The African Cashew initiative (ACi) ACi´s Sustainable Supply Chain Model Rita Weidinger, Executive Director World Cashew Convention, Dubai, 5 February 2015

Overview Africas role and its potential in a global cashew sector What is the African Cashew initative (ACi) ACi Success factors ACi Achievements so far The cashew way forward

Africa´s role and its potential in a global cashew sector

Consumption Production Processing Keeping a balance between global supply and demand, Africa must increase current production level by 20% until 2019 Production Africa produces about 45% of global cashew production Processing Less than 10% of African raw cashew production undergoes further processing in Africa Consumption More than 90% of global cashew is consumed outside Africa – the main consumers are North America, India and the EU. Major consumers Minor consumers Major producers Minor producers Main producer India, Production areas in India, Brazil, Vietnam go down, while cashew production and arable lands for cashew cultivation are increasing in west africa, also due to climate change. The increase of local processing will have a positive impact on economic development. It creates jobs, especially for women. Higher expert earnings when the final product is exported opposed to the raw nut. The global supply is reducing and demand is increasing – meaning higher prices if we do not increase cashew productivity. Africa must produce 30% more cashew nuts in order to meet the global demand Global

The overview of cashew production shows that yields in Africa vary considerably Est. Number of farmers Thousands Production volumes 2013/14 (MT) Est. area planted (000 ha) Typical yield 3 (kg/ha) Producer countries1 Cote d‘Ivoire 550.000 330 1.000 500 Guinea Bissau 135.000 1.000 245 550 Benin 100.000 200 213 400 Tanzania 90.000 250 300 300 Mozambique 90.000 1.000 325 250 Nigeria 70.000 n/a 175 400 Ghana 68.000 75 62 800 Burkina Faso 35.000 45 140 250 Senegal 30.000 60 57 350 Kenya 10.000 60 33 300 The Gambia 8.000 10 14 500 Countries in which ACi operates Primary countries where cashews are grown Typical benchmark yields are 1.2 tons/ha in India (Maharastra) or Vietnam (Binh Phuc Province)2, suggesting Africa’s yield gap is >500 kg/ha 1 There is some production in Sierra Leone, Liberia, Mali, and likely other African countries too, but no detailed data available 2 ISS based on reports from DCCD and Vinacas 3 Typical yields observed during the last 1-5 years, according to experts estimations. Source: McKinsey analysis of report by ISS/Fitzpatrick; further ISS/Fitzpatrick updates

Climate change is expected to increase cashew’s importance as an income source in West-Africa Current Situation in Côte d’Ivoire and Ghana 2 Suitability in 2050 in Côte d’Ivoire and Ghana 2 According to MAXENT, the current cashew growing areas in Ghana are located in the Guinea and Sudan savannah eco-zones, mainly in the following regions: Northern and Brong Ahafo region in Ghana and Zanzan, Valle du Bandama, Savanes, Worodougou and Denguele regions in Côte d'Ivoire . Question Dana Bogess: “ This would be especially compelling if you could show that climate change is expected to make other crops harder to grow. Is there an expectation that farmers will have a higher dependence on cash crops such as cashew with food coming from elsewhere or just that the cash crop profile will change?” Answer ACi: “A recent study which compiles the results of 16 published papers gives an overview of the sign, amplitude and uncertainty of CC impacts on food crops productivity (maize, millet, sorghum, soybean and cassava) in West Africa.  They found that the negative impacts of CC on crop productivity are more severe with more intense warming scenarios, with a medium yield loss near -15% for the moss intensive warming scenarios. This relationship between warming intensity and climate change impacts  highlights the positive effect climate change mitigation (e.g. buffer role of planted trees like cashew): mitigating global warming will result in less severe impacts.   Source: Roudier,P. et al., The impact of fucture climate change on West African crop yields : what does the recent literature say? Global Environ. Change (2011), doi:10.1016/j.gloenvcha.2011.04.007 Climate change is expected to provide opportunity for cashew production to expand and replace other cash crops such as cocoa, as well as to “buffer” climate change effects on food crops (food crops yield loss potentially -15% for most intensive warming scenarios).1 Green areas indicate best suitability for cashew 1Source: Roudier, P. et al., The impact of future climate change on West African crop yields : what does the recent literature say? Global Environ. Change (2011), doi:10.1016/j.gloenvcha.2011.04.007 2Source: “Predicting the impact of climate change on cashew growing regions in Ghana and Ivory Coast”, International Center for Tropical Agriculture on behalf of BMGF, 2010.

Introduction to ACi

ACi tackles these challenges and transforms them into business opportunities for all actors along the value chain   Production ‘Increasing raw cashew nut production and quality’ Processing  ‘Increasing quantity and quality of African cashew kernel and cashew apple processing’ Supply Chain Linkages ‘Establish and expand sustainable links to the global market place’ Sector organization  ‘Advocate policies that favor cashew production and processing’ ACi vision for 2016: 430.000 farmers increase their family income

A Strategic Alliance of Private and Public Partners ensures sustainable and market-driven implementation of activities Funding, Contributing and Implementing Partners (16) Public Private CSO / NGO Other partners (30+) Matching Fund Partners (30+) 10+ National Research Institutions, Universities and Extension Organisation 10+ Buyers, Traders, Processors, Farmers Organisations 10+ National and International NGO’s

ACi works in five countries along the Cashew Value Chain: From Farm to Fork, A Win - Win Situation for all Budget Size $97 mio in total $52 mio in cash $45 mio in-kind From farm to shelf for europe

ACi Success factors

58 Master Trainers from 7 West-African countries Success factor 1: Developing Local Capacities and multistakeholder Partnerships in the Cashew Sector 380,000+ farmers; 2,200+ trainers 58 Master Trainers from 7 West-African countries 5 countries policy advise , Regional networking, Conferences Communication, based on data and facts. Using ICT for Management Information Systems, tracebility, trainings, etc.

Good marketing position for farmers Traceability Good quality Market Power Past Market Power Future Success Factor 2: Changing power relations in agricultural value chains provide high potential for a more inclusive business model Good marketing position for farmers Traceability Good quality Cooperation/ joint initiatives Bad marketing position for farmers No traceability No incentives for improvement Bad quality No cooperation/suspicion Potential for increased value addition for farmer based organisations Processors take increasing initiative to link with farmers Producer Processor Buyer In a market evolving toward supply driven model, there is potential for producers and their organizations to increase the value of production and trading functions. Main benefit to all: Close market linkages reduce the transaction costs also for processors and buyers, eliminating ineffective trading and improving quality and market compliance. trader trader Traders play a less significant role, although will not likely be eliminated entirely

Success factor 3: For sustainable inclusive business, processors and others must apply an incentive mechanism for farmers Loyalty packages Benefit to farmer Knowledge/Training Inputs Community warehouse/decentralized cracking Traceability Pre-financing Market information Know how quality and quantity; prices Bulk sales; Speculation Increase price / income for farmers Premium Production; Personal needs Competition

Business Development Services for processing industry Success factor 4: Increasing efficiency and viability for processing and farming by reducing costs, increasing ROI and in-country value Advise for Financial Institutions, facilitating $12 mio + for processing Business Development Services for processing industry Sector analysis: e.g. margin distributions, and cost factors for development activities, e.g. cost per ton processed; costs per farmer training. ACi internal: Key Cost indicators Return on Investment

ACi Achievements so far

ACi shows visible and remarkable Achievements until today 380,000+ cashew farmers trained; 22% of them women $120 million accumulated incomes Plus $120 net income per farmer Nearly 5,800 jobs created in new cashew processing industry 75% being women $3.6 million accumulated wage $620 annual max. wage per worker

ACi shows visible and remarkable achievements until today 20 processing facilities receive technical, financial and managerial assistance These increased capacities from 8,150 MT in 2008 to 48,200 MT 2014. Processing in Africa increased from 5 % to 10 %. 18 projects were established to facilitate linkages with farmers 10 new projects in 2015 Total investment of $15 million, reaching 200,000 farmers

The Way Forward

The Cashew Way Forward for Africa depends on…. … Which new actors are joining to build stronger linkages … How fast will investors move into processing in Africa … How innovations in processing equipment improve labour and capital efficiency … How financial institutions and investors will be sharing risks, e.g. participating in equity Farmers are well trained Products meet international quality standards Trustful linkages and relationship along the value chain are established Great potential will within the cashew sector and beyond for other crops … stays engaged

Thank you for your attention! For more information, please visit: ACi Website www.africancashewinitiative.org ACi Facebook Page www.facebook.com/africancashewinitiative ACi on Youtube www.youtube.com/AfricanCashewIn