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West African cashew draws Vietnamese buyer to challenge Olam

A Vietnamese conglomerate is entering the cashew market with possible deals in West Africa for more than a 10th of global output, a bold start to take on the US$7billion industry’s dominant buyers such as Olam International Ltd.

In a fractured sector with dozens of producers, the purchase of such a large amount of cashew by a single company could sway prices in a market that’s not traded publicly and is dominated by a handful of traders. It could also offer poor, small-scale African farmers better assurance that their crop will be bought.

Hanoi-based T&T Group JSC, which holds investments that range from motorcycle parts to banks and real estate, will purchase 200,000 metric tonnes of raw cashew this year from the world’s No-2 producer, Ivory Coast, said Adama Coulibaly – head of the local Cotton and Cashew Nut Council. The volumes may increase to 400,000 tonnes in coming years, T&T said on its website.

The company is also in talks with producers in Guinea-Bissau, Africa’s third-largest grower, to buy a further 50,000 tonnes of nuts this year, said Jaime Gomes, the head of a farmers’ association.

“These are huge volumes,” said Pankaj Sampat, a partner at Mumbai-based cashew dealer Samsons Traders. “If this new player buys such large volumes, it will certainly have a significant impact on the market.”

Global output of the kidney-shaped nut, coveted in Europe and Asia for snacks and baked goods, was 3.3 million tonnes in the 2017-18 global harvest – of which Africa accounted for more than a half, according to the International Nut and Dried Fruit Council.

To be sure, T&T may struggle to fulfil its agreements because newcomers typically take time to establish infrastructure and build distribution channels, said Sampat. Singapore-based Olam took years to build a network of farmers across Africa, and runs its own processing plants in Asia.


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