Cashew is a juicy fruit that bears a kidney-shaped nut, which is edible only when roasted. The demand for this fruit is huge in virtually all parts of the world, but majority of the world’s cashew comes from Africa. Interestingly many people who consume roasted cashew nuts do not know where they are grown or that they grow on trees.
Nigeria is currently the 6th largest producer of cashew nut in the world. This alone speaks volumes. There is so much potential within the cashew industry. However, with the potential comes the need for a good understanding on how the industry works. This product comes from cashew fruits. Cashew is a perennial crop that grows seasonally. Unlike other fruits, its seeds are externally attached to the flesh of the cashew fruit. A lot of extensive research has been done on cashew by the Cocoa Research Institute of Nigeria (CRIN)
You may be lost by the mention of CRIN, but don’t be. This body conducted a series of research on Cashew, which led to the introduction of improved seedlings. Today, the results of this research has resulted in improved cashew yield.
The huge global demand for cashew nuts has led to increased rates of cashew production in Africa and other cashew-producing parts of the world as well as increased exportation to various parts of the world. However, the annual global demand for the commodity far exceeds the supply, which means there is enough room for new players in the cashew nut exportation business.
If you have been looking to start an export business related to agriculture, then starting a cashew nut export business might be your best option. If this idea sounds good to you and you would like to take a plunge, then I advice you follow these guidelines for starting a successful cashew nut export business.
The Relevance of Cashew Nuts
The effort committed to improved cashew cultivation shows its relevance to the economy. Hence the acceptance it has gotten among farmers. Due to its high nutritional value, demand currently outweighs supply. This is therefore good news for investors. An interesting feature of this crop is its wide demand. By wide demand, we mean global demand for cashew. Currently Nigeria is unable to meet up export demands. Cashew nuts have significantly contributed to Nigeria’s revenue generation. Starting cashew business in Nigeria requires the right knowledge.
The cashew value chain engages a lot of participants. This implies a lot of opportunities for investments. However, to benefit from this, knowledge is key.
This is the point where it all starts. Starting a cashew plantation is serious work. However, this is financially rewarding at the end. Starting a cashew plantation requires a lot of time (usually several years) before it starts producing cashew. Here, a nursery is provided where the seeds grow to young trees. By transplanting these to their permanent location, a gradual process of growth commences. These trees need care until they are mature to grow without watering. It is however necessary to note that not everyone wishing to start this business needs to grow a cashew plantation.
Choosing Where to Focus On
As previously stated, starting a cashew nut business requires you to decide the area you would make the most impact on. By impact, we mean being effective. Cashew nut business has an attractive value chain where you can focus your attention on. You may want to process your cashew nuts before selling, or just selling them directly. Whatever the case, knowing the right strategy that will yield the highest financial reward is important. Processing these nuts significantly increases the market value. However, striking a balance between cost and profit is important.
First Obtain Guidance
To start well, it is important to get guidance from the right sources. The Cocoa Research Institute of Nigeria (CRIN) Ibadan is a good place to start from. By doing this, you will have significantly lowered the chances of failure in your intended business. CRIN has carried out a lot of research in this regard; hence, it is the right body to approach. An important aspect of the research conducted by CRIN is that you get to know the sources of demand (both domestic and foreign). This makes exporting of these cashew nuts easier.
Register Your Business
Starting a cashew nut business of worth requires you to register your business. However, registration depends on your scale of operation (scale of operation will be further explained below). Gaining official approval enables the business to function at a much bigger capacity. Registered agro-allied businesses stand to benefit from a lot of incentives. You may want to take this serious as a new start-up will require all the breaks it can get to enable it stabilize. Domestic and foreign supply requires you to have a license obtained through registration. To register your business, locate the CAC (Corporate Affairs Commission) office nearest to you.
Scale of Operation
Your financial strength determines your scale of operation. It is therefore important that you consider your financial strength and pattern your business according to available resources. Without this, the cashew nut business will likely fall on hard times financially in the nearest future. Having an under-funded business is not what you should wish for as it has the ability to cripple business activities.
Conduct market research
When you are just plunging into a business that you know nothing about, you need to research extensively to understand how things work. This is always the first step I recommend for export beginners.
A good way to start your research is to contact a seasoned cashew nut exporter to make inquiries about the business. You will need to find out: The required startup costs; How to find local sellers (suppliers); How to find buyers in foreign countries; How to identify high quality cashew nuts; How to process and package your nuts for shipping; How to choose a shipping company and agent, and so on.
Equipping yourself adequately with relevant information about the business will help you plan your business well and avoid all the pitfalls associated with starting and running the business.
Determine your target market
A crucial part of starting any export business is figuring out where the export commodities are going—and the cashew nut export business is no exception. It is important you decide which countries you will be exporting cashew nuts to.
When you are just starting out, it is recommended that you stick with just one country that has a good market for the commodity. As your business grows with time, you can consider targeting more countries. It goes without saying that your ideal export destinations are those countries where there is little or no production of cashew nuts, but the demand is high.
Find local sellers
You need to find local cashew nut sellers from whom you will buy the commodity. That is, these local sellers will be your suppliers. Be sure to have more than one supplier, so you can turn to others should one of them run out of the commodity.
You must also bear in mind that the success of your business hinges largely on the quality of cashew nuts you sell to exporters, so ensure that your chosen suppliers have a reputation for high quality cashew nuts.
High quality cashew nuts may cost a bit higher than the low quality ones. However, paying the extra costs for high quality cashew nuts will help your business build a good reputation and win more buyers easily in the long term.
Find a shipping company or agent
Since you will ship your cashew nuts to the desired export destination, you will need the services of a shipping company. Find out the best shipping companies in your country from other cashew nut exporters.
A good shipping company will deliver your goods to the buyer in a timely and effective manner. So, the quality of service delivered by your shipping company can also affect the reputation of your business—which means you should choose your shipping company carefully.
You may find it more convenient corresponding with a shipping agent or freight broker. Also in this case, it is important that you choose an individual with years of experience and a reputation of credibility.
Find and pitch potential buyers
To get your business going, you need to find potential buyers in your chosen export destinations. Search the web for information about businesses in that country that buy cashew nuts. You can also search online business directories listing businesses in that country.
Another way to find potential buyers in your country of choice is to visit the embassy office of that country to make inquiries about businesses who might be interested in buying cashew nuts.
Once you have a list of potential buyers, you should craft compelling proposal letters and send to them via the medium you deem the most appropriate. If they are interested in your proposal, most buyers will make a trial order to test for your credibility. Once you give a good account with the trial order, then you will get bigger orders from them.