Among several ventures we invested in is cashew nut
business. The business is highly lucrative but seasonal. Cashew nut trading in
a nutshell is sourcing the raw material and selling to exporters or companies.
The enterprise is capital intensive and requires huge
investment. The major expenditure is buying the commodity, transportation costs
and operational costs.
The commodity has premium value in the international
market attracting lots of patronage. The nut is used for manufacturing, snacks
and other industrial packaging applications.
There are four basic formats, source the nuts from farmers
and export, sell to exporters, sell directly to local manufactures or buy from
wholesalers.
The nuts are processed, dried, weighed and packaged
according to buyer’s strict specifications. Cashew nuts are eaten fried,
roasted, salted, sugared or processed in a product. Cashew business is location sensitive and
subject to availability of the nut.
The global demand for the delicious nut exceeds supply
making the business highly lucrative. Cashew nut is grown in India, Africa and
a few countries. If you are in a region where cashew is grown then leverage on
this interesting business.
Here is a guide to starting your cashew nut enterprise.
How to
Succeed as a Cashew Nut Trader
To get maximum profit define your business goal. Decide on
the sector you are most comfortable doing. For example you can decide to buy
from wholesalers and export to your customers abroad.
Another way is get contract from companies in your
locality to supply the nut. You can go to farmers, buy the nut and sell to
exporters. Defining the sector gives you a clear picture of your goals.
Research
You need to do serious research before investing your
hard earned cash. Learn about the nut, location of cashew farms, wholesalers
and exporters.
If you are interested in exporting seek companies abroad
and get contracts including relevant export licenses.
You can contact exporters of the commodity for insights.
Other ways are factoring startup cost, local suppliers and source high quality
nuts.
Try to research processing, packaging, shipping costs and
transportation costs.
Local
Export Market
Countries that produce cashew have local export markets.
There are strict provisions to exporting cashew nuts overseas. The price of the
nuts constantly changes during the growth and harvesting season. Other considerations
when exporting is quality control, product weight and international prices.
Determine
your Target Market
Are you interested in exporting the nuts. Then you need
to decide which country to export your goods. Your target market determines who
you sell your nuts to.
You might decide to sell to the local market, resident
company or process the nuts. Deciding on your niche gives a clear picture of
your business template.
Contact
Stakeholders
Stakeholders in the cashew business are the farmers,
wholesalers and buyers. Companies that use cashew products are also
stakeholders.
Before you start the business you need to network with
stakeholders to remain abreast of the venture. Since you don’t have a cashew
farm finding networking with trustworthy sellers is very important.
Once you have established a network with local sellers
you business becomes much easier. Make sure the nuts are of high quality to
profit from the venture.
Develop
a Business Plan
Since cashew trading is capital intensive you need
adequate funding. The nuts are bought in tons so you need at least a container
load of nuts. Create a business plan that highlights your mission statement,
profit, and loss including management structure.
Include in your plan future projections, staff strength,
and marketing plan. The business plan should be realistic factual and
comprehensive.
The business plan is a good way to provide information to
get bank assistance.
Bank
Loans
You need money to start a cashew trading business. A
small container load of cashew could sell as low as $20,000. There are so many parameters
to arrive at a price namely quality of the nut, net weight, dried or fresh,
location and species of nut.
If you have previous knowledge of the business or export
license you can approach a bank for loans. You need to show clear margins of
profitability and proper loan servicing.
Agricultural trade banks come in handy in agro based
businesses.
Invest
in the Business
Make sure you have a buyer for your product before
investing a dime. Get contractual commitment from buyers before sourcing the
product. Exporters need export contracts from reputable companies abroad before
buying the nut.
Labor
Cashew farmers in West Africa produce some quantities of
the nut on their farms. So the buyer contacts a wholesaler who gathers the nuts
produced by the local farmers and sells to the trader.
There are lots of labor costs, transportation cost, shipping,
off loading and packaging. Large exports have laborers, truck drivers, clerical
staff, management staff and warehouse staff.
Cashew
Nut Quality
Cashew nuts are also subject to diseases and infestation.
Some cashew farmers produce low quality nuts and such nuts attract low prices and
poor profit margin.
Only invest your cash in high quality nuts for huge
profit. Constantly find new sources to buy the commodity because of stiff
competition.
Try to adapt to changes, develop skills and effective
networking. You need proper handling, processing, packaging and storage system.
Don’t forget to remain informed on international trade prices, new buyers and
exporters.
Cashew
Value Chain
The chain starts with the commercial farmers that produce
the nuts. They have a good support system such as government interventions and
commodity associations.
The next step is the wholesaler who collects the produce
from farmers. The post collection handling goes through the drying, packaging
and storage. The next step is where you come into the picture.
You buy the produce from the wholesaler/farmer and sell
to companies. Others in your category are collector agents, independent
collectors, store owners and middlemen.
So you face lots of competition in this sector. The
cashew value chain continues to big exporters, national stocks, seasoned and
local exporters.
The exporters buy from you and sell to foreign companies.
The cashew slowly increases in value through the value chain.
They dry the nut, transport, exporter and processing. The
exporter increases the value through package and sorting.
The entire process is inter- dependent across the value
chain.
Best
Price for your Cashew
To get the best price for your cashew nuts select cashew
that has high quality. Quality impacts on the price buyers are willing to pay
for the product. The process involves gathering the commodity, drying and
storage.
Proper drying increases the value and price of the
commodity. Bulk purchase is the way
cashews are traded according to quality and weight.
Other methods of getting a good price are following
international prices. Buyers determine the quality and quantity by calculating
the external nut size and nut count test.
They also do the out-turn test to determine the shape, size
and color of the kernel. Bad quality nuts are lightweight, have black spots and
look wrinkled.
The Drying
Process
Drying the commodity is a very important way to get high
quality cashew nuts. The nuts are exposed to the sun on a cemented floor or
tarpaulin. After the drying process the
nut is left to cool before bagging.
Storage
You can store in secure jute bags to prevent moisture getting
into the bag. The bags are aired out for a few days before sewing tight.
Store them in a dry place with adequate ventilation and use
wooden pallets to stack the bags to prevent contact with the floor.
Conclusion
Cashew business is very lucrative but requires serious
funding. The business is seasonal and runs for about four months.
Find genuine buyers early in the year and secure
contracts to supply the nut. You need to have good networking with farmers and
transporters.
How to start a Dairy Farm
How to start a Dairy Farm
0 comments:
Post a Comment