soft commodities 101
My favorite project of all was the cashew nut trade - a great problem to address, in the right time. Cashew nuts, a beloved snack all across the world, take a 30,000-kilometer journey from African farms to Southeast Asian processing facilities and, eventually, to Western markets. Recognizing the environmental impact and lost economic potential of this supply chain, we identified an opportunity to establish a local processing facility in Cote d’Ivoire - the world’s leading cashew producer. This would reduce transportation distances, improve profitability, and increase value capture within the source.
origins
The cashew tree (Anacardium occidentale), native to Brazil, is cultivated in Sub-Saharan Africa and Southeast Asia for its edible seeds, known as cashew “nuts,” though technically not true nuts. Rich in oil and flavor, cashews are popular in South and Southeast Asian cuisines, and serve as a premium protein-rich snack in Western countries. Nutritionally, cashews are fiber-rich, low in sugar, and provide nearly as much protein as an equivalent serving of cooked meat, offering health benefits like weight management, improved blood sugar, and heart health.
production and harvesting
Cashew apples are harvested by hand, and the seeds are sun-dried. In traditional roasting methods, the outer shells are burned to release the caustic resin, which can be harmful, though improved roasting techniques mitigate these effects. Since cashews are harvested annually, growers maintain stock to ensure profitability year-round. Immediately after harvest, raw cashew nuts are placed out in the sun to dry and are continuously mixed until the nuts in their shells get to around 8 to 10% rest moisture.
processing
Product packaging is fundamental to maintain RCN (raw cashew nut) quality, especially to avoid product damage, deterioration, or contamination. RCN is stored in dry, dark, cool, and well-ventilated conditions. They are then transported to a factory for processing. Collection, transportation and logistics processes are carried out by local intermediaries (typically engaged by large buyers, agents of exporters as well as agents of processors) who move from village to village to purchase RCN from the farmers.
Generally, the processing of RCN into edible cashew kernels takes the following steps:
roasting of RCN → shelling of RCN (cashew shell byproduct) → drying of cashew kernels → peeling (husk byproduct) → grading → quality control / fumigation → packaging
All these steps have to be conducted with care to obtain good quality and good grade kernels.
grading
Cashew kernels are graded based on size, shape, and color. The kernels must be obtained through roasting, shelling, and peeling. Below are the primary grading requirements, summarized from the UNECE Standard DDP-17, which governs the marketing and commercial quality control of cashew kernels, listed from highest to lowest value:
QC and shelf life
To ensure cashew safety, international growers and processors adhere to various quality control and food safety standards, focusing on chemical, microbiological, and contaminant control. Key programs include:
- Good Agricultural Practices (GAPs): Guidelines for safe on-farm production and post-harvest handling to minimize hazards.
- Good Manufacturing Practices (GMPs): Standards for sanitary processing, packaging, and transport.
- Hazard Analysis Critical Control Point (HACCP): A preventive approach to food safety, controlling risks across production stages.
Certification (GFSI-recognized) is essential for European and US importers, with popular certifications including IFS, BRCGS, and FSSC 22000. Buyers often require an audit of production facilities.
Cashews are packed in hermetically sealed, non-toxic containers to prevent contamination, maintaining a moisture level below 5%. Proper storage conditions include a dry, dark, cool environment (<10°C) with low humidity (<65%). When stored correctly, cashews have a 12-month shelf life. Transport packaging should be durable and compatible with standard pallet dimensions.
supply chain
The cashew supply chain is concentrated in developing countries for production, with Cote d’Ivoire, India, Cambodia and Nigeria among the largest producers. Harvesting and storage are locally managed, but these regions rely on developed countries for essential inputs like seedlings and fertilizers.
Most African cashews (over 90%) are exported as raw nuts to large-scale processors in Asia, primarily Vietnam and India, which dominate global cashew processing. Only a small portion of African cashews are processed locally, though recent initiatives aim to increase Africa’s processing capacity.
Vietnam and India re-export processed cashews globally, with Vietnam alone accounting for 78% of Europe’s cashew imports. However, Africa’s presence in the European cashew market is growing, reaching an 11% market share in 2021, with Côte d’Ivoire increasing from 1.2% to 5% since 2017. Africa has competitive advantages, including lower prices, reduced transport distances, fewer delays, and a better carbon footprint, making local processing an emerging focus.
market
Cashews are one of the most popular tree nuts globally, with the market size reaching $7 billion in 2022 and projected to grow to $10.5 billion by 2031 at a CAGR of 4.6%. Europe is the largest consumer, accounting for 35% of global imports (EUR 1.5 billion, or 215,000 tonnes), mainly for snacking, with a smaller but faster-growing segment in food processing. Germany, the UK, the Netherlands, France, and Italy are the top consumers.
In Europe, specialized nut importers are the primary channel, along with agents, food processors, and food service companies. Importers value transparency, often developing codes of conduct and maintaining strong relationships with suppliers. The retail industry’s demand for sustainability, organic, and fair-trade labels influences supply chain dynamics, adding pressure on importers and manufacturers for quality and price.
Cashew prices vary widely by region and type. Roasted cashews sell for €20-€25/kg, while unsalted kernels range from €12-€15/kg. The export price of cashews has fluctuated significantly, with the average European import price at €6/kg in 2021, varying by origin, quality, and destination market. The Czech Republic and Austria have the highest prices (€7.2/kg), while Italy and Spain have lower prices at €4.5/kg and €5.4/kg, respectively.
opportunity zones
The government of Cote d’Ivoire has introduced a range of incentives to attract foreign investment, particularly in value-added processing industries like cashews, cocoa, and cotton. Recognizing the economic potential in transforming produce locally, the government established tax breaks, special economic zones (SEZs), and import duty exemptions to encourage the development of processing plants near agricultural production hubs.
Key Incentives and Support Programs:
1. Tax Breaks: Foreign companies that establish processing operations in Cote d’Ivoire can benefit from extensive tax incentives, reducing operational costs and enhancing profitability.
2. Special Economic Zones (SEZs): The government has designated SEZs near major agricultural areas, such as in Korhogo in the north of the county, creating infrastructure specifically to support large-scale processing facilities.
3. Import Duty Exemptions: All machinery and equipment imported for processing operations within these SEZs are exempt from duties, allowing investors to acquire the necessary tools without facing additional financial barriers.
4. Comprehensive Support: Cote d’Ivoire provides a streamlined process for foreign investors, offering assistance in navigating regulatory, financial, and operational requirements.
Impact and Benefits for Côte d’Ivoire:
In exchange for these incentives, Côte d’Ivoire gains substantial economic benefits, including job creation, increased industrial capacity, and enhanced economic stability. By promoting local processing, the country strengthens its role in the global supply chain and captures more value domestically, shifting from raw exports to processed goods. This transition not only supports local employment and skill development but also fosters economic resilience and positions Côte d’Ivoire as a crucial player in the global agrimarkets.