#CommodityinFocus: Regulations Around Procuring Raw Cashew Nuts

Cashew nuts, a versatile and nutritious nut, have gained immense popularity in various cuisines worldwide. While roasted cashews are commonly consumed as snacks, raw cashew nuts (RCN) offer a different culinary dimension. 

However, procuring high-quality raw cashew nuts can be daunting if one is unfamiliar with the process. We’re here to offer guidance through essential tips & insights and help traders confidently purchase high-quality RCN. 

Understanding the importance of African government regulations for RCN

Complying with government and customs regulations is of the utmost importance when it comes to RCN export and import. Failure to comply can result in severe consequences, including delays, fines, and even the suspension of business operations. 

By adhering to these regulations, traders can ensure the legality of their business and protect their reputation as a reliable and trustworthy exporter/importer.

One of the primary reasons for these regulations is to maintain the quality and safety of RCN during transportation and storage. Governments set standards and requirements to safeguard the health of consumers and prevent the spread of pests and diseases. 

By complying with these regulations, traders contribute to the overall integrity of the global RCN trade and help maintain the industry’s sustainability.

Continental & Regional Regulatory Bodies

• African Cashew Alliance (ACA): Supports cashew industry growth, promotes best practices, and facilitates trade within Africa.

• Economic Community of West African States (ECOWAS): Regulates trade policies and facilitates intra-African cashew exports within West Africa.

• Common Market for Eastern and Southern Africa (COMESA): Promotes regional integration and trade in cashew-producing countries in East Africa.

National Government & Regulatory Agencies

Each major cashew-producing country has its own set of government bodies that oversee RCN exports.

West Africa

Ivory Coast

• Cotton and Cashew Council (CCA) – Regulates cashew pricing, export policies, and quality standards.

• Customs Administration – Ensures compliance with export duties and customs regulations.

Ghana

• Ghana Export Promotion Authority (GEPA) – Supports cashew exporters and promotes market access.

• Ghana Revenue Authority (Customs Division) – Oversees RCN export duties and documentation.

Nigeria

• Nigerian Export Promotion Council (NEPC) – Provides export guidelines and trade facilitation.

• Nigerian Customs Service (NCS) – Regulates export clearance and ensures compliance with global trade laws.

Burkina Faso

• National Cashew Council (CNC) – Oversees cashew sector policies and export regulations.

• Burkina Faso Customs – Monitors and controls RCN shipments.

East Africa

Tanzania

• Cashew Nut Board of Tanzania (CBT) – Manages cashew pricing, licensing, and quality control.

• Tanzania Revenue Authority (TRA) – Ensures compliance with export tax policies.

Mozambique

• Institute for the Promotion of Small and Medium Enterprises (IPEX) – Facilitates cashew exports.

• Mozambique Customs– Regulates customs duties and documentation.

Kenya

• Kenya Plant Health Inspectorate Service (KEPHIS) – Ensures phytosanitary compliance for RCN exports.

• Kenya Revenue Authority (KRA) – Customs & Border Control Department – Regulates RCN trade through ports and border checkpoints.

Process of procurement of Raw Cashew Nut

• Finding a Local Broker or Agent

When it comes to procuring raw cashew nuts, finding a reliable local broker or agent is crucial. When considering the purchase of raw cashew nuts from West Africa, engaging with a reputable local broker or agent can provide buyers with the necessary expertise and resources to navigate the procurement process effectively. 

Buyers can enhance their experience in procuring raw cashew nuts, ensuring a reliable and efficient supply chain.

• Coordination with Farms, Storage, and Shipping

Local brokers or agents play a pivotal role in coordinating with cashew farms for procurement, ensuring proper storage in warehouses, and liaising with logistics providers for shipping. 

They are responsible for establishing direct relationships with cashew farmers, overseeing the storage of the nuts in suitable warehouse facilities, and managing the logistics of transporting the nuts to their intended destination. 

This coordination ensures that the raw cashew nuts are handled and transported in a manner that preserves their quality.

• Payment Methods

Understanding the payment methods is crucial in the context of international trade. It is important to have a clear grasp of the various options available when it comes to purchasing RCN (raw cashew nuts). In this regard, two common payment methods stand out: The Letter of Credit (LC) and Bank Transfer.

The Letter of Credit (LC) is a widely recognized and utilized financial instrument that provides a sense of security for both the buyer and the seller. This instrument ensures that payment is guaranteed upon the presentation of compliant shipping and financial documents. It serves as a safeguard, instilling confidence in the transaction process.

Traditional bank transfers can also be employed as a payment method for the acquisition of raw cashew nuts. This method, although not as widely used as the Letter of Credit, still offers a reliable and straightforward approach to completing the transaction.

• Determining Payment Terms

The determination of payment terms is a critical aspect of buying raw cashew nuts. Common payment terms in the cashew trade include 100% irrevocable L/C at sight, where payment is guaranteed upon the presentation of shipping documents, and 10% deposit, 88% CAD at sight, 2% after quality inspection at the destination. 

These terms offer flexibility and security for both parties, allowing for the smooth execution of the transaction while ensuring quality compliance.

• Pricing and Trade Process

In the context of international trade, it is of utmost importance to have a comprehensive understanding of the various terms and concepts that are commonly used throughout the trade process. Two such terms that hold significant relevance in the realm of international shipping are FOB (Free On Board) and CIF (Cost, Insurance, and Freight).

FOB, which stands for Free On Board, denotes that the seller bears the responsibility for both the costs and risks associated with delivering the goods to the named port of shipment.

CIF, short for Cost, Insurance, and Freight, denotes the seller’s responsibility for covering the expenses and freight necessary for delivering the goods to the designated port of arrival. Acquainting oneself with these terms enables individuals to adeptly maneuver through the complexities of trade, thus ensuring seamless and prosperous transactions.

Additional Financing Methods

Understanding the various financing methods available for international trade can also be beneficial. Some common ways to finance international trade include:

• Open Account Terms: This method carries the most risk for the exporter but is a common practice in long-term business relationships.

• Documentary Collections: Involves using a bank to handle shipping documents and collect payment on behalf of the seller.

• Trade Finance Loans: Banks offer specific loans designed to meet the financing needs of international trade, covering expenses such as production, shipping, and inventory costs.

• Export Credit Insurance: Provides protection against non-payment by the buyer due to reasons such as insolvency or political instability.

• Supplier Credit: Suppliers may offer credit to buyers, particularly in cases of long-standing relationships or negotiated terms.

• Factoring: Factoring companies buy exporters’ accounts receivable at a discount for immediate cash flow, aiding in raw cashew nut purchases.

• Forfaiting: Selling medium to long-term receivables at a discount provides immediate cash for exports with longer payment terms, facilitating raw cashew nut procurement.

• Export-Import Bank Financing: These banks offer financing and guarantees, including credit insurance and working capital loans, supporting international trade and raw cashew nut purchases.

• Trade Credit from a Vendor: Negotiating extended payment terms with suppliers helps manage cash flow and secures favorable terms for raw cashew nut procurement.

It’s important to carefully consider the terms, costs, and risks associated with each method and possibly consult with financial professionals or trade experts to make informed decisions for specific international trade transactions.

For a more in-depth understanding of financing methods for international trade, traders can also refer to the provided video for additional insights.