Factors influencing cashew nut exports in Tanzania

Abstract

The demand for cashew nuts worldwide is high. However, Tanzania as one of the formerly world’s cashew nuts largest producer in 1970s, has its export supply fluctuating since its largest exports in 1970s. Though the prices have been increasing as from 2006, the marketed output of cashew nuts kept fluctuating and even declining in some years. This is an indication that output is declining despite increase in prices, which is in complete contrast with the role played by the price in influencing supply. This research analyzed factors influencing cashew nuts exports in Tanzania. The study analyzed the influence of cashew nuts produce on export volumes, the impact of real exchange rate on export volumes, and the impact of relative prices on cashew nuts export volumes. The study was based on Tanzania as the economy. Secondary data was obtained from various publications such as National Bureau of Statistics (NBS), Bank of Tanzania (BOT), and Cashew nuts Board of Tanzania (CBT). Quantitative data on quantity produced, export volumes, relative prices and real exchange rate was collected from year 1980 to year 2012. Regression analysis on export supply model was done using STATA version 12. Empirical results indicated that quantity produced and relative prices influenced cashew nuts export. However, real exchange rate had no impact on export volumes. Therefore, policies on trade and prices need to be considered. This study recommends the revival of local processing industries for both employment and more revenue as 99 percent of what is produced is exported unprocessed. Also cooperative unions should seek markets both locally and internationally so as to pursue a better price.