A Look at the Cashew Industry in Mozambique: Opportunities and Challenges

The cashew nut industry is a cornerstone of Mozambique's agricultural sector, with a varied history and significant potential for growth. Mozambique, once the world's largest producer of cashew nuts, has been making strides to reclaim its place in the global market. With rising production forecasts, increasing global demand, and opportunities for innovation in cultivation and processing, the country presents an attractive proposition for investors. However, the sector must navigate challenges, including the looming threat of climate change.

Cashews are kidney-shaped nuts obtained from trees grown in coastal areas. They are tasty, high in protein, low in sugar, and a good source of fiber, healthy fats, and several desirable minerals. As a result, they are used widely in baked goods, beverages, and cosmetics, helping to promote immunity, weight control, brain function, bone density, and good eyesight. They help in reducing blood pressure and cholesterol, thereby combatting cancer, gallstones, and cardiovascular disease.

Current State of Mozambique’s Cashew Industry

Mozambique's cashew production is set to rise to 160,000 tons in 2024, marking a steady recovery from a long period of underperformance. There are almost 10 million cashew nut trees across the country, and between 1 million and 1.4 million families cultivate and sell the nuts. In contrast, the processing sector only employs roughly 8,000 people in 20 factories.

The government and industry stakeholders have been working to rehabilitate plantations and improve yields. In the 2021-2022 marketing year, cashews generated

a gross income of $87 million. This growth is promising, but Mozambique's current share of the global market is still modest compared to other leading producers such as Vietnam, India, Côte d'Ivoire, and Benin, who together produce 73% of cashews globally.

Investment Opportunities

The global cashew market is expected to reach almost $9.3 Billion by 2028.

The European market accounts for 35 to 40 percent of cashew imports by value. It has increased annually from 2017 to 2021 in both value and volume, with almost all imports from outside of Europe coming from developing countries. Mozambique's cashew industry offers two key investment avenues:

1.       Research and Development (R&D)—The global cashew market faces existential threats from climate change. Research published by Carbon Brief highlights that key producers in Asia (India) and West Africa (Côte d’Ivoire and Benin) may face reduced yields due to rising temperatures and shifting precipitation patterns. Mozambique could take the lead in developing climate-resilient cashew varieties by investing in R&D. Research into disease resistance, improved cultivation techniques, and optimized water usage can secure the industry's future while enhancing yields.

2.       Processing Expansion—Currently, much of Mozambique's cashew output is exported raw, forfeiting the higher margins associated with processed nuts. Although the country was the first African country to open a cashew processing plant in 1960, processing activity declined in the late 70’s after it achieved independence from Portugal. Establishing processing facilities in rural areas can add value to the supply chain, create jobs, and stimulate local economies. Processing closer to the source can also reduce waste and increase efficiency. Mozambique's government and development agencies are already working to encourage this shift, but there is significant room for private sector involvement to scale these efforts. There is a particular opportunity for mechanization and digitalization of mechanical and manual operations. (High-value nuts are often still processed manually because of the high breakage rates of mechanical methods.)

Challenges: Climate Change and Sustainability

While Mozambique has favorable growing conditions for cashews, climate change poses a significant risk. A warmer climate can stress trees, reduce yields, and increase vulnerability to pests and diseases. The global cashew belt, including Mozambique, must prepare for potential disruptions, including irregular rainfall and extreme weather events. Without intervention, the long-term sustainability of the industry could be jeopardized.

According to a TechnoServe report, other challenges facing the industry include limited infrastructure, high absenteeism in factories, an inflexible labor law, and a long and costly export process. Mozambique’s volatile local currency exchange rate also contributes to uncertainty in production and export.

A Vision for the Future

Investors who embrace Mozambique's cashew sector have an opportunity to contribute to a win-win scenario: achieving commercial success while advancing social and environmental goals. Public-private partnerships could drive advancements in R&D, develop climate-resilient practices, and establish a processing infrastructure that benefits both producers and the broader economy.

Conclusion

The cashew nut industry in Mozambique is poised for a resurgence, with robust production forecast and untapped potential in processing and research. By addressing climate challenges head-on and investing in sustainable practices, Mozambique can position itself as a global leader in cashew production and processing. For investors, the opportunity is not just to capitalize on a growing market, but to be part of a transformative story that uplifts communities and ensures the future of a vital industry.