An economic analysis of some aspects of production and marketing of cashewnuts in Kenya

Abstract

The study is an economic analysis of some aspects of production and marketing of cashewnuts ln Kenya. The study was conducted mainly in Kilifi District. A random sample of 50 growers and some key official at the Kilifi District Cooperative Union/ National Cereals and Produce Board and Kenya Cashewnuts Ltd. factory were interviewed between December 1981 and February 1982. The major hypotheses tested are: (i) Cashewnut producers are responsive to cashewnut price changes. (ii) Producer prices of cashewnuts are directly influenced by prices of cashewnuts obtainable from the international market. (iii) The margin between the producer price and the consumer price is not significantly different from estimated total marketing costs. An examination of the farmers• reaction to cashewnut price changes reveals a positive reqction to cashewnut price increase. If cashewnut prices were-to be reduced, farmers would give less attention to the cashewnut trees leading to reduced supply of the cashewnuts. The study also reveals that farmers are faced with organizational, technological and socio-economic problems, which jointly affect production levels. Price of cashewnuts obtainable from the international market are found to have adi'rectimpact on producer prices in Kenya. Whether cashewnut marketing system was efficient or not was examined by an analysis of' marketing margins in relation to estimated marketing costs. The analysis suggests that the marketing system is inefficient. The study con c 1,udes by recommending structura1 reorganization in order to step up cashewnut supply. More formal links should be set up between the Kenya Cashewnut Ltd. factory and the farmers. The factory should provide inputs or services to enable farmers to improve their yields, which would facilitate the supply of sufficient amounts of cashewnuts for processing.