Entrepreneurship Zone: 15 February 2022 :: Tanzania: Cashew nut entrepreneur sets up local processing for export-led business

Tue Feb 15 08:39:40 CAT 2022

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Entrepreneurship Zone: 15 February 2022 ::  Tanzania: Cashew nut entrepreneur sets up local processing for export-led business

 <http://www.zitf.co.zw/> 

After emigrating to Canada as a child, Tanzanian cashew nut entrepreneur Fahad Awadh got used to breaking established conventions. On weekday mornings, he was picked up in a glossy yellow bus like most 11-year-olds in the Toronto area. But instead of just following the national curriculum, Awadh was recruited into a unique business and technology programme for schoolchildren. He was placed into courses on entrepreneurship, accounting, marketing, design and technology.

When he returned to Tanzania in his early 20s, cashew nuts offered the perfect crop to create an export-led business. The seeds that protrude out of the big yellow fruit that hangs off cashew trees are the most exported cash crop in Tanzania, generating $353.1 million in 2019.

Yet, much of the value in the finished product is taken out of Africa, when the raw kernels are cracked free from their shells, predominantly in India or Vietnam. Tanzania is the fourth largest producer of cashews in the world, but 90% of the crop is exported in raw form. This realisation presented the entrepreneur with an opportunity; to keep cashew production in Africa, package and market the finished goods himself and then sell to some of the world’s biggest consumer markets.

Establishing the business

Awadh founded YYTZ Agro-Processing in 2015. The YYZ is the airport code for Toronto, where the firm has a warehouse and distribution centre to supply North America. The TZ is the international abbreviation for Tanzania.

Straight off the bat, YYTZ met conservative Tanzanian bank managers, who were not sold on Awadh’s idea of bringing the cashew production process back home, choosing instead to back firms exporting the raw material. Loan applications for equipment were refused as Awadh travelled to meet farmers in the main cashew-producing region of Mtwara, in southern Tanzania, near the border with Mozambique.

Roughly 70% of Tanzania’s cashews are farmed in the region, covered in lush green forests. The crop was first introduced by the Portuguese in the 1500s, from the cashew tree’s native habitat of northeastern Brazil and southeastern Venezuela.

To help get the business off the ground, Awadh’s father, a retired airline pilot, financially backed his son. The two pooled their resources to finance some of the $300,000 needed to renovate a production facility – handed to them by the Zanzibar government – a few minutes’ drive from the islands’ main port.

YYTZ’s cashew processing facility

Before Awadh hired more than 30 employees, he conducted multiple research trips to Vietnam, where over 70% of the world’s cashews are processed to learn more efficient ways of manufacturing. “That’s when I saw the abundant mechanisation and realised that if we were going to do this, we had to invest in mechanisation. We had to be as efficient as they are because that’s exactly who we were going to be competing with,” says Awadh.

Ramping up production

In 2016, YYTZ increased its capital with a $500,000 grant awarded to it from the Africa Enterprise Challenge Fund. This gave the young entrepreneur credibility as he ramped up his firm’s production capacity to 2,500 tonnes per annum, roughly 1% of Tanzania’s total cashew yield.

At that time, YYTZ had a perfectly located state-of-the-art processing facility, purchasing agreements in place with all the farmers they needed, a committed buyer in the Netherlands and machines brought back from Vietnam and China. The imported machinery ensured the farmers could avoid breakage with yields of 80% in whole kernel recovery.

What the company didn’t have was any more money to buy the cashews from the farmers. After reading about YYTZ online, a Dutch investor put YYTZ in touch with Netherlands-based multinational Rabobank. A $280,000 loan from the Rabo Foundation was granted, allowing YYTZ to begin transporting tonnes of cashews from Mtwara once a week, before being shipped to YYTZ’s newly finished Zanzibar facility.

Fahad Awadh

Main products

In Zanzibar, YYTZ peels, roasts and flavours the nut, using machines that use “cameras and optic vision to sort cashews by colour and size, at a rapid pace”, says Awadh.

The cashews are flavoured with local ingredients and Zanzibar sea salt, dry roasted or unroasted, and sorted into green or turquoise packaging, representing the fertile soil and sea from where the ingredients are sourced. YYTZ then sells its ‘More than Cashews’ brand on online e-commerce platforms like Amazon or to supermarkets in East Africa, Europe and North America.

Awadh reveals that roughly 60% of YYTZ’s revenue comes from this brand, which is made up of 150g packages of cashews on sale for around $6. It is called ‘More than Cashews’ because customers can scan an APR code stapled onto their package, to find out who the farmers are that grew their cashews.

“The cashew product is part of one of the most opaque supply chains. Most consumers have no idea that if the packet maintains it’s a product of Vietnam, there’s an 80% chance the origin was Africa. We want you to be able to know what date your cashews were processed and roasted, to see a photo and read the story of the farmer who grew them,” explains Awadh.

YYTZ has also begun wholesale exports to Sweden, through a collaboration with a Swedish coffee manufacturer called Rutasoka and also provides occasional bulk orders to a company in the Netherlands when it has a surplus.

Despite 2018’s cashew market price crash and a slump in 2020, when consumption dropped as a result of Covid-19, YYTZ has managed to weather the recent storms and raise a further $1.3 million in its latest funding round.

The cashew tree is resilient against drought and climate change and provides several by-products that YYTZ is looking to market: from cashew butter, cashew milk and cashew cheese to dried cashew apples as a plant-based meat alternative.

“The market is growing again and there is a market for plant-based consumers looking for protein-rich alternatives to their diet. We want to be the best cashew exporter and create the best value for Tanzania by showing Africa can produce great finished products by innovating,” says Awadh.-Howwemadeitinafrica

Grading of cashew before processing

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