January 12, 2017

Moringa SICAR SCA, an €84 million (US$89 million) investment vehicle initiated by Edmond de Rothschild Private Equity and ONF International to invest in high impact agroforestry projects in sub-Saharan Africa and Latin America, has invested in Tolaro Global, the leading cashew processor in Benin.

Founded in 2008, Tolaro processed 2,500 tons of cashews last year at its facility in Parakou which were targeted for the sustainable, premium cashew markets in the U.S. and Europe through the company’s offtake partners that include Intersnack and PepsiCo, among others.

The company works with 7,000 farmers, supporting 2,500 of them through outgrower programs, and was the first cashew processor to receive the Africa Cashew Alliance Quality and Sustainability Seal in May 2012. More recently, the company was also awarded Fair Trade and Organic certifications.

“Cashew is a promising $5 billion market,” said Hervé Bourguignon, managing partner of Moringa in a recent statement. “Its annual growth rate in volume reached 10 percent for more than 10 years now. This phenomenon is due to the dynamic internal consumption in India, and in the U.S. and Europe to the many advantages consumers seek in cashew: nutritional benefits, pleasure in snacking, natural food, quality, and ease of consumption.”

Goals

Through this investment, the processing capacity at Tolaro’s main facility will be increased to 20,000 tons per year by 2021, and a salting and roasting operation will be established making the company the first in West Africa to export value-added, 100 percent “made in Africa” end cashew products.

Additionally, the company’s relationships with local farmers also will be strengthened, lifting the number of farmers connected to the company to 30,000 while creating 1,900 jobs.

“West Africa is the first producer of raw cashew nuts, but most of them are processed in Asia,” said Bouruignon. “With a vast producing area, a still underdeveloped agronomical potential and clear competitive advantages, the development of a local processing industry presents many opportunities.”

Tolaro Answers the Call

This infusion of capital also will help support Tolaro as the company strives to meet a commitment it made to the UN’s Business Call to Action.

Launched at the UN in 2008, Business Call to Action is a multilateral alliance between donor governments (Finland, the U.S, the UK, Sweden, and the Netherlands) and global institutions to challenge companies to develop business models that engage some of the lowest income people earning less than US$8 per day as consumers, producers, suppliers and distributors.

Tolaro is one of 170 companies across 65 countries that have answered the call to improve the lives of millions in developing countries by pledging to train 2,500 people (of which one-quarter will be women) from Benin’s Borgou region in organic production and fair trade practices, and to directly employ up to 2,500 people at its factory and train up to 11,000 farmers by 2020.

“Tolaro believes that developing the cashew industry in conjunction with community development efforts will bring a sustainable transformation to the region and eventually the country,” said Jace Rabe, Tolaro’s founder and chief executive officer. “The long-term viability of Tolaro’s – or any business’s – success must involve developing the community in which it works. We are pleased to have our inclusive business recognised [sic] by the Business Call to Action.”

The Promise of Cashews and Moringa

Although cashew trees had been planted in West Africa as a means of reforestation, it was not until the 1990s that the nut began to be produced as a cash crop in response to strong global demand, according to the report The African Cashew Sector in 2015 created by the African Cashew Initiative.

Since 2014 cashews have since grown to outrank cotton, rubber, palm oil, and bananas to become the second most important cash crop for West Africa in terms of export value behind cocoa. This rise in importance has not gone unnoticed.

This past August, William Loughmiller, president of U.S.-based Agpro International; Lowry Redd, the president of U.S.-based Redd Engineering; and Abraham Olanrewaju, chairman of African consulting company Orelope Integrated Concept, expressed their belief during a visit to the University of Ilorin, that cashews and the moringa plant could strengthen Nigeria’s economy if the value chain and exportation were properly managed.

Punch reports that Loughmiller and Redd were visiting Nigeria to explore the possibility of organizing and educating smallholder farmers to improve their farming methods and to leverage their ability to produce and internationally market these two crops.

Calling for greater investment in the region’s agricultural sector as a way to diversify against over-reliance on oil revenue, Loughmiller said, “Moringa and cashew, if harnessed, have the potential to increase the value of Nigeria’s exports which has the tendency to strengthen the nation’s economy and currency. “

Olanreaju added, “If moringa is well harnessed, processed and attended to as a miracle tree, it has the power to upgrade and lift the naira from the present falling state to a stronger currency across the globe. So also the cashew.”

Clément Chenost with the Moringa Partnership echoed these sentiments in a statement announcing the fund’s investment in Tolaro when he said, “Cashew processing is a major opportunity to develop fairly the economy of West African countries. It is produced by smallholders in agroforestry systems combining cashew trees and food crops. It could thus play a key role to restore land and avoid desertification in the Sahelian region while bringing a better livelihood to farmers.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com