Overview of the Cotton and Cashew Council of Ivory Coast

Interview with Sanogo Malamine, General Director of the Cotton and Cashew Council (Conseil du Coton et de l’Anarcade)

How is the situation within the cotton segment at the moment?

Well we can talk a little bit about cotton but as you know we are positioned with cashews and we can discuss our perspectives and our potential, etc., but with cotton, we work with just 200 thousand tonnes, whilst the world production is 25 million tonnes. The traders have ginning units but they aren’t that bothered about adding value with spinning or weaving, they prefer to send the product to the Asian countries. What can be done is that we can improve productivity and yield, reduce the arduousness of the work for the growers and workers and try to advance in terms of processing of cotton. Today we just produce the fibre, we could spin it and weave it and thus enter the cloth market directly.

So the objective is to find investors to work in the weaving and spinning. Thus in both sectors, cotton and cashews, you are looking for investors to help with the industrialisation processes. What is your policy in trying to attract these investors? Do you have a message for anyone interested in investing in cotton in Ivory Coast?

First of all, in terms of cotton in Ivory Coast, we have a very large cotton growing area so our potential is enormous. Today we produce 450 thousand tonnes of seed cotton and we can multiply that quantity still. This is cotton that is collected nearly entirely by hand and is of very good quality. The sub-regional market, which is the WEAMU regional market, is a potential market for investors interested in weaving and cloth. So I think that there is a very good potential market here and as such there are plenty of opportunities for those that are interested in investing in cotton.

So you have good quality, good production possibilities and an economic zone as a potential market place. These are the three main factors to take advantage of. Now with regards to cashew nuts; tell us a bit about the event that happened last November, SIETTA.

Yes, SIETTA – The International Cashew Processing Equipment and Technology Show.

What is the current situation in the cashew sector in terms of production, world levels, etc.? Tell us a little bit about the sector.

Globally, the production of cashew nuts is around 2.5 million tonnes. The largest producer of cashews is India, who produces around 650 thousand tonnes, followed by Ivory Coast which produces around 530 thousand tonnes. The third largest producer is Vietnam which produces around 350 thousand tonnes, followed by Guinea Bissau with 200 thousand tonnes. Now the difference is that countries such as India and Vietnam are processing their production on site and they have rather fast processing capacities; thus they are receiving the raw cashew nut production from the rest of the world. Ivory Coast represents about 25% of world production and 40% of the global offer.

You have worked very hard since you took up this position and as such you have reviewed productivity, maintained quality, organised the commercialisation of this product and you have stabilised the revenues for the farmers. Can you tell us a bit about the current situation regarding the cashew nut sector in Ivory Coast?

The situation of the cashew nut sector in Ivory Coast has evolved with the establishment by the government of the Cotton and Cashew Council which has as its main objective the structuration of this industry. As mentioned, we have improved quality, we are in the process of improving productivity and yield per hectare from our farmers, we have organised the commercialisation and the result of which has been the reduction of the volatility of prices in terms of the growers and thus a maintained and acceptable price level. Today, overall the sector is doing well.

Now we have to ensure its durability and that should happen with the implementation of processing on site, all the more necessary since the market today is in Europe and yet the nuts go to Asia to be processed before returning to the European or American market. So our objectives at the moment are to increase our processing levels and to transform ourselves from being a country that is an exporter of raw cashew nuts to a country that exports cashew kernels. This will allow us to ensure the stability of the price in terms of the growers and even to perhaps increase the price and create added value as well as reduce unemployment in Ivory Coast because the cashew industry is one that could provide a lot of employment and particularly jobs for women.

Can you tell us a bit more about the SIETTA?

The International Cashew Processing Equipment and Technology Show is an exhibition that was proposed for the reformation of the cashew industry, because we saw that we were processing barely 5% of our production and we really wanted to increase this amount, not only to create added value as I mentioned earlier but also in terms of responding to the need for traceability. Currently European countries are demanding that products be traceable making it difficult for cashew nuts mixed from various origins to get onto the European market. Thus if we want to ensure the durability of this sector we need to be able to process on site here in Ivory Coast.

We have noticed that there are lots of investors interested in the processing industry but they have two problems, mainly the visibility of equipment and processing technology. We received many people that wanted to invest but they encountered lots of problems in this regard and so that is why we wanted to establish this event. We wanted to be able to put in contact the equipment manufacturers on one side and the investors on the other side so that we could all become familiar with the processing equipment and technology.

Another of our objectives was to increase the local awareness and consumption of derivative products of cashew nuts. This was very important because you can’t have a cashew processing industry without having local consumers. For example, India is the largest consumer of cashew nuts, thus they consume the product locally before exporting it. We have noticed a lot of similarities in terms of certain products that are derived from cashew nuts and that can be consumed easily in our country, notably cashew paste that is used as a sauce. Everyone is familiar with using sauces in Africa. So the objective was to provide a platform that would allow us to bring together the equipment manufacturers and the investors so that they can discuss opportunities. It allowed investors to buy equipment that was exhibited there; even some of the machinery on show was sold. The manufacturers came from various countries, from India, Vietnam and Sri Lanka and also from Italy and China. I think that it was a good opportunity for us to familiarise ourselves with the equipment and technology and a lot of partnerships or joint ventures were signed during this Show, notably between Ivory Coast and Vietnam particularly in terms of implementing technology from Ho Chi Minh, to support the Cotton and Cashew Council with equipment and technological transfers, whether agricultural or technological. Thus we have been working on materialising these aspects.

You mentioned cashew paste, what are other derivative products of cashew nuts?

There is the shell that can be used to make energy, charcoal and briquettes. Thus it can replace charcoal made from wood and can help limit deforestation. There is also cashew balm that we call cashew nut shell liquid, which is used in the friction industry as well as being used as an insecticide and a fuel. It is very corrosive. There is also the outer layer of the cashew nut that is used in cosmetics but can also be used as a feed for poultry. Then obviously you have the kernel. With the kernels you can make a paste which is used in pastry and sweets, etc. You can also make cashew nut milk. So as you can see there are many uses. The entire nut is used for an aperitif and has a higher commercial value. It is a product that is produced by the poor but consumed by the rich. On the European market for example, it is an expensive product. Thus the market is directed towards producing the whole blanched kernels because that is where the highest value is. The other derivatives have slighter lower value. There is a lot of potential in the derivatives.

Our objectives at the moment are to increase our processing levels and to transform ourselves from being a country that is an exporter of raw cashew nuts to a country that exports cashew kernels. This will allow us to ensure the stability of the price in terms of the growers and even to perhaps increase the price and create added value as well as reduce unemployment in Ivory Coast.

There are also cashew apples which is a separate branch because when it comes to cashews there are two parts: the cashew apple and the cashew nut. With the cashew apple we can make juice as they do in Brazil. We can also make jam, wine, ethyl alcohol, etc. However the greater commercial value comes from the cashew nut especially here in Ivory Coast. Thus we aim to develop the nut before we go on to develop cashew apples. To summarise, this product really does interest investors because the entire fruit has a use, nothing needs to be thrown away.

What is the return for an industrialist that wants to enter this sector?

In terms of profitability I think that the economic model shows that in the cashew sector you start to see revenue from the second year onwards. You have technological choices to make, there are manual technologies where everything is done by hand and requires a lot of workforce. There are also semi-automatic technologies, where some work is done by hand and then there are technologies that are entirely automatized. The main problem we have in terms of profitability is the financing of raw materials, especially for countries like Ivory Coast where the production is available over just 3 months. To make a profit you are obliged to stock up to last all year. That is a comparative disadvantage that we have with countries like India or Vietnam which not only have their own production but they are processing the whole world’s production too, and as crops are not harvested in the same month all over the world it means that they have a supply all year round. For us here, we are obliged to have capacity or instruments in place that allow us to provision ourselves with a significant stock all year round, whether it be by storage or whatever… but we can find solutions with banks or other mechanisms.

We need tohave the means to be able to have a constant production supply. Ivory Coast´s current production rates are due to the fact that we don’t have the capacity to process locally. Additionally, in countries like India and Vietnam, in order to reach their levels of processing, they had to prohibit the exportation of raw cashew nuts. They have obligated their industry to comply with these regulations. We are waiting for policies and regulations to be implemented here regarding the quantities that can be placed on the international market.

Thus is it very important for you that industrialists come here and that there are specific policies set up for this sector to attract investors.

There are already some specific policies regarding the profitability of this sector. Today, if you look at agricultural sectors in Ivory Coast, this is the sector with the most potential. All of the experts will tell you that. Secondly, there is the investment code, which is very profitable for this sector because all of the processing industries for cashew nuts can only be conceived in the north of the country because cashew nuts can´t take humidity. They have to be in dry conditions. If the humidity conditions are not adequate, the nuts germinate very easily. So in the north, the investment code is very interesting for all the industries there. We are in the process of promoting the investment code to the investors. We support investors on various levels ; we help all those who come to visit us and wish to set up processing units. Firstly we support them with all of their investment paperwork ; we even help them in terms of choosing their equipment and technology and we help them negotiate within the local structures for example with customary land rights. etc. Thus we are in the process of setting up a good system that will help support all those who want to invest in this sector. This is a great opportunity to create industry in the north of Ivory Coast which could really benefit from this industry as it will offer a way of retaining the population there, avoiding migration to the south.

Do you have an example of an investor who is willing to go to the north and who you are already working with?

Yes, there are private investors ; for example there are some Israeli investors coming next week, there are also Ivorian investors who are coming and there are Vietnamese experts coming next week to set up all of the support mechanisms for these operators. Thus the Show really does have an impact. Ivory Coast has decided to institutionalise this Show every two years to exhibit everything to do with new equipment and technology in the field of shelling and peeling cashew nuts. As you can see we really do have investors interested and we have taken measures to support them. As I mentioned we are going to have Vietnamese experts supporting the Israeli investors who are going to come as part of an investment fund investing in cashews.

Is there anything else that you would like to mention about your goals and objectives? Is there anything you would like to add regarding cotton, perhaps regarding the privatisation of the CIDT, the Ivorian Company for the Development of Textiles?

The CIDT was the only company that had the monopoly on purchasing, ginning and commercialisation of cotton in Ivory Coast. The CIDT was privatised in the year 1989 or 1990 and from that, 5 or so different private companies were born. What we can note overall is that the production has evolved greatly. Today we produce 450,000 tonnes which is a quantity we had never reached before. Thus we see that there was a good side to the privatisation of the CIDT. Now we have to improve the revenues for the producers and growers by improving the structure of this sector and making sure that the production factors and costs don’t eat away at the net revenues for the growers. Additionally, alongside the ginning of cotton there are also other potential industries that we can implement, industries that we are trying to re-establish such as spinning and weaving, to be able to evolve in the value chain of this industry.

In two years’ time you will be holding another Show, in the meantime what do you have planned for this year regarding the cashew sector?

We are going to continue with the structural reform of this sector that we have started already and that has shown results in an improved quality, and also an improvement of the revenues for the growers and producers. This year, the revenue for the growers and producers should be distinctly improved in comparison to last year as should the improvement in quality. Additionally we expect the number of investors in processing to increase also. This is the outlook for this sector. The cashew sector is starting to hold a lot of weight in Ivory Coast, we even have a saying here that “cashews are the cocoa of the north”. The government has a lot of hopes for this sector as it can be a way of really improving the quality of life for the producers and growers in the northern region and to offer alternatives to cotton which were not available until now. Now we need to professionalise the players in this sector and increase the number of companies in the northern region, because there are not that many companies set up there yet. The cashew sector will allow us to launch the industrialisation of the central northern region of our country.

Who could potentially intervene in the quality improvements for this sector, for example NGOs, funds, etc.?

As I said earlier, we are a platform and we accept all those that wish to support us. I can’t go into depth but for example the German cooperation through the African Cashew Initiative, which is an association between the GIZ German International Cooperation and the Bill Gates Foundation, has done a lot for the cashew industry not only in Ivory Coast but in the sub region. The GIZ has supported us a great deal, in terms of sending people to train us in good agricultural practice. Other European NGOs are also involved in this sector. We are supported by various NGOs and entities but we ensure the type of cooperationand that they don’t overlap. We work to optimise the work done by all of these participants. We even have the support of the World Bank, the European Union, the ACP Secretariat, etc., all of whom have supported us and we have ensured the coordination of this support to be able to optimise the participation of each one.

What is your outlook for the medium term if everything goes to plan? What would you like to achieve over the next 2 years?

We would like to see Ivory Coast as the leading country in terms of production of cashew nuts. We would like to see the growers revenues increase by more than 50% and that the processing levels go from being 6 or 7% to at least 30%. These are our projections and what we are working towards. Even if we don´t reach these figures we want to be not far off.

Do you have a final message to give to investors interested in Ivory Coast?

Ivory Coast is back! As you have seen there is a lot of potential for agriculture here particularly in terms of products for exports. The crisis did set us back but as you have seen the fundamentals are still here and in less than two years Ivory Coast has been regaining its position in all sectors.

In terms of the cashew sector, I think that it is the sector that offers the most economic opportunities in terms of investments in the agricultural sector in Ivory Coast. We want to show this to investors. We want to present them with this economic model and with all that this sector can offer in terms of partnerships that will be win-win between producers and investors.

I would like to invite investors to come to Ivory Coast so that we can orient them with regards to this sector that we believe has the potential to be very interesting in terms of agro-business.