The compensation procedure was troubled as the government resolved to confiscate the cashew consignments of those who fail to show proof that they are farmers.
The government also introduced the verification exercise to rid the sector of middlemen whom it believes for so long have dominated the business and caused woes to the cashew farmers. The middlemen have been buying the produce before harvest season since they take advantage to negotiate with the vulnerable growers who cannot afford to purchase agricultural inputs and thus conditioned to equally share the sales.
As the verification process continues, it has been found out that most of the cashew bought by the government had already been sold to the middlemen at prices lower than the government`s indicative price of Tsh. 3300 ($1.5) per kilo. Due to this, the government resorted to freeze at least 191 bank accounts belonging to farmers pending a detailed verification process. The Agriculture Minister, Japheth Hasunga, stated that the owners of the frozen accounts had sold cashew in small amounts to different Agricultural Marketing and Cooperative Societies (Amcos) making a total of over 1500 kilograms creating a need for thorough verification to determine the source of the consignment.
By the end of last week atleast Tsh.206 billion ($89 million) representing 62,452 tonnes of the over 200,000 tonnes had been paid to over 100,000 farmers as compensation and Tsh. 188 billion ($81 million) already deposited into the farmers` accounts by Christmas. Complaints have also risen from farmers claiming they have been sidelined in the compensation process. The Tandahimba Farmers` Association chairman, Faraji Njapuka, expressed his concern over figures released by the government claiming that his area had barely received a dime despite being a major cashew producer in the country.
Furthermore, questions arose over the time it would take to process the season`s cashew harvest estimated to be over 200,000 tonnes. Going by the installed and operational capacities of functional operational factories, it could take anywhere between 2 and 14 years to process the entire consignment.
Currently only eight cashew processing factories are operational in the country with their annual combined installed and operational capacities being 127,200 and 18,945 tonnes respectively. The eight factories that are currently operational include five that were previously owned by the government before they were privatized. They include Micronix System Ltd (Newalla II), Mtwara Cashew Company (MCC) 2005 (Mtwara), Exporting Trading Company Limited (Tunduru), Micronix System Ltd (Likombe) and Safa Petroleum and Mineral Company Ltd (Kibaha).
The whole cashew nut turmoil comes after the government barred the cashew traders from purchasing from the growers on grounds that the buyers were offering prices not favorable to the local farmers. Traders offered prices below the government`s indicative price which was stated to be Tsh. 3300 ($1.5) for a kilo forcing the government to declare its plan to purchase the entire cashew consignment. The government deployed the military and equipped them with 75 trucks each with a 20 tonnage capacity to aid the transportation of the cashew consignment from the cashew growing regions in the South to government storage facilities in Dar es Salaam. The entire process gave rise to controversies over the transportation costs and some politicians went further to question the ability of TADB to compensate the farmers citing the bank`s liquid capital of about Tsh. 200 billion ($90 million) vis-à-vis the 250,000 tonnes estimated at Tsh.660 billion ($300 million).
Tanzania has a competitive advantage on the cashew global market since its harvest time is the off season for cashews from West Africa, and so the government should utilize this opportunity before West African countries begin their harvesting in February thus spelling doom for the Tanzanian cashew making them fetch a low price due to market competition.