Salma Seetaroo is the CEO and co-founder of Cashew Coast, a cashew nut processor and exporter in Côte d’Ivoire. She spoke to James Torvaney about how she built the business and the global trends and opportunities relating to the lucrative nut.
What does Cashew Coast do, and how did you first get into the cashew nut industry?
Cashew Coast buys raw cashews from individual farmers in Côte d’Ivoire, then we process the raw nuts into the edible kernels at our factory, before exporting them wholesale, mainly to Europe.
I never had any grand plan to go into the cashew nut business. I was working in investment banking, and performing due diligence on the purchase of a cashew processing factory in Azaguié, around 40km from Abidjan. The owners were looking to sell due to financial difficulties.
Whilst there, I fell in love with the cashew nut. It’s an amazing crop with many benefits and uses. As well as the kernels, which are widely eaten, the shells can be used to generate power, create fertiliser, or even animal feed. The apple (the fruit to which the shell is attached) is also high in vitamin C and eaten in countries such as Brazil.
We acquired the factory in September 2018 and in the first year we processed about 3,500 tonnes of raw cashews. In 2019, we started to develop organic farming.
In 2020, we doubled capacity and moved to dual shifts. The following year, we became fully certified and the majority of our produce was organic.
Currently, we export around eight containers of cashew nuts a month (each contains around 15.8 tonnes produce).
Explain the major challenges associated with cashew processing.
Processing cashews is an intensive process, which is part of what makes the final product so expensive. For each individual cashew nut kernel, the nut must be removed from the fruit (also known as the ‘apple’) by hand. It is then dried, stored and cooked to soften its shell before being machine cracked to remove the kernel. The kernel is heat-treated to cause the testa around it to detach. The kernel is then put through mechanical peelers and any residual kernel through manual peeling.
The shell itself is acidic and can cause damage to skins, so we use a fully mechanised process for the cracking. Other countries – traditionally India – do this manually which means fewer broken kernels but a higher risk to the workers.
Other challenges for cashew nut processing include infestation – it’s very common for butterflies to lay eggs on the cashew nuts – and pests. If cleanliness is not enforced properly, the kernels attract mice.
What are the global trends and opportunities in the cashew nut industry?
Traditionally, the consumer market was dominated by India. It is only relatively recently that Europeans and Americans have consumed large quantities of cashew nuts. The market is expanding as people move from consuming cashew nuts solely as snacks, and begin using them in ingredients for foods such as vegan milk and cheese, soups, butters, and salads.
Covid-19 actually helped us in many ways, as consumers in Western markets became more health-conscious and reduced their meat intake.
The supply chain disruption over the last couple of years has also changed behaviours of many commercial buyers, who saw the risks associated with relying on a single country for their cashew nut supply.
This is potentially a big opportunity for processors in West Africa; currently export of processed cashew nuts is dominated by Vietnam. Because of this near-monopoly, Vietnamese producers have been able to exert a lot of control over global prices for cashew nuts.
How are cashew nuts priced globally?
There are 26 different grades of kernel, based on factors such as size and shape. Whole intact kernels sell for around twice the price of their broken equivalents.
The trade prices for cashews are quite opaque – most of our sales are OTC (over-the-counter, meaning the buyer and seller negotiate directly, as opposed to via an exchange with public prices). Buyers often want to pay Vietnamese prices despite the fact that products from African processors are of better quality. However, buyers from Europe are prepared to pay a premium for organic cashews.
How can companies like Cashew Coast combat this price pressure?
Africa grows a large amount of the global cashew nut supply (around 43%, according to the International Nut and Dried Fruit Council). However, only around 10% of that is processed here. The vast majority is shipped to countries with more processing capacity, such as Vietnam.
The more cashew nuts that can be processed within West Africa itself, the more control African companies can have over their export prices. The Ivorian government is pushing hard to encourage processing locally.
What are the competitive advantages that Cashew Coast, and West African cashew nut processors more generally, have on the world market?
The major competitive advantage for West African processors is that we are located three weeks by ship away from Europe and therefore offer fresher products, compared to the roughly four months it would take if the cashews had to be shipped to Vietnam for processing. Once consumers taste the difference, I think there will be more appetite to pay higher prices for the fresher African cashews.
Another advantage for Cashew Coast specifically is that we are fully certified.
Can you elaborate on how certification helps you as a business?
We have five certifications, including BRCGS (Brand Reputation Compliance Global Standards) and Fair for Life. This helped put us on the map as not many West African processors have these certifications, and allows us to charge a premium. For example, for the WW320 grade of whole cashews, we can typically charge 15 cents per pound more for BRCGS-certified cashews (compared to a standard wholesale price of around US$3 per pound).
Is the certification process a major cost for the business?
The real cost comes in the management buy-in aspect – not just having the right facilities, but also the right processes. You need to change your entire design flow, dedicate significant capex, and train your staff.
The challenge is not just getting certified in the first place, but in renewing the certifications, as we get audited annually.
What trends do you see for the cashew export industry over the next few years?
African processors need to step up our game and build trust with the market. When we do, we can provide a counterpoint to the Asian producers.
There was a first wave of cashew processors in West Africa which largely failed. I think this next wave will be more successful and we will see more processors in West Africa, as governments offer incentives to encourage more domestic processing.
I also predict more regional organisations and co-operatives arising to reduce the influence of Vietnam on world cashew prices.
There is a trend of Vietnamese processors coming into West Africa. They control the technology – all the machinery we use is imported from Vietnam. A concern is the de-shelling of the kernels in West Africa and shipping to Vietnam for peeling and packaging. This can create an environmental hazard (poorly-disposed shells can leak CNSL, or cashew nut shell liquid, which can be harmful to plants and animals) and means that a lot of the added value remains captured outside of Africa. I think strong government policy is needed to combat this risk.