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Why Tanzania’s cashew farmers are losing bargaining power

In southern Tanzania, the cashew harvest begins as the long rains end. Farmers in Mtwara and Lindi gather fallen nuts, remove the cashew apples and carry heavy sacks to collection points. Many then accept an advance from a trader and wait for a price negotiated several stages away from the farm. Indian trading and processing groups are major buyers of these raw nuts, yet the farmgate price depends on decisions made by local agents, Tanzanian processors, financiers and overseas markets. Farmers have little ability to compare offers or wait for a better deal.

The imbalance is not simply a conflict between Tanzanian producers and Indian buyers. It reflects a fragmented industry in which overseas processors have capital, information and flexible supply networks, while smallholders need cash quickly. India’s importance lies in its shelling capacity, established trading relationships and access to large markets, not in any single practice associated with one nationality. The result is a global value chain that rewards scale and coordination while transferring most of the risk to the people who grow the crop.

A colonial crop shaped by independence and trade

Cashew trees reached Tanzania from Portuguese Mozambique in the early twentieth century and were planted on large estates around Mtwara. After independence, the Arusha Declaration of 1967 and the associated villagisation programme shifted control of much of the land to household farmers. The trees survived that restructuring, and cashews eventually became valuable income for families able to combine agriculture with seasonal labour.

The crop also drew Tanzania into an international trading pattern that shaped its economy. Raw cashews were exported to processing centres in India, where kernels were removed and the shells used to make cashew nut shell liquid, a feedstock for coatings, adhesives and lubricating chemicals. Domestic processing expanded later, particularly after the government banned most raw cashew exports in 2008 to encourage local value addition. The policy created factories and jobs, but it also produced a recurring problem: processors compete for limited supplies while some mills operate below capacity.

That history helps explain the modern chain. A farmer usually sells to a collector or trader, who may sell to a local mill or export intermediary. Indian buyers can then purchase raw cashews in bulk, arrange shipment and process them alongside material from other producing countries. Regional bargaining power is rarely created by one commodity policy alone. The GERD dispute examined in this GERD politics guide concerns a different dispute, but it illustrates how infrastructure, finance and border rules determine who can wait, who must sell and who can negotiate from strength.

Where bargaining power leaks away

The first loss occurs because most producers sell small, irregular quantities. A household may bring only a few bags to a roadside buyer, making independent transport to a distant warehouse unrealistic. The collector provides cash, transport and a guaranteed outlet, but also controls information about the buyer’s final price. If a farmer cannot safely store the crop or obtain a bank loan, the trader’s preferred collection day effectively becomes the farmer’s deadline.

Farmers face further disadvantages when raw exports are restricted. A ban intended to promote domestic processing can make the official domestic price the only visible option, even when demand abroad would be higher. Raw nuts have also crossed Tanzania’s porous border with Mozambique, where they can enter a legal export chain. Such movements do not necessarily mean that every shipment is fraudulent, but they weaken the government’s ability to use export policy to raise farmgate returns and complicate efforts to track where the crop was grown.

Competition among buyers should improve a farmer’s position, but only if it reaches the farmgate. Indian processors can compare Tanzanian material with supplies from several West African producers, while other Asian processors have access to Cambodia and Vietnam. A large buyer can wait for favourable terms or redirect shipments. A farmer facing school fees, debt or a dry-season shortage cannot. Local agents may also be the only parties able to assemble enough volume, grade it correctly and finance the next transaction, leaving them with substantial power over both the farmer and the eventual buyer.

Why prices and contracts remain opaque

Cashews are sold in-shell and graded by size, moisture, appearance and expected kernel yield. A price announced for a particular grade may not translate into the amount a farmer receives after deductions for transport, storage, shelling losses or rejected nuts. Where collection scales are not independently checked and receipts do not state every deduction, disputes are difficult to resolve. Government agencies have sometimes announced indicative farmgate prices, but an announcement alone does not guarantee that the final payment is timely or transparent.

Advance finance deepens the imbalance. A trader who pays for fertiliser, food or school fees before harvest may gain influence over the delivery of the crop. The contract can appear voluntary, yet the farmer’s practical dependence makes it difficult to seek another buyer. If a better price emerges later, the farmer may remain bound to the original arrangement, while the agent and processor retain a margin that is not visible in the village.

Transparent bidding can improve a market only when weights are credible, rules are public and bidders are genuinely independent. An Italian ambassador’s charity auction provides a simple illustration of visible bidding, although cashew purchases involve much larger volumes, informal contracts and fewer public records. Serious efforts to raise farmgate prices therefore need enforceable measurement, accessible price information and a way for farmers to challenge manipulation. Calls to avoid Indian businesses may also be counterproductive: many Indian-owned mills employ local workers and sell finished kernels. The appropriate focus is the conduct of buyers and intermediaries, verified through transparent sourcing systems rather than assumptions based on ownership.

Measures that would strengthen farmers’ bargaining position

Farmers will gain leverage through several connected reforms rather than through a single change in export policy.

These measures would make the market more accountable without requiring consumers to determine every commercial detail. For Australian businesses, the corresponding responsibility is supply-chain due diligence. Under the Modern Slavery Act 2018, large entities with consolidated revenue above A$100 million must report modern slavery risks in their operations and supply chains. Cashews may pass through numerous farms, agents, mills and exporters, so country of origin alone reveals little about labour conditions. Importers should seek evidence covering recruitment practices, worker pay and the distribution of income along the chain.

Why the issue matters to Australian consumers

Australian consumers encounter cashews in familiar settings. Shoppers in Sydney and Melbourne find them in raw, roasted and salted forms in supermarkets, bulk-food stores and online grocery orders, while cafés, bakeries and food manufacturers use kernels in sauces, bakery products, plant-based cheeses and frozen meals. Australia has substantial commercial industries in macadamias, almonds, walnuts and pistachios, but virtually all consumer cashews are imported. The low prices and convenience on local shelves therefore depend on decisions made thousands of kilometres away.

Import regulations show only part of the journey. Cashews entering Australia must satisfy the Biosecurity Act 2015 and the import conditions listed through BICON, including phytosanitary requirements where they apply. Food sold under the Food Standards Code must also meet Australian labelling rules, including country-of-origin information in many circumstances. A pack processed in India may identify that country while saying little about the Tanzanian district or cooperative that grew the nuts. Labelling cannot reveal every stage of a commodity chain, but stronger traceability standards could make processors supply more complete sourcing evidence.

The structure of Australian grocery retail offers a useful parallel. The Australian Competition and Consumer Commission’s food and grocery market inquiry found that major retailers’ scale, private-label products and access to consumer data gave them substantial bargaining power over suppliers. Their ability to switch between wholesalers and suppliers can pressure the entire chain. The same concentration can be transmitted overseas when Australian wholesalers seek the lowest processed-cashew price without examining whether farmgate returns allow producers to meet labour, safety and environmental standards.

Australian buyers, retailers, policymakers and consumers can support a fairer cashew trade by following procurement disclosures, pressing suppliers for farm-level evidence and rewarding prices that are transparent enough to trace to producers. They can also tell Australian representatives that fair farmgate prices are part of food-system resilience rather than a niche preference. A market built on shifting every cost to the farm will remain fragile even when the supermarket shelf appears full and inexpensive.