How To Begin Cashew Nut Processing Business In South Africa – A Well Defined Business Plan
Nigeria is currently the 6th highest producer of cashew nuts in Africa, trailing Ivory Coast, Tanzania, Burkina Faso, Ghana, and Mozambique, according to the cashew association.
Cashew nut farming is very popular in Nigeria, with a land area of over 320,000 hectares used in the cultivation of this cash crop and the country currently producing over 120,000 tons of Cashew Nuts annually.
Since investing in cashew nuts farming is a lucrative long term investment that can thrive for over 50 years continued crop harvest and retail cyle, venturing into cashew nuts farming in Nigeria is a great option for new and existing agro entrepreneurs in Nigeria.
What Is Cashew Nut
Cashew, known botanically as Anacardium occidentale, is the seed of a tropical evergreen shrub related to mango, pistachio and poison ivy. Commercial growers cultivate cashews in warm, humid climates across the globe; Vietnam, Nigeria, India, Brazil, and Indonesia are among the top producers.
Cashew nuts are a kidney-shaped, glove-like seed, that grows at the base of the cashew fruit.
Business Opportunities In The Cashew Nut Farming Business Around The World
1). Source Of Food:
The cashew fruit and the cashew nuts are both a great source of food. The fruits can be sold to people in communities for food, and the cashew nuts, the most important part of the cashew fruit when roasted, can be sold to people as a snack.
2). Alcohol Production:
The cashew fruit is actively used in the production of alcohol by many alcohol producers around the world, making the sale of the cashew fruit to their facilities, a great source of income for the cashew nuts farmers, traders, or exporters in Nigeria, Africa, or anywhere around the world.
Facts And Benefits Of Cashew Nuts
- Cashews nuts are about 21% protein, 46% fat, and 25% carbohydrates.
- Cashews nuts are eaten mainly as a premium-quality snack food.
- The shell of the cashew seed yields derivatives used in many applications including lubricants, waterproofing, paints, and arms production
- Cashews are high in calories. 100g of nuts provide 553 calories.
- Cashew nuts are rich in “heart-friendly” monounsaturated fatty acids like oleic, and palmitoleic acids.
- In 2010, Nigeria was the top producer of cashew nuts, producing 650,000 tonnes.
- Cashew nuts shell are surrounded by a toxic oil or resin that’s similar to urushiol called “anacardic acid,” which can burn or irritate the skin.
- The starch content of cashew nuts is about 23%, which is a lot higher than most other nuts and makes them suitable for thickening sauces.
- Cashews are commonly used in Southern and Southeastern Asian cuisine.
Types Of Cashew Nuts
First, raw cashew nuts qualities are measured in Kernel Outturn Ratios which can range from 30 KOR to over 50 KOR.
But when it comes to the roasted cashew nuts, there are different varieties with various sizes and qualities. It is also key to know that roasted cashew nuts are called cashew kernels.
The types of cashew kernels are:
- W180: This is also called the King of Cashews. They are much larger than the rest and are very expensive.
- W210: This is commonly known as Jumbo nuts. They are also pricy, but not as expensive as the W180 grade of cashew
- W240: This is also a large sized cashew nuts grade. Their price is in the middle of the pack.
- W320: These are the most popular type of roasted cashew kernels. They’re very available in the global market, are moderately priced, and are the most common size that would be requested.
- W450: is the smallest and cheapest white whole kernels and hence the favourite among low priced whole grades
How To Start Cashew Nuts Farming In Nigeria: Step By Step Guide
1). Pick A Great Site:
The first step is to pick a great site for cultivation. Some parts of Nigeria have great soil and climatic conditions to produce the best quality cashew nuts and other parts have different soil types and produce different grades.
When you understand the target quality you’re aiming for, you could get a site within the environment.
2). Planting:
While planting cashew, it is advisable to buy already sprouting seedlings or propagated plants from an established nursery, because while seedlings take 3 years to produce, it takes 5 years for the seeds to produce.
In cashew cultivation, seeds planted directly have less taste and less fruit than the parent plant. For commercial purposes go for the grafted ones. If you most, use containers or plant directly into a prepared bed. Insert 2-3 seeds into a hole of 2-3 cm depth.
2). Fertilization:
Apply nitrogen, phosphorus and zinc fertilizers. Cashew crops need nutrients at every point in their development to grow faster and to produce good fruits.
During the growing stage, fertilize them during fruiting and flowering. Apply 15kg of farmyard manure once in a year to a mature cashew tree.
3). Harvesting/Drying Of Cashew Nuts
The ripe fruit starts dropping from late January/Early February depending on where you plant them in Nigeria.
Before the trees start dropping their fruits, make sure you clear the surroundings of the trees.
It’s important to pick the nuts within 2 to 3 days of falling to avoid quality reduction.
Next, use a sharp knife to detach the apple from the cashew nuts. Ineffective detaching of the nuts would affect the quality.
Dry them on a clean surface and keep turning them frequently to ensure uniform drying
How To Store Cashew Nuts
You should store cashew nuts in jute bags that allow free flow of air. Place the bags on wooden pallets in a dry place with good ventilation.
Don’t place the cashew nuts bags on the floor to avoid moisture absorption.
Cashew nut farming and processing is an area of business with huge potentials. Although this is the case, knowing how to start has been a challenge. In a bid to establish your business, several factors need to be considered. Hence for meaningful progress, the business plan is indispensable. As the name suggests, this is the guiding light of your business. It charts the way forward by setting short, medium and long term goals. This significantly enhances the chances for success. This cashew nut farming and processing business plan sample seeks to guide the reader on what a good plan should contain. The basics as provided here cannot be done without.
It is necessary to add that doing a good job on your plan will directly impact on the business. Also, without proper implementation, the business will not be effective. In fact your plan is only as good as how dedicated you are to its implementation.
Executive Summary
Agro Hub is a cashew nut farming and processing business to be located in Jos Plateau State. Our main activities are the commercial cultivation and processing of cashew nuts for the domestic and the international market. Although we have a global perspective, we will act local with the aim of expanding production. We are a business driven by excellence. Hence we are leaving no stone unturned in realizing our objective. And the main objective for our business is client satisfaction. We understand that only the best products will guarantee client satisfaction. Thus it is only logical that we strive towards exceeding our set targets.
There are major cashew brands in Nigeria with huge investments. To compete favorably, it is necessary to think outside the box. Hence we are are prepared to hire the best brains in the industry. These would be made up of people with considerably experience in the industry. Their wealth of experience will be brought to bear on how we do business. Also a significant part of our capital will be channeled towards equipment purchase. These equipment will be used for processing and packaging of our products. Relevant permits and licensing have been obtained as well from regulatory authorities.
Our Products and Services
Our main activities are cashew nut farming and processing. However our other areas of expertise include training workshops. This would be organized for aspiring farmers. In addition to this, we will offer advisory/consultancy services to other farmers. Our customers will be charged for these services. Currently we have a 5 hectare farm. A major part of our nuts will be sourced from here.
However we realize that this is not enough. Therefore while expanding on our farms, we will buy these nuts from other farms. These would supplement or make up for the short-fall in cashew nuts. Within a decade of our operations, we intend to have planted over 30 hectares of cashew trees.
Mission Statement
Our mission at Agro Hub is to build a world class agro business. Based in Nigeria and exporting to the world, we intend to be a success model of what a business should be. Therefore to achieve this, we will be a foreign exchange earner for Nigeria’s economy.
Vision Statement
Branding is an important part of our business. Hence we intend leveraging on this to change the perspective of youths about farming. This is necessary because many see farming as being for the poor. We will change this perception by building a successful business. By so doing, those interested to learn will be trained on high impact driven agriculture.
Capital Requirement
Funding is indispensable to achieving our objective. Hence the entrepreneur Mr. Daniel Peters has set apart a savings of N5,000,000.00. The sum of N15,000,000.00 will be sourced through debt financing.
SWOT Analysis
We have realized that a thorough assessment is necessary to achieving our objectives. Hence we have hired competent hands to carry out a SWOT analysis on our business.
– Strengths: Here we have developed a business model that takes advantage of favorable agro-policies. This has created an incentive for growth. Lately there has been a growing emphasis on agriculture. We have positioned ourselves to take full advantage of these opportunities. Part of these include tax breaks as well as less stringent export requirements.
– Weaknesses: We are currently disadvantaged in comparison to well established cashew brands. This makes them have the financial muscle to dominate the market. However we have found a way around this. This includes taking advantage of their weaknesses. Another includes recruiting the best hands for the job.
– Opportunities: The local and international demand for cashew is on the rise. This is strategic to the success of our business.
-Threats: Unfavorable agricultural policies are possible threats. However this is highly unlikely for the time being. There are also threats posed by our competition.
Competitive Advantage
Our business philosophy is simple; act local and think global. This is the bedrock of our activities. Our workforce are our biggest strength. Therefore to ensure maximum productivity, they would be highly motivated. This will come in the form of attractive wages. Also a conducive work environment will be provided. This will ensure that they put in their best effort. Refresher courses on industry best practices will be held periodically. This will ensure they operate at peak levels. Investments in equipment is yet another area we plan on. We realize that only the best equipment will give the best results. Therefore a substantial part of our funding will go into this area.
A world-class quality control unit has been established. This is a strategy to ensure only the best products reach our target market. A constant innovative approach will be followed. This will ensure that we gain a fair share of the market size.
Target Market
Cashew is widely consumed across the world. This means there is market everywhere. However the domestic market is important to our growth. Before we can go global, the domestic market needs to be conquered. Hence our targets are the domestic and the international market. The domestic market will provide the launching pad. In the Nigerian market, we will target the general population. How can we do this? By raising awareness about the benefits of cashew nuts. The potentials in this sector will also be stressed.
Sales Projection
This is a vital area of the business. We have researched on the viability of the business. This was carried out by experts hired by us. A three-year profit/sales projection was targeted. The results have been impressive. As a matter of fact, a steady growth in revenues has been predicted. However this discounts uncertainties such as sudden disasters, economic recession and others. The figures have been summarized in the table below;
- First Year N5,000,000.00
- Second Year N10,000,000.00
- Third Year N19,000,000.00
This steady growth is very vital to achieving our targets. Therefore with the right attitude, we will achieve our goals.
Pricing Strategy
We need to strike a balance in pricing to achieve a win-win situation. However to do this we need to adopt an effective strategy. This we have done by offering lower prices for our products. This will last for two months, after which prices will be adjusted back to normal. This is a strategy to capture a fair share of the market.