Determinants of cashew supplies and prospects for diversification into agro-allied industries in Nigeria

Abstract

Supply of cashew is lagging behind demand for both in the domestic and foreign markets. While the agro-allied industries face serious problems in procuring the kinds and quantities of the commodity they want, producers of the commodity have remained poorly linked to agro-industrial sector and availability of the commodity as raw material to agro-industry remained inadequate and irregular. In this connection, the key determinants of domestic supply and the prospects for diversification of increased supply of cashew to domestic agro-industry for manufacturing high value products of the commodity was examined. Time series secondary mainly collected from National Bureau of Statistics were used. Data were analysed using simultaneous equation regression model. The key determinants of cashew supply in Nigeria were price of cashew, price of complementary crop, rural wage rate, government investment in agriculture and interest rate charged on agricultural loans. Among the significant variables, rural wage rate has significant effect on cashew supply with coefficient of -0.38 at p<0.05. Government investment on agriculture with coefficient of 0.06, has significant effect on cashew supply at p<0.05. Interest rate on agricultural loans, with coefficient of -0.44, has significant effect on cashew supply at p< 0.05. Policy strategies to expand supply of cashew and enhance diversification to agro-industry include improved infrastructure that will ensure effective market linkages and maintaining stable macroeconomic policy environment.

Keywords: Agro-allied industry, cashew, determinants, diversification, simultaneous equation model