Cashew nut processing presents a valuable business opportunity in Nigeria given the country’s position as one of the leading producers of raw cashew nuts in Africa. With only about 10% of Nigeria’s raw cashew output undergoing local processing, there exists immense potential to add value, earn export revenue and create jobs by setting up cashew processing plants.
This article explores how Nigerian entrepreneurs can capitalize on the cashew value chain by establishing profitable processing units for various cashew products.
An Overview of Cashew Production and Processing in Nigeria
Nigeria is the 4th largest producer of raw cashew nuts in Africa, after Cote d’Ivoire, Ghana and Guinea-Bissau. Cashew farming is concentrated in the southwest and southeast regions where the tropical climate favors cashew cultivation.
Major cashew-producing states include Oyo, Osun, Ondo, Ekiti, Kwara, Kogi, Enugu, Abia and Taraba among others. The total area under cashew cultivation is projected to be around 300,000 hectares, yielding over 200,000 MT of raw cashew nuts annually.
However, local cashew processing is still at a nascent stage in Nigeria. Most farmers sell raw cashews to middlemen who then export the nuts to India and Vietnam – the world’s biggest processors. Only about 10-20% of the harvested raw cashew undergoes value addition within Nigeria.
This indicates a huge scope for the cashew processing industry to expand by setting up plants that can process raw nuts into:
- Cashew Kernels – The prime product, obtained by shelling and peeling raw nuts. Kernels are either white/ scorched or wholes/splits. They have immense demand globally.
- Cashew Nut Shell Liquid (CNSL) – The viscous liquid extracted from the honeycomb structure inside the cashew nutshell. It is used to make industrial chemicals, synthetics, and friction dust.
- Cashew Nut Shell Cake (CNSC) – The solid leftover after extracting CNSL. It is used as fuel, fertilizer, cattle feed etc.
- Cashew Apple – The cashew pseudo-fruit that is mostly wasted currently. It can be processed into products like juice, jam, wine etc.
Let us look at how you can turn raw cashew nuts into these value-added products and money by setting up processing units in Nigeria.
Steps to Start a Cashew Processing Plant in Nigeria
Starting a cashew processing plant entails meticulous planning, large investments, strategic partnerships and systematic execution. Here are the key steps involved:
- Conduct Market Research and Formulation of Business Plan
First and foremost, conduct thorough research on the cashew sector in Nigeria to make informed business decisions.
- Demand analysis – Assess current and future demand for cashew kernels, CNSL and allied products in export and domestic markets.
- Industry analysis – Study existing cashew processing units in Nigeria and scope for further growth. Analyze competition, products, capacities, manufacturing processes etc.
- Raw material availability – Evaluate production volumes and supply chain of raw cashew across cashew farming belts.
- Government regulations and incentives – Learn about policies, programs, subsidies etc. promoting cashew processing.
- Technology options – Explore equipment and techniques for processing and packaging.
- Project costs and economics – Estimate capital investment, operating costs, profits etc. by modeling project finances.
Based on the research, formulate a sound business plan covering your product portfolio, production capacity, quality standards, budgeting, timelines etc.
- Obtain Operational Licenses and Clearances
- Register a business entity with the Corporate Affairs Commission (CAC) to obtain a Certificate of Incorporation.
- Secure operating license from National Agency for Food and Drug Administration and Control (NAFDAC).
- Register with Cashew Export Promotion Council of Nigeria to gain visibility and access to export assistance programs.
- Fulfill state and local government regulations to set up and operate a cashew factory.
- Arrange Finance for the Cashew Processing Project
Cashew processing requires substantial capital investment. Approach banks, private financing companies or government agencies for business loans by presenting your feasibility report and business plan.
Some financing options include:
- Bank of Industry – Offers medium and long-term loans for agro-processing businesses.
- CBN Intervention Funds – The Central Bank provides concessional financing for agriculture.
- Commercial bank loans – Approach major banks providing SME loans.
- Foreign investments – Attract investment from international cashew companies looking to enter Nigeria.
- Strategic partners – Join hands with Nigerian cashew exporters who can invest in processing.
- Self-financing – Invest your own savings and funds to start small before seeking external financing for expansion.
- Procure Machinery and Equipment
Import critical cashew processing equipment like:
- Pre-cleaning equipment – elevators, dryers, de-stoners, floatation tanks etc. to clean raw nuts.
- Steam boilers – to steam-cook nuts for shelling.
- Shelling machines – to remove shells from steamed nuts.
- Peeling machines – to peel testa from cashew kernels.
- Grading equipment – gravity separators, sieves etc. for sorting kernels by size, shape and quality.
- Packaging machines – vacuum sealers, and nitrogen flushers to pack kernels in pouches.
- Roasting equipment, oil expellers, distillation units etc. for CNSL extraction.
Take care to source equipment that matches your processing capacity and technical requirements.
- Set Up the Factory Infrastructure
The processing plant requires infrastructure like:
- Warehouses to store raw materials and finished goods.
- Work sheds housing the processing and packaging machinery.
- Testing lab for quality checks and R&D.
- Utility supply including water, electricity and power backup.
- Waste water treatment facility.
- Administrative office block.
Ensure optimal factory layout and workflow. The infrastructure must meet food safety and industry standards.
- Hire and Train Workers
Staff the plant with skilled and unskilled labour:
- Production supervisors and workers to operate the processing machines.
- Quality control and R&D professionals to ensure product quality.
- Packaging, inventory management and warehouse staff.
- Administrative and sales team.
Train employees extensively on process protocols, safety procedures, hygiene and food safety standards, troubleshooting, equipment operation and maintenance.
- Commence Trial Production and Quality Checks
Conduct test runs to calibrate machines before starting commercial production. Refine processes and product quality based on trial outcomes.
Once commercial operations begin, rigorous quality checks must be performed at each processing stage – upon raw nut procurement, pre-processing, shelling/peeling, grading, roasting, packaging etc. to ensure premium product quality.
With thorough planning and effective execution, your cashew processing plant will soon be turning raw nuts into high-quality, profitable cashew products for export and domestic markets!
Lucrative Cashew Products to Manufacture in Nigeria
Here are some of the most commercially viable cashew products you can manufacture competitively in Nigeria:
- Raw Cashew Nuts
Nigeria produces over 200,000 MT of raw cashew annually but exports 95% of harvest as-is. Raw nuts with intact shells have a longer shelf life and fetch higher prices internationally than shelled kernels. Setting up dedicated raw nut processing units for grading, cleaning, packing and export is highly lucrative.
Target markets: Raw nut importers in Vietnam, India, UAE
- Cashew Kernels
Focus on producing premium quality white kernels demanded globally. Target production of met-demand kernel grades like Whole, Butts, Splits, and Large White Pieces (LWP).
Target markets: Europe, USA, Japan, Middle East, domestic market
- Cashew Nut Shell Liquid (CNSL)
Nigeria’s potential to produce over 60,000 MT of CNSL annually remains untapped. Set up CNSL extraction plants along with kernel processing.
Target markets: Local and international manufacturers of paints, brake linings, laminated boards etc. where CNSL is used.
- Cashew Nut Shell Cake (CNSC)
Left over after extracting CNSL, CNSC is a good biomass fuel for boilers. Also used as mulch, fertilizer, in livestock/poultry feed.
Target markets: Local boiler manufacturers, poultry farms, agro-product manufacturers
- Cashew apple juice & pulp
Popular in Brazil and Vietnam, cashew apples can be processed into nutritious juice and fruit pulp for domestic consumption.
Target market: Local supermarkets, juice vendors
The high export value and domestic versatility of these products present a solid business case for investing in cashew processing in Nigeria.
Challenges Facing Processors and Mitigation Strategies
While the Nigerian cashew sector holds promise, it also comes with inherent challenges that processors must tackle:
- High energy and water usage
Cashew processing is energy-intensive. The steam boilers, distillation units and machinery consume considerable electricity and water.
Mitigation: Use energy-efficient machines, minimize steam loss, and optimize water usage. Install solar panels and biofuel boilers to offset conventional energy needs.
- Low-capacity utilization
Many processing units operate below 50% of installed capacity due to shortages of working capital, raw materials and manpower.
Mitigation: Boost capacity utilization by securing abundant raw nut supply through coordinated procurement. Adopt precision equipment that requires lower manual labour.
- Limited access to finance
Banks consider the cashew business high-risk due to input supply uncertainties. processors struggle to obtain credit.
Mitigation: Present realistic business plans demonstrating risk mitigation strategies to improve credibility. Avail government schemes for agro-processors.
- High export logistics costs
Inadequate port infrastructure and complex documentation procedures inflate cashew export costs.
Mitigation: Use cost-effective sea routes. Obtain necessary phytosanitary certificates on time. Use export incentives under the Nigeria Export Promotion Council (NEPC)
- Unorganized raw nut supply
Over 60% raw cashews come from small farms, making coordinated procurement challenging.
Mitigation: Support out-grower models linking processors directly with cashew farmer clusters for organized supply.
With prudent planning and execution, these challenges can be effectively addressed to create a thriving cashew processing industry in Nigeria.
The Growth Potential Ahead
In spite of current limitations, the future growth outlook for cashew processing in Nigeria is remarkably promising.
- Expanding cultivation area under cashews can increase raw nut output to 500,000 MT annually by 2025.
- Value addition of just 50% of that volume will generate export revenues above US$ 500 million.
- According to the National Cashew Association of Nigeria (NCAN), locally processed cashew exports can grow from $94 million to over $400 million by 2025.
- Thousands of jobs will be created in cashew farming, aggregation, processing and trading.
- Processing units will spur the development of cashew farming belts while enhancing farmer incomes.
To truly harness this potential, supportive efforts are needed from both the public and private sectors:
- NAFDAC must expedite cashew factory licensing and regulation.
- CBN can formulate financial packages suited for cashew processors.
- Nigeria Export Promotion Council can drive cashew product promotion in foreign markets.
- State governments should allot land to establish cashew processing clusters.
- Entrepreneurs must invest in world-class cashew factories with modern technology.
- Farmer cooperatives are vital to organizing raw nut collection centers providing year-round supply security.
With such coordinated efforts, Nigeria is well-poised to emerge as a global cashew processing and exporting hub. The time is ripe to turn the nation’s abundant raw cashews into high-value processed products and foreign exchange revenue. Investors can seize this lucrative opportunity while creating jobs and uplifting rural economies.