportforsuchimprovements.

2.2.4.3 Threats

AnumberofthreatsalsoexistthatMozambicanproducerswillhavetotakeintoaccount.Theseinclude:

Natural disasters that may destroy trees (increasing threat of cyclones).Theeffectofnaturaldisasterswasclearlydemon-stratedin2008,whencycloneJókwepassedthroughNamp-ulaprovinceanddestroyed1.47millioncashewtreesand113,000graftedseedlingsanddamagedtwonurseries,seri-ouslyaffectingtheircapacitytoproduceseedlings.Assumingthatglobalwarmingwillcontinueandcausemoreintenseandextremeweatherphenomena,suchdisastersmaystrikemorefrequentlyinthefuture.Thedamagecanbeminimised,however,byadaptingthewaycashewtreesaregrownandshaped.Treeswithamoreopenandlessdensecanopyandbranchingoutclosertothesoilsurface(half-trunk)aremoreresistanttodamagethanregular-sizeanddensecanopies.

(In the long run) a potential reduction of precipitation due to climate change. Fearsaboutclimatechangeincludethepossibilitythatannualrainfallfiguresmayfall.Thecom-binationofimpacts,bothpositive(lessmildew)andnegative(extendedperiodsofwaterstress),coulddamagetheproduc-tivityofcashewandleadtomorewildfiresharmingtrees.However,thiscouldbecompensatedbyadaptationsintheproductiontechnique.

Fall of the world market prices. Thedangerthatthemarketforcashewnutsmightbecomesaturatedsoonifproductionin

29 themainproducingcountries-especiallythoseinWestAfrica,VietnamandIndiacontinuestoexpandquickly-cannotbetakenlightly.However,thiscanonlybeassessedifathoroughstudyofglobaldemandandsupplyisconducted.Onemightassumethatinsuchasituationthelargerandmoredynamicorbetterorganisedproducerswouldpersistinthemarket,whereascountrieswithmanylowvolumeproducersandaninelasticagriculturalsectorwouldbecomenon-competitivesooner.However,sincealargepartofthecostsincashewpro-ductionarelabourcosts,countrieswhereproductionisbasedonsmallholdersmightweatherperiodsofreducedpricesmoreeasilythanthosewhereproductionisdependentuponwagelabour.

National policies that are not conducive to an enhanced business climate. ThechancethattheGovernmentofMo-zambiquemayreverseitseconomicpolicyofprivatesectorpromotion,marketliberalisationandadaptedfiscalpoliciesappearsslimintheeyesofthemission.Thestronglinkagetomajorbi-andmultilateraldonorsthatpromoteeconomicpoliciesthatsupporttheprivatesectormakesitveryprobablethatthepresentgovernmentalpolicies–andhenceprivatesectordevelopmentaswellasaconducivebusinessclimate–willbemaintained.

16

14

12

10

8

6

4

2

05 10 15 20 25 30 35 400

Prod

uctio

n pe

r tree

(kg

)

Age of tree (yrs)

32 3.0 Proposed Project Approach and Intervention Strategy

3.1 Proposed Areas of Intervention and Fields of Activities

3.1.1 Other projects in the cashew sector in Mozambique

Asmentionedabove,someprojectshavealreadybeenimple-mentedinthecashewsectorinMozambique.AnambitiousprojectwasimplementedbyAgence Francais de Developp-ment (AFD)from2001totheendof2006.Themainob-jectivesweretoincreaseproductionandstrengthenfarmers’groupsinthreesoutherndistrictsinNampula,namelyMoma,MogovolasandAngoche.Thetotalcostoftheprojectwas4.9millionEuros.Accordingtoinformationgathered,theprojectwasneitherverysuccessfulnorsustainable.Thereju-venationcomponentapparentlyregisteredfewsuccessesbe-causethesurvivalratesofseedlingswerefarbelowtheexpectedrate.Additionally,therewasnosustainableincreaseinthepro-ductionofthethreedistricts.

TheEuropean UnionalsofinancedaprojectthroughtheNGOAdventist Development and Relief Agency (ADRA).Theprojectlastedabout6yearsandaimedtosupportthecashewproduc-tioninprovincesinMozambique.Theprojectwasclosedtwoyearsago.Accordingtothedeskofficeritwasnotverysuccessfulandhadalimitedimpact.

USAID iscurrentlyfinancingtwoprojectsrelatedtothecashewsector:ThebiggestoneisAGRIFUTURO,whichpromotesthevaluechainofninecropsofwhichoneiscashew.ClosecooperationexistsbetweentheACiprojectandAGRIFUTUROandcomplementaryactivitiesinthecashewsectorwillbedeveloped.AGRIFUTUROisimplementednationwide.

USAIDalsofinancesafundwhich,throughcommercialbankcreditsofupto15months,supportsprocessingcompaniesinacquiringtherawmaterialtoproduceprocessednutsthrough-outtheyear.Creditsaregivenonceabusinessplanhasbeenpresentedandiftheclientshaveasafemarkettosellthepro-cessednuts.

3.1.2 Production-related aspects

Theanalysisledtotheidentificationofthreekeyinterventionareaswheresignificantimprovementsoftheproducer’ssitua-tioncanbeachieved:(a)Rejuvenationofthetreepopulation,(b)Improvementsinproductiontechniquetoenhancethetrees’productivityandproductqualityand(c)Improvementsinmarketingofcashewnuts.

3.1.2.1 Rejuvenation of the tree population

Asakeyfactorinfluencingtheproductionvolume,theageofmanytreesmustbeconsidered.Manytreeshaveclearlysur-passedtheageinwhichtheycanproduceattractivevolumesoffruit.Suchtreesfallintotheagerange(>30years)inwhichproductiondecreasestolevelsthatwarranttheirreplacement(see the following figure 3.1 onthedevelopmentoftheyieldovertimeinrelationtotraditionaltreevarieties).Treesof50yearsarenotuncommon.

Figure 3.1: Raw cashew nut production per tree (kg)

Duetotheiroldagethesetreesdonotpossesstheyieldpotentialofyoungertrees,eveniftheyaretreatedaccordingtotherec-ommendationsforbestpractices.Theiryieldwillnotonlybebelowthatofyoungertreesunderbestpracticeconditions,butitwillalsobebelowthatofyoungertreesthatonlyreceiveminimumcare(limpeza only,butnopruningorspraying).

Ashasbeencalculatedabove,assuminganimprovedsurvivalrateof75%ofseedlingsafterplanting,about410,000cashewtreesseedlingshavetobeplantedeveryyearinNampulaprovinceinordertomaintainthegivenagestructureofthetreepopulation.

Again:thecapacityofINCAJU’snurseriesinNampulaprov-inceisabout700,000seedlingsannually,resultinginonly115,000newlyplantedtreesbeingsuccessfullyestablished(surviving)inthefield.

So,inordertoreplaceanassumed3milliontreesthataretoooldtobecomeproductiveinthenext10years,300,000treeshavetobeinstalledeveryyearinadditiontothenumberneededtomaintaintheagestructure.Presumingasurvivalrateof75%to80%,another400,000seedlingshavetobeplantedinNamp-ulaprovince,elevatingthetotalnumberofrequiredtreesestab-lishedinthefieldto800,000annuallyduringthenext10years.

Table 3.1: Calendar of activities in cashew production

Plant’s stage / Human activity

Month

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Flowering

Nut ripening

Weeding

Spraying

Harvesting

Transplanting seedlings

33 Asaconsequenceofthissituation,keyfutureactivitiesare:anincreasedproductionoftreeseedlingstoreplaceoldtreesinNampulaprovinceandfewerlossesfromtheseedlingpro-ductionstageonwards.

Need to transfer existing nurseries to the private sector and support the establishment of additional private nurseries.Thissituationistypicalofthemanagementofnurseriesbystateorganisations.Manyprojectshaveinthepasttriedtoimprovesuchsituationswithouttouchingthequestionofwhoisresponsiblefornurserymanagementandhavefailedtoachievelong-termimprovements.Thisisduetothelackofcompetitioninpubliclyrunsystemswhichpreventsefficientlyoperatingnurseriesfromsurviving.Itisthereforeimperativetodevelopastrategytotransfertheexistingnurseriesfromthepublictotheprivatesectorduringanadequateperiodoftime–say3to5years.

Themissionthereforestronglyrecommendsdeterminingastrategytoachievethischangeofresponsibilityforseedlingproduction.Thestateshouldinfuturerefrainfromproducingseedlingsitselfandconcentrateonregulatingandsupervisingthesector,i.e.bysettingrulesandstandardsandcertifyingseedlingproducersandseedlingproduction.

Clearly,privatenurseriescannotdistributeseedlingsfreeofcharge.Thefirststepisthereforetheabolitionofthedistribu-tionofseedlingsfreeofchargetoproducers,evenbyINCAJU.Ontheonehandthiswillmakecashewgrowersvaluethetreesasaninvestmentthatneedstobetakencareof.Ontheotherhandthepossiblecomparisonbetweenvariousseedlingproduc-erswillhelpensurethatthemoreefficientseedlingproducerssurviveandensureconstantimprovementsovertime.Ifnec-essary,theseedlingproducersmustreceiveasubsidyduringthetransitionperiod.

Lookingatthepolicytobefollowedatthefieldlevel,theprojectwillnotsupportthereplacementofindividualtrees,butoughttorecommendtheestablishmentoftreestandsthat

followproventechniques.Hence,farmersshouldbeadvisedtoplanttheirseedlingsattherecommendedspacingof12 mby12 m,andshouldplantatleasthalfahectare(about35trees)minimum.

Thiswillhelpfarmersviewtheircashewtreesasacropthatisworthbeingactivelymanagedandtakesthemawayfromcollecting/harvestingfruitsfromtreesthatstandscatteredontheirpropertyandwhicharenottakencareofproperly.Also,sincetheprojectdoesnotneedtosupportlargecom-mercialproducers,anupperlimitof10 haor20 hashouldalsobeobserved.Henceitisrecommendedthattheprojectlimititssupporttoestablishingtreestandsofbetween0.5and10or20hectares.

Recommended types of seedlings Modernvarietiesandformsoftreescombinetomakecashewproductionmoreefficientandeconomic.Akeyelementisthewaytreesareshaped.

Asinothertreecultures,treatmentsandharvestingarefacili-tatedifthetreesarenotpermittedtogrowastallasisthecasenow.INCAJUhasproventhattreesofvarietiesthatbranchoutlowabovethesoilandthatareshapedaccordinglycreatetheseadvantagesfortheproducer.Ithasalsobeenob-servedthatsuchtreesaremuchlesspronetodamagebystorms.Inthiswaytheriskofloosingalargepartofthetreesduringcyclonescanbeminimised.

3.1.2.2 Improved crop and pest management

Arangeofmeasuresisneededtoenhancetheproductionofindividualtrees,independentoftheirage.Themixofrecom-mendedpracticesisknownasintegrated crop and pest man-agement (ICPM).

34 ICPMnormallyincludespreventivemeasures(pruning,cuttingunwantedshoots,weeding,biologicalcontrolofharmfulor-ganismsand,ifneeded,theuseofchemicalstocontrolthem).Thepreventivemeasureswouldbecomplementedbyemergencymeasurestocontrolharmfulorganismsincaseofoutbreaksofactualdiseasesorwhenmajorattacksareobserved.Thesecouldbeapplications(spraying)ofchemicalsbutwouldbestrictlyappliedandconsidereconomicthresholdlevels.

InMozambiqueICPMhas,untilnow,beencomposedofonlypreventivemeasuresandincludescalendarsprayingsofpartofthecropwithsubsidiespassedonthroughINCAJU.Thetable 3.1 (on the last page) showstheactivitiesincashewproduc-tionandthetimesoftheyearwhentheyareexecuted.

Spraying regimeINCAJUissupportingfarmerswhoownatleast100cashewtreestobecomecontractorsforspraying(port:provedor)otherproducers’trees.

Inthesystem,eligiblefarmersreceivetwodaysoftraining,asubsidyforbuyingamistsprayerandarethenlicensedtotreatthetreesofothercashewproducersaccordingtotherec-ommendationsofINCAJU. INCAJUfurnishesthecontractorswiththechemicalsfreeofcharge.ThefarmerswhosetreesaresprayedpaythecontractoranamountrecommendedbyINCAJU(between15and20 MTs/treeforseveralapplicationsintheseason2009/2010).Sincesmallfarmershavelittlemoney,someprovedorestakeinkindpaymentfromsmallholdersof2kgto3kgofcashewnutspertree.Withthegivenpriceof10MTsto13MTs/kgtheprovedormakesgoodprofit.ForNampulaprovince,INCAJUrecommendsthreecalendarsprayingsattwothree-weeklyintervals,butmoreifnecessary.

Theweaknessesofthissystemcanbeseeninthefollowing:ÿ Thecalendarsprayingtechniqueleadstoexcessiveuse

ofpesticidesÿ Therearenotenoughcontractors,especiallyinremote

areas,andonlybetween20%and25%ofthecashewtreesoverallarebeingsprayed

ÿ Thecontractorshaveatendencytogiveprioritytotreatingtheirowntreesandownersoflargernumbersofcashewtrees

ÿ Somesmallholdersclaimthatthecontactorsdonotspraythetreesasthoroughlyasneeded

ÿ Theheavysubsidiesofthissystemmaynotbesustainableinthelongrun

ÿ Withapriceforraw cashew nutsaround10 MT/kg,thesprayingiseconomicallyfeasibleiftheyieldpertreeisincreasedbyatleast2to3 kg/tree.Ifthetreeisoverageitisquestionablewhetherthefarmergetsanincrementalbenefitfromthespaying;iftheyieldpotentialdoesnotallowanincreaseofatleast4to5kg/tree,thismeasureisnotprofitableforthefarmer.

3.1.2.3 Improvements in marketing

Frequently,improvementsintheareaofmarketingareneededtocomplementincreasesinproduction.Thisisalsothecaseinthecashewsector.Improvementsinthisareahavethepo-tentialtocontributesignificantlytoincreasingtherevenuesoftheproducers.

TheimprovementsrequireontheonehandthattheGov-ernmentofMozambiquesetsfavourableconditions,e.g.theviabilityoftheexistingtaxonexportsofRCNandtheexportbanuntiltheendofDecembershouldbereviewedinthelongrun.Suchataxcanbejustifiedtoprotectdomesticprocessingfacilitiesduringaninitialphaseofestablishment.Butinthelongrun,Mozambicanprocessorsshouldbecomecompetitiveontheworldmarketandbeabletosurvivewithoutaprotec-tionistexporttaxonRCN.

Favourableconditionsforcashewmarketingcanalsobein-creasedbyprovidingbettermarketinformation.Forthefarmersinparticular,suchaninformationsystemisofvitalinterest.Farmersoftenselltotheclosestbuyersandtraderswithoutknowingaboutregionalcashewprices.Theirconditions(e.g.nostorageand/ortransportfacilities,hungerandthereforeurgentneedforcash)veryoftenpreventthemfromsellingelsewhere,butbetterinformationaboutpriceswouldinsomecasesprobablyleadtohigherrevenuesforfarmers.

Meanwhile,producerscangainbyorganisingthemselvesinassociationsorothersuitableformsinordertoofferlargeranduniformlotsforsalethataremoreattractiveforbuyers.Someofthemeasuresmentionedfalloutsidetherangeofmeasuresthatfarmerscancontrol.Jointactionofthestakeholdersshouldbepromotedinordertohelpimplementtherequiredchangesinthisarea.CLUSA,forexample,issupportingthecreationoffarmers’organisationsintheprovinceofNampula,andtheireffortstopromotejointmarketingshouldencompasscashewnuts.

Sellingasanassociationorcooperativehasseveraladvantages.Largeranduniformlotsaremoreattractiveforbuyers.Theindividualfindsthemselfinabetterpositionfornegotiatingahigherpricewhensellingtogetherwithothers.Ifwell-man-aged,anassociationcanequipitselfwithasmallstoragefacilitywherethememberscanguardtheirproduceuntiltheendoftheseasonwhenpricesusuallyraise.Organisedfarmerscanalsomoreeasilyselldirectlytothecashewfactories,avoidingthenumberofmiddlementhatareoftensituatedalongthevaluechain.

Theproducersneedtobemadeawareofthepotentialaddedincomethatcanbecreatedbycooperativeformsofmarket-ing.Jointactionofthestakeholdersshouldbepromotedinordertohelpimplementthechangesinthisarea.Forexam-ple,somedonorsandNGOssuchas CLUSA, ADPP andSNV

35 aresupportingthecreationoffarmers’organisationsintheprovinceofNampula.Sucheffortscanincludethejointmar-ketingofvariousagriculturalproducts,cashewnutsbeingonlyoneofthem.

TheACiwillconcentrateonexactlythisformoffunctioningfarmers’groups.Besidesprovidingagriculturalextensionad-vicetoFarmerFieldSchools,theprojectwillsupportthepar-ticipatingfarmersinorganisingthemselvesforjointmarket-ing.Thiscanbeintheformofanassociationorcooperative,butdoesnotnecessarilyhavetobeformalised.Theimportantfactorhereistoprovidefarmerswiththeknowledgeandca-pacitiesonhowtoselltheirproducetogether,e.g.explainingthepotentialbenefits,teachingbusinessskillsandpossiblyprovidingmeasurestoconstructastockroomorfacilitiesforsortingnutsaccordingtoquality.

3.1.3 Economic aspects and expected impacts of the project

Manymembersofthesmallholdercommunityareilliterate.Therefore,mostareunabletorealisticallyestimatetheeco-nomicsofcropproduction,andevenmoresointhecaseofapermanentcroplikecashew.

Still,evenundersuchcircumstancesandevenacceptingthattheprofitabilityofacropmustnotbetheonlycriterionfordecisionmaking,producersmustknowtheeconomicsofcash-ewproductionandmustbemadeawareoftheimplicationsofmaintainingaloss-makingbusinessoverseveralperiodswith-outtakingstepstomakeitmoreeconomicallyadvantageousorswitchingtoothercropsthatrenderahigherincome.

Cashewproducersmustbeabletocalculateoratleasttoesti-matewithanacceptabledegreeofcorrectnessthecosteffective-nessofchangesintheproductionsystem(i.e.thatofdifferentintensitiesofproduction,forexamplecomparingthelessormoreintensivemaintenanceoftrees).

Also,andmoreimportantly,cashewtreesreachtheirfullpro-ductivityonlyinornearthetenthyear.Aspectsofinvestmentanalysisandliquiditymustthereforebeconsideredwhencashewplantationsaretobeestablishedaneworwhenexistingplan-tationsaretoberejuvenated.

Similarly,aproducermustbeabletocomparetheviabilityofaninvestmentincashewproductionwithotheralternatives,includingannualcrops,andhemustbemadeawareofhowtorateaspectsofriskandthevaryingdegreesofsusceptibilityofalternativestotheriskposedbyclimaticvariationslikedroughts.Itisthereforeimperativetobuildtheawarenessofcashewproducersoftheeconomicsofcashewproductionandtoenablethemtoweightheeconomicsofdifferentoptions.

3.1.3.1 Impact at the farm level

Asreported,manysmallholdersdonotcareforcashewtrees,butjustcollectthenuts.Theydonothavecostsrelatedtocashews.Assumingayieldof3kg/treeandapriceof10MTs/kgtherevenuefromthenutsisabout30MTs/tree,equivalenttoabout2,100MTsperha.Inadditiontothis,farmersproducealcohol (aguadente)outofthedriedappleswhichhasamarketpriceofabout20MTs/l.Theaguadenteisoftenusedtopaycasuallabourersemployedforharvesting.Itwasre-portedinNampulaprovincethatonaveragefarmersget0.125lofalcoholperkilogrammeofnutsharvested.

Figure 3.2: Cashew yield/revenue

3 kg/ tree

x 10 MTs/kg

= 30 MTs/kg

x 70 tree/ha

= 2100 MTs/kg

Othersproducejuiceoutoftheapplesandconsumeitorsellitonthemarketifthefarmissituatednearatownorabiggerroad.

Itseemstobethatfarmersinotherregionstakemorecaretoproducealcohol,probablybecauseofbettermarketopportu-nitiessuchasintheprovinceofGaza,whichisnearertothebigmarketofMaputoandwithalotoftourists(andpotentialclients)arrivinginGaza.Somefarmersreportedthattheirrevenuefromaguadentewasashighastherevenueofsoldnuts,whichsignificantlyboostsincome.Thedifferencesintheproductionofalcoholmaybebecauseofreligiousreasonsaswell,sincetherearemoreMuslimsinNampulaprovincethaninthesouthofMozambique.

Thefollowingcashflowanalysis (see next page)wasmadeofanewcashewplantationtoassesstheprofitabilityofcashewnutsandtoanalysetheincrementalbenefitforsmallholderswhenbettercultivationpracticesarechosen.Thetotalcashflowcontains25years,butduetospaceconstraintsononepage,only17yearsarepresented.However,itisimportanttorememberthatuntilthe25thyearitisassumedthateachyearinvolvesthesameoutflowsandinflows

Smallholderscarryoutallormostoftheworkontheirfarmswithfamilylabour.IntheruralareasofNampulaprovince,findingworkisalmostimpossible,especiallyforunskilledlabourers.Therefore,opportunitycostsforlabourmustnotbeconsideredandtheinputoffamilylabourisnotacostitemforthesmallholder.

However,twoalternativeswereconsideredinthecashflowcalculations:oneexcludinglabourcosts,assumingthatasmallholderisestablishingandrunninganewcashewplan-

Cost during establishment Cost peak produktion period

20%

80%

50% 50%

MTs/ha

6.000

4.000

2.000

0

6.000 MTs/ha

2.850 MTs/ha

Without Labour cost With Labour cost

36 tationwithfamilylabouronly,andasecondassumingacom-mercialfarmerhastohireandpaycasuallabourforallthelabourneeds(see the cash flow analysis, Table 3.2).

Foracommercialfarmerthemaincostsintheestablishmentofacashewplantationcomefromlabourduringthefirsttwoyears.Thesehaveashareofover80%,whereastheseedlingsaccountfortheremaining20%.Bycontrast,thesmallholderhastobearonlythecostsoftheseedlings.Duringthepeakofproductionbetweenthe16thandthe25thyear,abouthalfofallcostsforacommercialfarmerarelabourcostswhiletheotherhalfaresprayingcosts.

Figure 3.3: Cost split

Labour Seeding Spraying

Thebalancecashflow(themarginobtainedwhentheannualcostsaresubtractedfromtheannualrevenues)amountstoabout6,000 MTs/ha(207USUS$/ha)withoutconsideringthelabourinputand2,850 MTs/ha(98US$/ha)includinglabourcosts.Duringtheseyearsthevalueofthelabourinputofabout55workingdaysperhectareisabout110 MTsperday(3.8 US$/day)(balancecashflowwithoutlabourcostsdividedbytherequireddaysoflabour)whereasacasuallabourercostsabout50 MTs/day.Inotherwords:whenworkinginacashewplantationthefamilylabourergainstheequivalentoftwicethesalaryofacasuallabourer,whichcanbeassumedtoindi-catetheopportunitycost.

Figure 3.4: Balance Cash flow

TheInternal Rate of Return (IRR)ofcashewturnsouttobeveryhighwhenlabourisnotaccountedfor(inthecaseofthe

familyfarmer)atabout68%over25years.Whenincludinglabourcostsitisreducedtoabout12%.However,theprofitandthereforetheIRRwillincreaseifthesmallcashewtreesareintercroppedwithfoodcropsduringthefirstthreeyears.Sesameisonesuchcropthathasahightolerancetoheatandwaterstressandrendersaproduct(grain)andby-product(straw)thathavevarioususes.Inadditiontothis,thereisahighdemandforsesameinthecountry,thepriceisattractiveandtheGrossMarginispromising

InthiscasethereisapositivebalancecashflowfromthefirstyearonwardswhennotconsideringthelabourcostsandconsequentlyanIRRcannotbecalculated(itwouldbeindefinite).However,whenconsideringalllabourcoststheIRRisabout62%.

Afterthe10thyear,whencashewtreesareinfullproduction,thebalancecashflow(comparablewiththeGrossMarginofanex-istingplantationoranannualcrop)isabout6,000 MTs/ha/year(200 US$)withoutthecostsoflabourandabout2,850 MTs/ha/year(100US$)ifthelabourcostsarefullyconsidered.

3.1.3.2 Expected impact on poverty reduction

Assuminganestimatedyieldof3 kgpertreeand70 trees/ha,asmallholderwhojustcollectsthecashewnutswillatpresentharvest210 kgnutsperha.Atanaveragepriceof10 MTs/kgthegrossmarginwouldbe2,100 MTs/ha(about70US$).

Comparedtothe6,000 MTs/hawiththenewplantationand/ortheimprovedcultivationtechniques,theincomeismorethandoubledinthisway.WiththeapplicationofICPMtoexistingcashewtrees,anincreaseof5 kg/tree(from3 kg/treeto8 kg/tree)canbeassumed.Evenifweconsiderthatthefarmerhastopayonaverageatleast2 kg/treeforspraying,theincrementalbenefit(notconsideringtheincrementalneedoflabour)isabout3 kgofnutspertree,resultinginthedou-blingthefarmer’sincomefromcashewfrom70 US$perhaandyear.Theincreaseinincomevariesfromfarmtofarmac-cordingtothenumberoftreesorthearea.

Onaveragefarmersownabout20to30trees.Thismeansthatjustbyhavingthetreessprayedthepotentialofanincreaseofincomewiththeexistingcashewtreesisabout30 US$/yearfortheaveragesmallholder.Inadditiontothisithastobestatedthatthisincrementalyieldcanonlybeachievedifthetreesarenotoverage–whichinmanycasesisafact–andthetreesre-spondtotheimprovedcultivationtechniques.

Thiscalculationshowsclearlythatwiththeexistingcashewtreestheimpactonpovertyreductiononthemajorityofsmall-holdersisverylimited.Ifoneassumesanimpactof30 US$/yearandafamilyofsixpeople,thenthecontributiontothedailyincomeperpersonisjust0.014 US$/dayperfamilymember.

Cash

flow

ana

lysi

s of

a C

ashe

w tr

ee p

lant

atti

on (2

5 ye

ars)

Year

Uni

tNr.

of

Uni

tspr

ice/

unit

12

34

56

78

910

1112

1314

1516

17…

Infl

ows

Prod

uction

of Ca

shew

/tre

eKg

/tre

e10

1,0

35

77,5

88,

68,

89

9,2

9,4

9,6

9,8

1010

10

Rev

enue

of Ca

shew

/tre

eM

Ts/t

ree

10,0

30,0

50,0

70,0

75,0

80,0

86,0

88,0

90,0

92,0

94,0

96,0

98,0

100,

010

0,0

100,

0

Prod

uction

of Ca

shew

/ha

kg/h

a70

,021

0,0

350,

049

0,0

525,

056

0,0

602,

061

6,0

630,

064

4,0

658,

067

2,0

686,

070

0,0

700,

070

0,0

Rev

enue

of Ca

shew

/ha

MTs

/ha

1070

021

0035

0049

0052

5056

0060

2061

6063

0064

4065

8067

2068

6070

0070

0070

00

Rev

enue

of ag

uade

nte/

ha (0,12

5 l/

kg d

e ca

stan

ja)

l/ha

2017

552

587

512

2513

1314

0015

0515

4015

7516

1016

4516

8017

1517

5017

5017

50

Tota

l gr

oss

reve

nue

(MTs

/tre

e)M

Ts/h

a13

3863

8894

100

108

110

113

115

118

120

123

125

125

125

Tota

l gro

ss r

even

ue (M

Ts/h

a)M

Ts/h

a87

526

2543

7561

2565

6370

0075

2577

0078

7580

5082

2584

0085

7587

5087

5087

50

Tota

l gro

ss r

even

ue ($

/ha)

$/ha

3091

151

211

226

241

259

266

272

278

284

290

296

302

302

302

Outfl

ows

Labo

ur c

osts

Clea

ring

of th

e la

ndM

anda

y/ha

150

507.50

0

Lini

ng, d

iggi

ng the

hol

esM

anda

y/ha

450

200

Tran

spor

t of

the

see

dlin

gs to

the

field

(3

km)

Man

day/

ha5

5025

0

Plan

ting

Man

day/

ha2

5010

0

Irriga

tion

of th

e se

edling

sM

anda

y/ha

250

100

Rep

lant

ing

mis

sing

pla

nts

(20%

)M

anda

y/ha

250

100

Wee

ding

(lim

peza

) (1

hour

s/tr

ee, 2

tim

es)

Man

day/

ha12

5024

050

472

096

012

0012

0012

0012

0012

0012

0012

0012

0012

0012

0012

0012

00

Prun

ing

(1 h

our/

tree

)M

anda

y/ha

1250

6012

024

036

048

060

060

060

060

060

060

060

060

060

060

060

060

0

Har

vest

ing

(1,5

MTs

/kg)

MTs

/kg

1,50

105

315

525

735

788

840

903

924

945

966

987

1.00

81.02

91.05

01.05

01.05

0

Dry

ing

of the

Cas

hew

nuts

days

150

1020

3040

5050

5050

5050

5050

5050

5050

Dry

ing

of the

Cah

ew a

pple

sda

ys1

5010

2030

4050

5050

5050

5050

5050

5050

50

Prod

uction

of ag

uade

nte

(1 litro

por

8 k

g ca

stan

has)

days

550

250

250

250

250

250

250

250

250

250

250

250

250

250

250

250

250

Labo

ur c

osts

tot

al8.

150

160

735

1.34

91.

915

2.50

52.

938

2.99

03.

053

3.07

43.

095

3.11

63.

137

3.15

83.

179

3.20

03.

200

3.20

0

Inpu

ts

Seed

ling

s (r

equi

red

Qty

+ 2

0%) (C

osts

incl

. Tra

nspo

rt)

seed

ling

7020

1.40

028

0

Cost

s of

spr

ayin

g/ha

(ex

cl. c

hem

ical

s)M

Ts/t

ree

7020

280

560

840

1.12

01.40

01.40

01.40

01.40

01.40

01.40

01.40

01.40

01.40

01.40

01.40

01.40

0

Voltra

id (10

ml/

arvo

re 3

tim

es)

l0,

0350

021

042

063

084

010

5010

5010

5010

5010

5010

5010

5010

5010

5010

5010

5010

50

kara

te (5

ml/

tree

2tim

es)

l0,

0135

049

9814

719

624

524

524

524

524

524

524

524

524

524

524

524

5

Tota

l Out

flow

s ex

cl. L

abou

r (M

Ts)

1.40

028

053

91.

078

1.61

72.

156

2.69

52.

695

2.69

52.

695

2.69

52.

695

2.69

52.

695

2.69

52.

695

2.69

52.

695

Bala

nce

Cash

flow

(Gro

ss M

argi

n 1)

(M

Ts/h

a)-1

.400

-280

336

1.54

72.

758

3.96

93.

868

4.30

54.

830

5.00

55.

180

5.35

55.

530

5.70

55.

880

6.05

56.

055

6.05

5

Bala

nce

Cash

flow

(Gro

ss M

argi

n 1)

(U

S$)

-48

-10

1253

9513

713

314

816

717

317

918

519

119

720

320

920

920

9

IRR

68%

Tota

l Out

flow

s in

cl. L

abou

r co

sts

(MTs

)9.

550

440

1.27

42.

427

3.53

24.

661

5.63

35.

685

5.74

85.

769

5.79

05.

811

5.83

25.

853

5.87

45.

895

5.89

55.

895

Bala

nce

of c

ash

flow

(Gro

ss M

argi

n 2)

(M

Ts)

-9.5

50-4

40-3

9919

884

31.

464

930

1.31

51.

777

1.93

12.

085

2.23

92.

393

2.54

72.

701

2.85

52.

855

2.85

5

Bala

nce

of c

ash

flow

(Gro

ss M

argi

n 2)

(U

S$)

-329

-15

-14

729

5032

4561

6772

7783

8893

9898

98

IRR

12%

37

Tabl

e 3.

2: Ca

sh fl

ow a

naly

sis of

a C

ashe

w tr

ee p

lant

attion

38 Asignificantcontributioncanonlybeachievedinthelongrunbyestablishingnewplantationsofatleasttwotothreehectarespersmallholder.Asshownabove,1 hainfullpro-duction,whennotaccountingforlabourcosts(assumingthatthenecessarylabourinputisprovidedentirelybyfamilyla-bour),resultsinaGrossMarginofabout200 US$/ha/year.Thisisabout0.09 US$/familymemberperyear.Ifafarmergrows3 ha,thepovertyreductioneffectperfamilymemberwillbeabout0.30 US$/dayinthelongrun.

3.1.3.3 Impact on the volume of production

Inordertohaveanoticeableimpact,theprojectisexpectedtoreachabout10%ofthecashewproducersintheprovince,about30,000growersduringitsimplementationperiodof3years.

Asdiscussedabove,anincreaseintheaverageproductivityinNampulaprovincefromthecurrent3 kg/treeto8-10 kg/treewithpropermanagementappearsrealistic.Withthisincreaseof5kg/treetheproductionofatypicalgrowerwith30treeswouldincreasebyabout150kgperyear,whichmorethandoublestheactualproduction.

Theincreaseoftotalproductioninthepilotdistrictswillde-pendonthedegreetowhichtherecommendedtechnicalpackageisused(intermsofpercentageoffull,partialandnon-adopters).Assuming100%adoptionbythetargeted30,000treeowners,thetotalproductiondifferentialcouldreachabout4,500tonsayear–whichcorrespondstoatleast10%oftheprovince’sand5%ofthenation’spresentproduc-tionvolume.

Ontheonehandnotallparticipatingfarmersinthe Farmer Field Schools (FFS)willapplytherecommendedICPMculti-vationtechniquesentirelyand/or100%correctly.Thishasanimpactontheaverageyieldincrease.OntheotherhandthefuturemembersoftheFFSwillownanumberoftreesabovetheaverage,sinceexperienceshowsthatfarmerswithmoretreesorbiggerplantationsaremoreinterestedinnewtechnol-ogiesandinnovations.

Atthenationallevel,theproject’seffectwouldresultinin-creasedreceiptsfortheGovernmentofMozambiquethroughthetaxonexports.Thesemustbebalancedwiththeincreasedvolumeofsubsidiesfortheacquisitionofpesticidesandmistsprayersand,inthemediumandlong-term,theneedtomul-tiplytheproductionoftreeseedlingswhicharenowdistribut-edfreeofchargetothegrowers.

Thedescribedeffectsandtheideathatthegovernmentmight,inthelong-term,bettersupportthebuild-upofprivatesectorcapacityforseedlingproductionandserviceprovision,suggestthatafteratransitionperiodsubsidiseddirectgovernmentin-terventioninproduction,andhencethecostsassociatedwithsuchsubsidies,maybereduced.

3.1.3.4 Impact on the quality of production

Aswehavelearnt,thequalityofcashewnutsdeliveredbythefarmersisbelowinternationallevels.Variousmeasuresarepos-sibletoimprovethisquality.Butfirstithastobestatedthataslongastheprocessorsandexportersarenotwillingtopaypricesaccordingtoqualitythereisnoincentiveforthefarmertoproducehighqualitynuts.Thishasbeenthecasesofar.

OrganisedfarmerscouldeasilyperformaninitialselectionofRCNaccordingtoqualityaspects.Atthemoment,RCNarenotusuallypricedaccordingtotheirquality.Buyerspaythesamepriceperkgwithoutconsideringbetterqualityproducts.Someprocessingfactorieshavestatedthattheywouldpayaccordingtoqualitycriteriaifsuchasystemwereintroducedeffectively.Whileasinglefarmerwithoutstoragefacilitiescouldhardlymanagetosortouthisnuts,thiscouldbepossibleinanassociation.Thisimplies,however,thatthereissufficientproductioningeneralsothatthenutsoflesserqualityareactuallyinlessdemand.Sofar,everyrawcashewnut,regardlessitsquality,willfindabuyerontheMozambicanmarket.

Sofaronlyonefactorypurchasesaccordingtoquality,paying2MTs(20%)morethanforaveragequalitynuts.Duetohighdemand,farmersareabletoselltheirlowqualitynutsfortheaveragemarketprice.Buttheprocessorismixingthehighquality(bigger)nutswiththeotherrawmaterialbecausehewouldotherwisetreatthelabourersunequally,whichmightleadtobadrelationssincethosewhichprocessthehighquali-tynutwouldbenefitmorebecausetheyallarepaidbythekilogrammeofprocessednuts.

Themostimportantmeasurestoincreasethequalityofnutsaregoodcultivationsuchaspruning,pestmanagementandweedingandsubstitutingoveragetreeswithnewplantationsofcashewtrees.ToachievethisobjectivebestpracticesincashewgrowingwillbetransferredtothefarmersthroughextensiontechniciansandthefacilitatorsoftheFFSandamajoreffortwillbemadetorejuvenatethecashewtreepo-pulationinthefourpilotdistricts.

Thisneedsasoundstrategyforproducingnurseriesandcon-vincingpoliticians,otherdonorsandNGOsnottosubsidisetheproductionofseedlingsinordertogivetheprivatesectorthechancetoenterthismarket.

39 3.2 Implementation Strategy

3.2.1 Methodological approach

Giventhelowlevelsofliteracyamongsmallholders,thedif-ficultiesofusingmodernmeansofcommunicationandtheneedtocommunicatetoalargenumberofthoseinvolved,espe-ciallywomen,inlocallanguagesratherthaninPortuguese,

arereasonsthatfavouratieredsystemfortheintendedknowl-edgetransfer.Thiswaythenumberofpeopletargetedbyprojectpersonnelismultipliedandthefollow-upofchangesintroducedattheproducerlevelisdonebythoseclosetotheproducersorbytheproducersthemselves.InotherAfricancountriesinwhichthesituationofsmallholdersresemblesthatofthoseinMozambiquetheapproachcalledFarmer Field Schools (FFS) hasprovedmosteffective.Themaincharacteris-ticsoftheFFS-approachare explained in the box below.

Strengths of the FFS approach

Adult education: FFSs ensure the integration of the adult farmers’ existing knowledge/experience into the programme.

Convincing facilitators: The group facilitators are more convincing because they grow the crops themselves. Usually they are colleagues from the same or a neighbouring village. They are usually elected by the group, receive training and their judgement is therefore respected.

Based on crop phenology and time: The assistance of the growers is based on the crop phenology and continues throughout the year ensuring that farmers can immediately use and practice what is being learned and are not over-burdened by theoretical knowledge that cannot be applied right away.

Group study: Groups members can support each other, both with their individual experience and strengths.

Field School Site: Field Schools are always held in the community where farmers live so that they can easily attend. The FFS will choose a stand of trees in which the recommended techniques are demonstrated and applied by the group members and where they themselves practice the operations which they then repeat with their own trees.

Building groups: One of the jobs of the facilitator is to assist the FFS to develop the group spirit so that participants support one another after the FFS is over. This is done by having elected officers (head, treasurer, and secretary), and thus having a group identity. Such groups may even choose to extend their activity into the area of marketing by creat-ing a marketing association.

Basic science: FFS focus on basic processes through field observations, season-long research studies, and hands-on activities. It has been found that when farmers have learned about basics, combined with their own experiences and needs, they make effective decisions.

Trial fields: The FFS determines a stand of trees in a field for group study where farmers practice the recommended techniques and can carry out studies without personal risk. Here the groups can treat one group of trees in the tradi-tional way and another in the recommended way. The advantages of the recommended techniques are thus demonstrat-ed convincingly.

Evaluation and Certification: The results obtained with the traditional and improved techniques in the trial field are evaluated economically at the end of the production period. FFSs may include field-based pre- and post-tests for the participants. Then certificates can be awarded, which have a motivating effect, especially on those without school cer-tificates.

Follow-up All FFSs normally benefit from a longer follow-up period, in which the facilitators support the groups even after the direct involvement of the project has ceased. Regarding cashew trees, follow-up during a 3 to 5 year period is recommended when the planting (new or as a substitution of old trees) is demonstrated.

Community action: Once they have introduced communities to group action, FFSs may foster further community action, thus leading to other socio-economic benefits for the rural population.

Adapted from: Gallagher, K.D.: Farmers Field Schools (FFS) – A Group Extension Process Based on Adult Non-Formal Education Methods. Global IPM Facility 1999 See: http://www.farmerfieldschool.net/document_en/FFS_GUIDe.doc

Training of Facilitators(technically sound facilitator training)

Farmer Field Schools ÿ basic field course ÿ group organisation ÿ research methods

Community Action ÿ joint marketing

of nuts ÿ clubs, etc. ÿ joint procurement

of inputs ÿ farmer forums

40 TheFFSsystemhasanaddedadvantageoverthefrequentlyusedTraining and Visit Systemsinceitmakesthefieldactivitiesmoreindependentoftheofficialextensionservicesandtheiroftenprecariousfinancial.IntheFFSsystemextensionofficerssupervise/backstopfacilitators(upto5or6perextensionist)whoaremembersofthefarmingcommunitythathavebeentrainedforthepurpose.Thefacilitatorsguide/accompanythegroupsoffarmersformedatthevillagelevelthroughouttheseason.Afacilitatormayworkwithuptothreegroupsof20to30farmersandisusuallysomeonewithhands-onexperienceofthecropthatisatthecentreoftheprogramme.

Thedescribedstructureisalsoproposedforthisproject(see figure 3.7 on the next page).Thegenericactivityflowisvisual-isedintheschematicbelow.

Figure 3.5: Activity flow in extension programmes using Farmer Field Schools

3.2.2 Area and organisational structure of implementation

3.2.2.1 Districts proposed for implementation

Itisnotrecommendedtoimplementthestrategyinthewholeprovincebutratherinfourpilotdistricts.Toimplementtheproposedstrategyseemspossibleinrespecttotheavailablere-sourcesgiveninthecalculationbelow.

ImplementationistocoverfourdistrictsinNampulaprov-ince.Theproposeddistricts(see the figure 3.6) wereselectedusingthefollowingcriteria:

ÿ Districtisoneofthemaincashewproducingdistrictsoftheprovince

ÿ AlldistrictsarecloselyspacedtofacilitatelogisticsandbackstoppingbytheprojectstafflocatedatNampula

ÿ Highpopulationdensity(atleast25%oftheprovince’stotalinthefourdistricts)

ÿ Totalpopulationinthefourdistrictsshouldbeapproxi-matelyonemillion(170,000familieswith80%or135,000beingfarmingfamilies)

ÿ Processingindustriesexistinthedistricts(atleast5facto-riesinthefourdistricts)

ÿ Farmersorganisationsexistÿ INCAJUandMINAGRItechnicalstaffare

sufficientinnumberfortheproject‘sneeds

BasedonthesecriteriathedistrictsofMogovolas,Moma,AngocheandMogincualareproposedfortheimplementation.Theyaregroupedtogetherinthesouth-eastoftheprovince.

Figure 3.6: Districts in Nampula province proposed for the implementation of the Project

3.2.2.2 Organisational structure

Theprojecthastoavoidbuildingparallelextensionstructures.Thiswouldcreatehighcostsinthelong-runwhichcannotbemanagedinasustainableway.However,someINCAJUandMINAGstaffinthedistrictsarecurrentlyunderutilisedduetolimitedfinancialresourcesfortransport,communication,etc.,weakmanagement,bureaucraticprocedures,etc.

Therefore,theteamrecommendscooperatingcloselywiththesegovernmentalorganisations,especiallywithINCAJU.Theyaretheonlyorganisationwithspecialisedknowledgeofthecashewsectorandwithsufficientextensionagentsatthedis-trictlevel.Inadditiontothis,andaccordingtotheinforma-tionfromtheDirector,INCAJUisveryinterestedincoop-eratingwiththisproject.

Theorganisationoftheprojectwillfollowthestructuresuc-cessfullyusedinothercountrieswithintheprojectAfrican Cashew Initiative (ACi) – Analysis of the Cashew Value Chain in Mozambique withit’sheadquarterinAccra,Ghana (see figure 3.7 on the following page).

ThestrategyshouldbedefinedandapprovedbyaSteeringCommittee,whichconsistsofrepresentativesofimportantstakeholdersinthecashewsectorinMozambiqueandespe-ciallyintheprovinceofNampulasuchasINCAJUonthenationalandprovinciallevel;NGOsactiveinthecashewsectorinNampula;representativesoffarmerorganisations,processingindustry,traders,exporters,ACi,etc.TheSteeringCommitteeshouldmeettwotothreetimesayearandoneofitstasksshouldbetolobbyonbehalfofthecashewsectorandcoordinateandharmonisethestrategiesandactivitiesbe-tweenthedifferentactorsinthissector.

Regional Office Accra, Ghana

Coordinators in 5 other countries Nat`l, Coordinator Mazambique

Coordinator Moma Coordinator Mogincual Coordinator Angoche Coordinator Mogovolas 4

1–2 Extensionists per Aministrative Post 1–2 Extensionists per Aministrative Post 1–2 Extensionists per Aministrative Post xx

x Facilitators x Facilitators x Facilitators xx

FFS FFS FFS FFS FFS FFS FFS FFS FFS xxx

41

3.2.2.3 Project personnel

Capacity neededTomeetthetargetof30,000farmersduringa3yearperiod,thenumberofFFSshoulddevelopfrom120inthefirstyearto540inthesecondandthirdyear.Thenumberofsmallhold-ersreachedandofextensionistsneededtotrainandsuper-visethefacilitatorsinyear1(ratio1:5)andinyears2and3(ratio1:6)areindicatedinthetable 3.3 below.

Table 3.3: Number of farmers reached, of FFS, of facilitators, of extension technicians and District Coordinators needed

Type 2010 2011 2012

Farmers 3000 13500 13500

FFS 120 540 540

Facilitators 40 120 120

Extensionists 8 36 36

District Coordinators 4 4 4

National coordinator, deputy coordi-nator (agricultural economist) and ‘expert of farmers organisations’

3 3 3

Inthecaseoftheproposedprojectthefacilitatorsthataccom-panythefarmers’groupsaretobechosenamongthecashewproducersinaparticipatorywayatthevillageorcommunitylevel.Likelycandidatesmaybeproducersthathavebeencho-sentoprovidesprayingservices(provedores).

Proposed project personnel TheprojectwouldemployaNational Coordinator,whowouldworkoutofanofficeinNampulaandbesupportedbyaDeputy Coordinator(agriculturaleconomist)andaspecial-ist for supporting farmers organisations andanOffice Manager (administratorwithdutiesassecretaryandaccount-ant).Adriverandguardswouldcompletetheteam.TheNampulaofficewouldworkwith4 District Coordinators,oneineachdistrict,eachofwhichwouldconnecttobetween5and10extensiontechnicians.

Eachoftheextensionists (8inyear1and36eachinyears2and3)wouldinturnaccompany5to6facilitators.

Eachofthefacilitators(40in2010and120eachinyears2and3)wouldworkwiththreeFarmerFieldSchools.

Inthisway120FFScouldbeaccompaniedinyear1and540eachinyears2and3.

Thissystemwouldreach3,000cashewproducersinyear1,13,500inyear2and13,500(different)cashewproducersinyear3,i.e.atotalof30,000producersduringtheproposedimplementationperiodofthreeyears.

TheProject CoordinatorwouldbesupportedbyaGIZ Coordinator (junior expert) inahalf-timepositionwhichwouldbeattachedtotheGIZofficeinMaputo.Sheorhewouldsupportandbackstoptheprojectintheadministrationoffinancialmatters,therealisationoftrainingcoursesandM&Eactivitiessurroundingtheperformanceoftheproject,especiallyconcerningthelogisticsandthecontractingofnationalshort-termexperts.Thispersonwouldalsosupporttheproject’snetworkingwithotherdonorsandNGOsandpromotedialoguebetweentheprojectandrelevantgovern-mentalinstitutions.

OneInternational Short-Term Expertwouldberesponsi-bleforprovidingtechnicalbackstoppingandadviceoncurriculumdevelopmentand,specifically,economicaspects.HeorshewouldalsoorientthedevelopmentofanM&E systemforperformancemonitoringandassessmentoftheproject’simpactatthefarmlevelandproposeandlobbyforapolicyenvironmentthatsupportsthedevelopmentofthecashewsector.

National Short-Term Experts,mostlikelymembersofresearchandeducationalorprofessionaltraininginstitutions(likeIIAM ),wouldberesponsibleforcurriculumdevelop-mentandfortherealisationofthetrainingcoursesforextensionistsandfacilitatorsaswellastheimplementationofrequiredfieldcomponentsofthemonitoringsystem.

Figure 3.7: Proposed organisational structure of the Project Component Mozambique

42 3.3 Training Activities

3.3.1 Training of facilitators

Inordertotrainthefacilitatorsitisnecessarytoaccountforacertainpercentageofdropouts,sothenumberoftraineesneedstobe20%higherthanthefigures in Table 3.3 on page 41,hence48,216and216duringthethreeyearsforatotalof480individuals.

Thetrainingoffacilitatorswouldincludefourmodulesoffivedayseach,covering: (1) plantinganddiversification,(2)pruning,weeding,(3)integratedpestmanagement,(4) harvestandpost-harvestactivitiesandmarketing.Eco-nomicaspectswouldbeanintegralpartofthesemodules.

Thenumberofcourses,basedon20participantspercourse,is(mathematically)2.4inyear1and10.8eachineachofthefollowingyears,theirnumberaugmentedby2refreshercoursesinthesecondyearand9inthethirdyear.

3.3.2 Training of extensionists

Thetrainingandmonitoring/backstoppingofthefacilitatorsisdonebyextensionistswhowillbeselectedfromamongthemembersoftheextensionserviceandINCAJUinthepilotregions.Atotalof80peopleareneededduringthethreeyears:8inthefirstand36additionalonesineachofthefollowingtwoyears.

Theextensionistswillreceivetrainingingroupsof10byin-ternationalandlocalspecialists.Thistrainingconsistsofsixmodulesoffivedayseach,covering:(1) plantinganddiversi-fication,(2)pruning,weeding, (3)pestmanagement,(4) har-vestandpost-harvestactivitiesandmarketing,(5)economicsofcashewproductionand(6)farmersassociations.

Onesuchcoursewillbeheldinthefirstyearandfoureachwillbecarriedoutinthesecondandthirdyeartotrainnewprojectstaffplus,inaddition,onerefreshercourseinthesec-ondyearandfourinthethirdyear.

3.3.3 Training contents

Thetrainingcontentsofthecoursesaretoalargedegreeidenticalinsofarasfarastheycoveraspectscloselyrelatedtocashewproductionandmarketing.

However,thetrainingoftheextensionistsincludesaspecificmoduleontheeconomicsofcashewproduction,asthisgroupshouldunderstandaspectsrelatedtoproductivitynotonlyofcashewproduction,butalsoofthemethodologyfordetermin-ingthefeasibilityofinvestmentsandalternativecrops,whichwouldbebeyondthepresentcapabilitiesofthemajorityofsmallholders.

Themodularconstructionofthetrainingcourseswillfacilitatetheeasyadaptationofthecoursecontentstothespecificneedsofthetrainees.Aproposalforthecontentsofthecourse(toberefined)isgiveninthetable 3.4 on the following page.

Table 3.4: Proposed main contents of the training modules

Training Course CASHEW PRODUCTION for extensionists (E) and FFS facilitators (F) (contents to be refined by project staff)

Objective: Participants know how to increase the productivity and profitability of cashew production as well as of nursery management and are aware of gender and HIV aspects

Method: Short exposure to the relevant theories, brief presentation of research results, group exercises in the classroom and in the field building on/incorporating participants’ experiences

Module 1: Integrated Crop Management (ICM) in cashew nut production (for E+F) ÿ Pruning and cleaning trees ÿ Prevention and treatment of pests and diseases ÿ Natural and chemical control measures ÿ Use of mist sprayers / health protection ÿ Harvesting and post-harvest techniques ÿ Marketing of cashew nuts ÿ Increasing the value added of by-products

Module 2: Planting and plant substitution (E+F) ÿ Field preparation for planting ÿ Suitable times for planting ÿ Proper seedling care before and after planting

• Supply of nutrients• Physical support• Plant protection • Watering

Module 3: Intercropping and diversification (E+F) ÿ Reasons for diversification (aspects of risk) ÿ The ‘machamba’ as a production system ÿ Production planning involving various crops

• Aspects of food security • Aspects of soil fertility• Labour requirements and monthly budgets• Economic aspects (income effects,

liquidity aspects, monthly cash flow) ÿ Intercropping of cashew with annual crops

(costs and benefits, problems)

Module 4: Farmers associations (FA) / Cross-cutting issues (E+F) ÿ Types of farmers groups and their characteristics ÿ Benefits expected from group action ÿ Differences between FA and private enterprises ÿ Management of farmers associations ÿ Factors determining an FA’s success or failure ÿ Legal aspects of FAs ÿ Gender aspects in cashew production ÿ Precautions against HIV

Module 5: Nursery management (E and persons interested in establishing private nurseries) ÿ Plant selection for rootstocks ÿ Grafting of plants ÿ Production techniques and plant hygiene ÿ Logistics (seedling distribution) ÿ Economics of producing tree seedlings (fixed and variable

costs, unit cost calculation, investment analysis, etc.)

Module 6: Adult Learning and Didactics for rural advisors (E+F) ÿ Differences between adult and child education ÿ The learning process ÿ Communication techniques ÿ Visualisation techniques ÿ How to increase the rate of adoption of new techniques

(management of demonstration fields)

43

44 3.4 Estimated Costs of the Project

Thecostsoftheproposedprojecthavebeenestimatedusingtheprincipalsofcostestimation(usingthehigherestimatesincasecostsvary).

3.4.1 Costs of experts

Thesecostsamountto441,660 US$duringthetotalperiodandinclude:

ÿ ThesalaryofapermanentGIZCoordinator(JuniorExpert)attheGIZofficeMaputoworkinghalf-timefortheproject,amountingto72,000 US$peryearand216,000 US$intotal

ÿ FlightandothertravelcostsoftheGIZCoordinatorwithinMozambique,amountingto5,220 US$peryearand15,660 US$intotal

ÿ Thecostofinternationalshort-termexpertsworkingfortheprojecttwomonthsperyear,being66,000 US$peryearand198,000 US$intotal.Thisisbasedon22,000 US$/monthhonoraryfee,4,500 US$/monthperdiems,andacostof5,700 US$forinternationalflights

ÿ Thecostofnationalshort-termexpertsworkingfortheprojecttwomonthsperyeartopreparecurriculaandcarryouttrainingcourses(4,000 US$/yearand12,000US$in3years)

3.4.2 Investment costs

Thesecostsamountto106,500 US$.Thesearecomposedof:ÿ Officeandcommunicationequipment(1,500 US$inyear1)ÿ Thecostofafour-wheel-drivecar(40,000 US$inyear1)ÿ Thecostof6motorbikes(30,000 US$inyear1–forthe

DeputyCoordinator,theSpecialistforsupportingfarmersorganisationsandthe4DistrictCoordinators)

3.4.3 Costs of technical staff a t the project office in Nampula and office running costs

Thesecostsamountto632,760 US$forthetotalperiodandconsistof:

ÿ ThesalaryoftheNationalCoordinatorandhishousingallowance,whichamountsto48,000 US$peryearand144,000 US$intotal(basedon4,000 US$/monthin-cludingsocialsecuritycontributions)

ÿ ThesalaryoftheDeputyCoordinator(AgriculturalEcono-mistandMarketingSpecialist)andhishousingallowance,whichamountsto24,000 US$peryearand72,000 US$intotal(basedon2,000 US$/monthincludingsocialsecuritycontributions).Itisimportantthatoneexpert,specialisedineconomicsandmarketing,isemployedbytheprojectto

adviseandsupervisetheextensionists,tosupportthemarketingofcashewnuts,especiallythroughfarmers’organisationssuchasfarmers’groupsorassociations,andtoadvisethemanagementofsuchfarmergroupsonhowtomaximisethebenefitsforthemembersbymarketingproducts,buyinginputsjointlyorrenderingservicestoitsmembers

ÿ ThesalaryofaSpecialistforSupportingFarmersOrgani-sations(InstitutionBuildingandCapacityDevelopmentSpecialist)andhishousingallowance,whichamountsto24,000 US$peryearand72,000 US$intotal(basedon2,000 US$/monthincludingsocialsecuritycontribu-tions).Attheprovinciallevelsuchaspecialistshouldbeavailabletosupportfarmersgroupsthatwanttodevelopintoformalassociationsandinordertoadviseexistingassocia-tionsinstrengtheningtheirorganisationalandmanagerialcapacities.HewillcooperatecloselywithNGOsworkinginthisfieldinNampula

ÿ ThesalaryoftheOfficeManager,whichamountsto6,600 US$/yrand19,800 US$intotal(basedon550 US$/monthincludingsocialsecuritycontributions)

ÿ Thesalaryofthedriver,whichamountsto4,800 US$peryearand14,400 US$intotal(basedon400 US$/month)

ÿ Thecostofguardsandancillaryofficecosts(electricity,stationaryetc.)whichamountsto1,800 US$peryearand5,400 US$intotal(basedon150 US$/monthinclud-ingsocialsecuritycontributions)

ÿ Therentforthe3-roomofficewhichamountsto12,000 US$/yrand36,000 US$intotal(basedon1,000 US$/month)

ÿ Thesalariesofthe4DistrictCoordinators,whichamountto48,000 US$peryearand144,000 US$intotal(basedon1,000 US$/monthincludinghousingallowanceandsocialsecuritycontributions)

ÿ TheallowancesoftheDeputyCoordinator,theSpecialistforSupportingFarmersOrganisations,andthe4DistrictCoordinators,whichamountto19,800 US$peryearand59,400 US$intotal(basedon10nights/month/personand1,000MTs/nightequalling330 US$/month/personatanexchangerateof30 MTs/US$)

ÿ Runningcostsoftheprojectcarof5,000 US$peryearand15,000 US$intotal(20,000 kmperyearat0.25 US$/km)

ÿ Runningcostsofthemotorbikesof13,500 US$/yearand40,500 US$intotal(basedon6motorbikes,50 km/day/motorbike,300work-daysperyear=60,000 km/yrandbasedonvariablecostsof0.15 US$/km)

ÿ TravelcostsoftheCoordinatorof3,420 US$/yrand10,260 US$intotal(assuming2flights/yrtoAccraandbackat2,000 US$each,6flights/yrtoMaputoandbackat300 US$each,16internationalovernightallowancesof180 US$/nightand18in-countryovernightallowancesof30 US$/night)

45 3.4.4 Costs of the extension technicians CooperationisintendedwithINCAJUandMINAGwhicharekeyplayersinthesector.ItisassumedthatINCAJUandMINAGcanbepersuadedtoreorienttheworkoftheiragentsintheprojectareasothattheycanserveassupervisorsoftheFFSfacilitators.Theirsalariesmustthennotbeconsideredasaprojectcost.Thecostsassociatedwiththetrainingoftheextensionworkersandwiththeirworkexecutionitselfamounttoatotalof219,313 US$duringthe3yearperiodandincludethefollowing:

ÿ Thecostsoftrainingtheextensiontechnicians(extension-ists)andincluding,inyear1,sixprojectstaffmembers,of2,257,500 MTsintotal.Thecostcalculationforthetrain-ingcoursesconsiders25 daysofthecourse,10participants/course,acostofthe2trainersof2x3,000 MTs/day,roomandboardfortheparticipantsof350 MTs/day/trainee,andcostsoftrainingmaterialof100 MTs/day/trainee)

ÿ Thecostsofone5-dayrefreshercourseinyear2andfoursuchcoursesinyear3,amountingto262,500 MTsintotal

ÿ Thecontributionoftheprojecttotheextensionists’useoftheirmotorbikesinthefollow-upofthefacilitators,whichamountstoatotalof4millionMTsinthe3years

3.4.5 Costs of the FFS facilitatorsThecostsassociatedwiththetrainingofthefacilitatorsandwiththeirworkamounttoatotalof355,649 US$forthe3yearperiodandinclude:

ÿ Incentivepaymentstothefacilitators,whichamounttoatotalof1.2millionMTs(basedon50 MTspaidpermeetingwiththeFFSmembers,3FFSperfacilitatorand20meetingswitheachFFSduringtheyear=3,000 MTs/facilitator/year.With40facilitatorsinyear1and180inyears2and3,theannualtotalsare120,000 MTsinyearoneand540,000 MTsineachoftheyears2and3)

ÿ Thecostsofhandouts(leaflets)giventotheFFSmembers,amountingto180,000 MTsinyear1and810,000 MTsineachofthefollowingtwoyearsforatotalof1.8mil-lion MTs(basedonacostof60 MTsperhandout)

ÿ Thecostoftheinitialtrainingofthefacilitators,whichtotals7,224,480 MTsduringthe3yearperiod.

Thecalculationconsiders20 daysofthecourse,20partic-ipants/course,acostofthe2trainersof2x3,000 MTs/day,roomandboardfortheparticipantsof350 MTs/day/trainee,costsoftrainingmaterialof100 MTs/day/traineeatransportallowanceof50 MTs/traineecovering4trips,andtheneedtotrain20%morepeoplethanthenumberoffacilitatorsactuallyneeded

ÿ Thecostoftwo5-dayrefreshercoursesinyear2andofninesuchcoursesinyear3,totalling445,000 MTs

3.4.6 Training institutionItissuggestedthattrainingbecarriedoutatADPP’strainingcentreinIthuculo.Thistrainingcentrehasthefollowingad-vantages:

ÿ Sufficientcapacity(upto40participants)totrainfacilita-torsandtechnicians

ÿ Existingdidacticmaterialfortraining,e.g.pinboards,flipchartstands,etc.

ÿ Thepossibilitytoofferfullboardinthecentreitselfÿ About100 haofcashewtrees,whichcancomplementthe

trainees’theoreticallessonswithpracticalexercisesÿ Equipmentforprocessingthenutsandextractingthe

juicefromthecashewapplesÿ Additionalcrops,whichareimportantfortheobjectives

ofdiversifyingfarmproductionandincomesÿ Thecentrehastrainerswhowillbeabletotrainthepar-

ticipantsinICPMandwhoknowthesituationonsmallfarmsbecausetheyalreadyadvisefarmersgroupsoncash-ewproduction

ÿ Trainingmaterialforcultivatingcashew,whichonlyhastobeadaptedtotheneedsoftheproject

Inthecostcalculation,thecostoftrainingisbasedontheratesofthistrainingcentre.

3.4.7 Contingencies

Inordertocoveradditionalexpensesthatcannotbeforeseenatthepresenttime,contingenciesof175,000 US$(roughly10%ofthecalculatedtotalcosts)areincludedinthebudget.

Table 3.5: Costs of Project Business Skills to Farmers in FFS - Mozambique, Nampula Province

Year 2010 2011 2012 Total

No. of Farmer Field Schools (FFS) 120 540 540 1.200

No. of farmers in FFS 3.000 13.500 13.500 30.000

Cost of experts Unit US$/unit No/yr US$ US$ US$ US$

GIZ Coordinator Maputo (half-time, 6000 US$/calendar month)cal.

month6000 12 72.000 72.000 72.000 216.000

National flights and travel costs for GIZ-coord.(5 days/visit) 1 visit 870 6 5.220 5.220 5.220 15.660

International short term experts 2 month 33000 2 66.000 66.000 66.000 198.000

National short term experts month 2000 2 4.000 4.000 4.000 12.000

Subtotal 441.660

Investment costs

Furniture, office equipment, communication set 1500 1 1.500 1.500

Car, 4 wheel drive unit 40000 1 40.000 40.000

Motorbikes unit 5000 6 30.000 30.000

Subtotal 71.500

Cost of technical staff and running costs of the project office Nampula

Coordinator salary incl. housing cost month 4000 12 48.000 48.000 48.000 144.000

Deputy coordinator incl. housing cost month 2000 12 24.000 24.000 24.000 72.000

Farmers organisation specialist (FOS), incl. housing cost month 2000 12 24.000 24.000 24.000 72.000

Office manager/acountant/secretary 3 month 550 12 6.600 6.600 6.600 19.800

Driver month 400 12 4.800 4.800 4.800 14.400

Guard, cleaning, electricity, stationary, etc. 3 month 150 12 1.800 1.800 1.800 5.400

Office rent (three rooms) month 1000 12 12.000 12.000 12.000 36.000

Four district coordinators incl. housing cost 3 month 1000 48 48.000 48.000 48.000 144.000

Allowances for deputy, FOS, and district coordinators (330 $/month each) 4 month 330 60 19.800 19.800 19.800 59.400

Running costs of the car km 0,25 5.000 5.000 5.000 15.000

Running costs for the 5 motor bikes (50 km/day, 300 days/year) km 0,15 13.500 13.500 13.500 40.500

Travel costs of the coordinator (to Maputo and international travel) 5 3.420 3.420 3.420 10.260

Subtotal 632.760

Costs of extention technicians

Subtotal extension technicians (see calculation below) 219.313

Costs of facilitators

Subtotal facilitators (see calculation below) 355.649

Contingencies

Subtotal contingencies (~ 10%) 175.000

GRAND TOTAL (US$) 1.895.883

GRAND TOTAL (EURO) 1.365.036

46

Costs of extentionists 6 Unit Total 2010 Total 2011 Total 2012 Total 3 yrs

No. of extension technicians needed No 8 36 36 80

No.of courses needed to train extensionists (10 persons/course) No 0,8 3,6 3,6 8

Cost of training extensionists (plus, in 1st year, 6 project staff members) 7 MTs 367.500 945.000 945.000 2.257.500

No. of 5-day refresher courses for extensionists No 1 4 4

Cost of 5-day refresher courses for extensionists MTs 73.500 189.000 262.500

Costs of transport (motor bikes) for extensionists MTs 400.000 1.800.000 1.800.000 4.000.000

Subtotal (MTs) 6.579.400

Subtotal (US$) 219.313

Cost of facilitators

No. of farmer field schools No 120 540 540 1.200

No. of trained farmers (Ongoing training) No 3.000 13.500 13.500 30.000

No. of needed facilitators No 40 180 180 400

No. of trained facilitators (20% more than no. of trainers needed) No 48 216 216 480

Costs of the FFS (incentive for facilitator) MTs 120.000 540.000 540.000 1.200.000

Costs of handouts for farmers MTs 180.000 810.000 810.000 1.800.000

No. of training of facilitators No 2,4 10,8 10,8 24

Cost of the training of facilitators MTs 722.448 3.251.016 3.251.016 7.224.480

No. of refresher training courses per year (5 days/course) No 2 9 11

Costs of refresher ToTs per year (5 days/course, 2 trainers) MTs 100.000 345.000 445.000

Subtotal (MTs) 10.669.480

Subtotal (US$) 355.649

Exchange rate (US$ : MTs) 30

Exchange rate (US$ : Euro) 0,72

Base values used in the calculation of the costs of training extensionists and facilitators and determining costs associated with their work execution Unit Value

No. of participants per training course for extentionists No 10

No. of training days fextensionists 8 days 25

Costs of trainers for training facilitators or extentionists (per day per trainer) MTs/day/p. 3000

Costs of room and board (full board) during training for extensionists or facilitators (per day and per person) MTs/tr.day/p. 350

Costs of training material (per day and per person) MTs/tr.day/p. 100

Costs of training for extensionists (2 trainers per course) MTs/course 262.500

No. of trainees needed in training course to produce one trained facilitator No 1,2

No. of training days for facilitators 9 days 20

No. of participants per ToT for facilitators No 20

Costs of transport for facilitators to the training (to and back, 4 times) MTs 50

Costs of one training course for facilitators (2 trainers per course) MTs 301.020

Costs of transport (motor bike) for extensionists 10 MTs/year 50.000

No. of facilitators supervised by one extentionist No 5

No. of participants per FFS No/FFS 25

No. of field days/year per FFS No/FFS 20

No. of FFS per facilitator No.FFS/Facil. 3

Incentive paid to facilitator per field day assisted MTs/field day 50

Cost of handouts for farmers MTs/farmer 60

1 6 flights/year, 300 US$ each, 30 days allowances, (30 US$/day and 80 US$/night) sums up to 5220 US$/year2 Costs of an international short term expert: 4500 US$/month per diem, 22,000 US$/month honorar fee, 5700 US$ for international flights3 including expenses for social security 30.5%4 Costs for overnight staying of district coordinators (10 nights per month, 1000 MTs/night, 10,000 Mts/month/coordinator)5 Costs of travel for the coordinator: 6 national flights/year to Maputo 300 US$ each, two international flights/year to Accra 2000 US$ each. In addition to this per diems of 30 US$/night for 18 nights in Maputo, 180 US$/overnight for 16 nights in Accra6 The salaries of the extentionists are paid by INCAJU or MINAG. Each extentionist is assisting the field days of each facilitator he super-vises two times during one training month. There will be 10 training months per year. 7 The training in year 1 will include 6 project staff members, hence (8+ 6)/10 trainees requiring 1,4 courses at a cost of 25 days/course x 9500 MTs/day8 Training for extentionists: 5 modules, 5 days each: (a) Planting and diversification; (b) Pruning, weeding; (c) Pest management; (d) Har-vest and post harvest (e) Economics of Cashew production9 Training for facilitators: 4 modules, 5 days each: (a) Planting and diversification; (b) Pruning, weeding; (c) Integrated pest management; (d) Harvest and post harvest.10 Costs of transport by motorbike (investment 5000 US$, residual value 500 US$ economic live 6 years) depreciation 750 US$/year, fuel 80 US$ /month, maintenance and repairs 50 US$/month, 10,000 /year) 0,15 US$/km or 5 MTs/km. Average distance is about 25 km/visit

47 Table 3.6: Calculation of the cost of extension technicians and facilitators

48 3.5 Next Steps

Oncethisprojectproposalhasbeendiscussedbytheauthori-tiesconcernedandaProjectAgreementhasbeensigned,thefollowingstepswillhavetobeinitiatedtobegintheprojectimplementation:

ÿ EstablishingaSteeringCommitteeanddefiningitstasks.ÿ Selectingimplementationpartnersandreachingagree-

mentontheimplementationstrategyandprocedures.ÿ Contractingexpatriateandlocalprojectstaffandestab-

lishingtheofficeinfrastructure.ÿ Reachingagreementswithorganisationsthatcanprovide

trainers.ÿ Holding a joint planning workshop with representa-

tives of all stakeholders. Reaching agreement on the planned activities (Plan of Operations for the entire implementation period of 3 years and Plan of Activi-ties for year 1, which should include the following):• Realisationoftrainingforthefirstgroupsofexten-

sionistsbyspecialists(internationalandnational)Groupsizeshouldnotexceed10people–thecoursemaybesplitintotwoormoresections

• IdentifyingandformingtheFarmer Field Schools (lo-calities,members,facilitators,selectionofplotsforthefielddemonstrations)

• Trainingofthefacilitators(20peoplepercourse,modules1,2,3,4and6above).

• ActivatingfirstFFSinthedistricts.

Apartfromthesekeyactivities,theprojectneedstodevelopadditionalactivitiesto

ÿ Identify,afterapprovalbyINCAJU,privatesectorpartnersthatareinterestedintheproductionofseedlingsandad-visethemonthestart-upoftheactivity.

ÿ Supporteffortstoimprovesmallholders’accesstoformalcredit.

ÿ Helpimprovesmallholders’accesstoinputs.

49 List of Acronyms

ACA AfricanCashewAlliance

ACi AfricanCashewInitiative

ADPP AjudadeDesenvolvimentodePovoparaPovo

AIA AgroIndustriaisAssociados

AICAJU AssociaçãodosIndustriaisdeCaju

AFD AgenceFrançaisedeDéveloppement

CLUSA CooperativeLeagueoftheUnitedStatesofAmerica

EPV EstimatedProductionVolume

FAO FoodandAgricultureOrganization

FFS FarmerFieldSchool

GIZ DeutscheGesellschaftfürTechnischeZusammenarbeit

ICPM IntegratedCropandPestManagement

IIAM InstitutodeInvestigaçãoAgráriadeMoçambique

INCAJU InstitutoNacionaldoCajú

IRR InternalRateofReturn

M&E MonitoringandEvaluation

MINAG MinistériodeAgricultura

MT/MTS Metical/Meticais(Mozambicancurrencyunit)

NGO Non-governmentalOrganization

PMD PowderyMildewDisease

RCN RawCashewNuts

SNV NetherlandsDevelopmentOrganization

SWOT Strengths,Weaknesses,Opportunities,Threats

TIA TrabalhodoInqueritoAgrícola

USAID UnitedStatesAgencyforInternationalDevelopment

50 Notes

Published by:

Deutsche Gesellschaft fürInternationale Zusammenarbeit (GIZ) GmbH

International Foundations

Postfach 518065726 Eschborn, Germany