Nigeria is the fourth largest producer of cashew nuts in the world with almost 19 states as major contributors. Our nuts go as far as India, USA, UAE, and Vietnam, yet, the quantity we export still falls short of demand. Raw cashew nut has a variety of uses that make it highly sorted. Cashew Kernels, the main product obtained by peeling the raw nuts, are edible.
The liquid extracted from inside the cashew is used for Making Chemicals while the leftover after extraction of the liquid is used for fuel, animal feed, and fertilizer.
Nigeria is a focal point for raw cashew nut buyers–this is a pure indication that the raw cashew nut business is more than a profitable venture for those seeking an agricultural-related business.
In this article, we will discuss the step-by-step approach to starting a raw cashew Nut Business in Nigeria.
Let’s get to it.
Table of Contents
Is Raw Cashew Nut Business Profitable in Nigeria?
The demand for Raw Cashew Nuts is on the rise with Nigeria being one of the top exporters. Respective marketers have been minting money selling these nuts. Now to answer the question, the raw cashew Nut Business is a very profitable venture in Nigeria.
Aside from selling the nuts, cashew nuts can be processed into other value-added products that can significantly increase their profitability as long as they are of good quality. The good part is, no matter the quantity of raw nuts In your possession you will always find a buyer willing to purchase all and even ask for more.
Strategies of Operating Raw Cashew Nut Business in Nigeria
The most common method of partaking in the raw cashew Nut Business is by cultivating, harvesting, and then selling to the customers. Nut Business has gone past these basics, they are now a cliche.
Here are different methods you can try out:
#1. Processing:
Nut processing refers to the Series of operations involved in converting raw cashew Nuts into various products.
Some of the operations include removing foreign particles, shell softening for kernel extraction, drying to reduce moisture, roasting and flavoring to enhance taste, and packaging into bags, and containers according to customers’ preferences.
You can buy the raw cashew nuts directly from farmers or local collectors and then process them, and sell them to exporters, wholesalers, and retailers.
Getting these processing machines can be financially demanding, in that case, you can use the service of the local processor you know or rather partner with them
#2. Mixed Strategy:
In the mixed strategy you start from the basics, you play the role of a farmer and processor. You farm the cashew from scratch, purchase or rent land, cultivate and harvest, then process and finally sell to the exporters (you can even export), wholesalers, and retailers.
This strategy requires more capital and expertise than the previous one. But it’s entirely worth the investment since you are both the producer, processor, and distributor.
Step-by-Step Guide on How to Start a Cashew Nut Business in Nigeria
1. Determine your target audience
The first thing before starting a Cashew nut business is to know your target audience. The target customers are quite varied, but here are a few ones to consider:
- Local consumers: you can target local cashew Nut processing factories in Nigeria or well-established raw cashew nuts collectors.
- Exporters: since Nigeria is one of the major exporters of cashew nuts, it makes sense that you explore the opportunity by striking deals with exporters where you act as a supplier.
- Food processing companies: most of these factories in Nigeria appreciate that they can access cashew nuts at an affordable price since they are being purchased locally. This is an avenue to supply them with whatever quantity they need. The problem here is that your profit margin is nothing compared to dealing with an exporter—yet, it’s still profitable.
Knowing your target audience is crucial for any business, and it’s especially important in the cashew nut business, so make sure to dig deeper than we mentioned.
2. Double-take on the Demand
Understanding the level of demand for certain products allows you to determine if the business is worth investing in, and can also help you make a financial analysis for the business.
If you decide on exporting your cashew nuts you will need to check which country is in higher demand for your nuts and then give that place higher priority.
This will help you plan your production effectively to avoid over or under-production.
3. Sourcing for Raw Cashew Nuts
You can source raw cashew nuts from various sources in Nigeria, including:
- Local farmers: you can directly purchase from the cashew farmers which at most times could be cheaper. You can begin by narrowing your focus on cashew-producing states like Kogi, Oyo, Enugu, and Kwara state.
- Processing factories: you can contact established cashew Nut processing factories, make a deal with them, and purchase products in bulk. One thing is, since some of the nuts are already processed it could be more costly than when sourcing a crude one from a local farmer.
- Markets: visit markets where cashew nuts are sold in bulk. Since there will be many cashew Nut sellers, that will give you an edge to bargain the price at a cheaper rate. Markets are converging points for other traders, you can connect with other minds like yours and share contacts for future purposes.
- Online Forums: there are thousands of forums online that connect cashew nut suppliers to prospective buyers. You can get such forums on Facebook, Twitter, and WhatsApp.
- Exporters: Agricultural exporters are very active when it comes to this kind of business. You can reach out to them(maybe for a fee), they might help connect you with one or two suppliers.
- Trade Associations: Engage with trade associations in the cashew nut industry. There you can meet other like minds who can connect you to suppliers. There are chances you meet the suppliers in person in the gathering.
Tips
- Ensure to verify the quality of the nuts you intend to purchase. To be safe, you can request a sample.
- Negotiate terms in a way that will be favorable to you. If possible ask for discount
- Maintain good relationships with your suppliers to ensure a reliable and consistent supply.
- Check the supplier’s history with other clients, you can ask around.
4. Deploy your capital
As with all businesses, good capital is needed to set a business towards the dream objective. The amount of capital depends on the size and the type of the cashew nut business.
Say you decide on cashew Nut processing; you should factor in the cost of getting a place for the factory, setting it up, obtaining paperwork, and purchasing the required equipment. If you lack the necessary funds you can apply for a loan or better still pool funds together with a partner.
5. Obtain the Necessary licenses
If you are into raw cashew Nut processing in Nigeria, you are expected to get registered with the Corporate Affairs Commission(CAC) and other governing bodies.
This is to enable you to operate legally without facing any hindrances. And if you are into the exportation of raw cashew nuts from Nigeria you are required to register with the Nigeria Export Promotion Council(NEPC). This body oversees on behalf of the federal government the overall export activities in Nigeria.
6. Join Active Trade Unions
Joining a trade union is very advisable, especially for Johnny in the cashew nuts industry. Participating actively in unions connects you to other key players in the industry.
These trade Unions provide valuable resources and financial support systems to their members such as training programs, legal assistance, and networking opportunities(including access to suppliers and customers).
Besides, it appears you gain more than you give to the unions, it is strange how some think unions are a waste of time.
Related: 10 Business Risks in Nigeria
Challenges in the Raw Cashew Nut Business in Nigeria
The cashew nut business in Nigeria faces mounds of challenges that hinder growth and profitability. These challenges include inadequate infrastructure such as poor road networks and unreliable electricity supply, which impact transportation, storage, and processing efficiency, leading to post-harvest losses and reduced product quality.
Among these challenges are: export tariffs, competition from other cashew-producing countries coupled with the naira to dollar exchange rate fluctuation have a great influence on the business
Conclusion
The cashew nut business is highly lucrative if only you could follow the right pathways some of which we have set for you. If you haven’t started, there is no perfect time to start other than now.
Have any questions about this topic?
Leave a comment below and we will answer as best as we can.
Frequently Asked Questions
How do I determine the quality of a raw cashew nut?
To determine the quality of a raw cashew nut, consider the following factors:
- Check for uniform size and color across the nuts.
- Examine the shell for any cracks or holes, which can indicate damage or pest infestation.
- Apply gentle pressure to the nut to assess firmness and weight; high-quality nuts should feel solid and heavy.
- Look for kernels that are plump, creamy in color, and free from discoloration, mold, or signs of spoilage.
How to preserve raw cashew nuts?
To preserve raw cashew nuts effectively, follow these steps:
- Store the nuts in a cool and dry place away from direct sunlight, as exposure to heat and light can degrade their quality.
- Use airtight containers or vacuum-sealed bags to protect the nuts from moisture, air, and pests.
- Avoid storing the nuts near strong-smelling foods or chemicals that can transfer flavors or odors.
- Regularly check the storage conditions to ensure the nuts remain fresh and free from spoilage.
How much does it cost to set up a cashew nut processing factory in Nigeria?
The cost of setting up a cashew nut processing factory in Nigeria can vary significantly based on factors such as the size of the factory, location, types of equipment, and infrastructure requirements. However, It’s crucial to conduct detailed research to determine the specific costs involved in setting up a processing factory tailored to your business needs.
How to validate a cashew nut supplier?
Verify Credentials: Check business registration, licenses, and certifications.
Research previous work history
Inspect Product Quality: Ask for samples and check for size, color, freshness, and defects.
Review Documentation: Verify invoices, shipping documents, and certificates.
Communication: Evaluate responsiveness and clarity in communication.
Beware of Unrealistic Offers: Be cautious of unusually low prices or promises.