Why are Fairtrade cashews more expensive?

We have just received a container of organic and fair trade cashew nuts from our Burkinabè producer Coopake. For retailers and consumers alike, the price might seem high compared to cashews without Fairtrade certification, and you may wonder why.

These cashews correspond to the 2020 harvest: the whole nuts are stored and will be shelled during the following months. The pandemic has had several consequences for cashew producers and we will see the details in this article.

Prices subject to market fluctuations

The main cashew production area is West Africa, and their processing takes place mainly in Asia. The timing of the last harvest coincided with the peak of the first wave of the pandemic in the spring.

In May and June 2020, the warehouses were full, but the Asian factories were at a standstill. The supply being considerable and the demand almost zero, prices therefore plummeted. On the international market, contracts traded at US$1,400 per tonne fell to US$900 [1] .

In Ivory Coast, the world's largest producer of cashews, the government sets the price to pay to producers at 400 FCFA. However, as a producer testifies to the newspaper La Croix: “with the crisis, the middlemen who come to the village offer us 200 to 300 FCFA per kilo”. But necessity is law, according to another producer: “To absorb my debts I was forced to accept the price of 300 FCFA per kilo. But it's like they came to steal from me. »

Cashews often constitute the only annual source of income for producers, amounting to CA$2,000 to CA$2,500. It is with this income that their families must deal with expenses for health, education, housing, etc. Even a slight reduction in this already meager intake can prove catastrophic.

In the summer of 2020, the Ivorian government announced a very large contract negotiated with the Vietnamese group T&T, specialized in the import-export of cashew nuts [2]. The price paid to producers, set by the government at 400 FCFA, will be respected [3]. However, this contract only represents around 20% of the volume that will be purchased from producers for export. The remaining 80% probably escape the vigilance of the authorities and are purchased at a ridiculous price, as the producers testify.

Producers paid a fair price

On the side of our partner, Coopake, located in Burkina Faso, a neighboring country to Côte d'Ivoire, producers received this year 475 FCFA per kilo. This represents almost double the price offered on the local market, from 250 to 300 FCFA. Comparing to the contract negotiated between the Ivorian government and the T&T group, we even arrive at 20% more.

And this is just the part about trading raw nuts. We have already mentioned in one of our blog articles (February 2020) the deplorable remuneration and working conditions in walnut shelling units. In the end, even if an organic and Fairtrade cashew nut costs 30% or 40% more than a non-Fairtrade cashew nut, it is worth it as a consumer to consider the facts.

Umano Fairtrade certified organic cashew nuts are:

• A price paid to the producer up to twice as high
• Less international transport since the nuts do not transit through Asia
• Safe working conditions and fair remuneration for shellers

At Umano and for many retailers, we choose to reduce our profit margin to offer the product at a better price for consumers. We also mainly sell cashew nuts in pieces rather than whole to offset the additional cost of fair trade. The quality and taste of the product are the same, it is essentially the imperfect visual aspect that changes. When you grind cashews to add creaminess to a vegan recipe, for example, appearance matters little!

Notes

To write this article, we compiled articles from various direct sources (producer cooperative) and the specialized press (Agence Ecofin, news.abidjan.net, La Libre Afrique, La Croix, Le Courrier du Vietnam) focusing on the 2020 cashew harvest in Ivory Coast. The choice of Ivory Coast is not insignificant, since it is the largest producer in the world with a volume estimated this year at nearly 900,000 tonnes [4]. In fact, this country is the largest producer in the world, but exports 90% of this volume in the form of shelled nuts which will be transformed into “cashew kernels”, mainly in India and Vietnam.