cesses imposed by district authorities. In some locations, the sum of educational, building, and other funds totals up to Tsh. 18/Kg. While traders are normally required to pay part of the fees, these fees are in fact simply taxes on local producers.'<sup>2</sup> Exporters indicated that the storage and transport facilities which they own or lease are more than adequate for their present trading activities. In fact, not a single firm indicated that it needed to make<sup>any</sup> additional investment in order to enter into the cashew trade. In the southern zone, there is significant unused storage facilities, especially at the depots of the National Milling Corporation and at the idle cashew nut factories. Varied responses were given to the question about finance. This was not a problem for those firms who receive financing from overseas affiliates or buyers, yet it was reported to be a costly and difficult barrier for those firms having to rely upon local commercial banks. The exporters do not see marketing (including market information, market outlets, and buyer reliability) as a serious constraint to the current trading activities.

Private exporters were asked about their potential interest (or emerging plans) to enter into cashew nut processing to replace or supplement raw nut exports to India. Several firms, each with external partners, have been engaged in discussions with the TCMB to lease one or more of the existing factories. At least one of these deals is expected to go through in time for operations during the 1993/94 season. A few other exporters expressed scepticism regarding the financial viability of the complete mechanical processing systems. They have been exploring alternative, semi-mechanized technologies whose operating scales are significantly lower than the existing factories. In March of 1993, no investments of this type were imminent. A third option, suggested by one of the firms, was to canabalize a few of the existing factories, utilizing the best features from the Oltremere and Cashco systems, yet building in less mechanized features for several processes.

# Dimensions of Performance

During the 1992/93 season, the overall performance of the industry was mixed. Total marketed production declined to about 35,000 tons, the decline being attributed to an unseasonal cold spell which damaged flowers and reduced fruit setting. Still, on the agronomic side, there was evidence of increased efforts to combat the powdery mildew problem (through sulphur spraying) and to rehabilitate cashew shambas.'<sup>3</sup> One of the major objectives beyond the market liberalization was to improve the reliability of the crop procurement system and to raise farmer incomes. To some extent, progress has been made. In contrast with past seasons when crop buying was not completed until April or later, this season virtually the entire crop was purchased by the end of February, and in some areas, by the end of January. This occured despite the delays in bank overdraft approvals. Also in contrast with past experience, farmers were paid this season on a timely basis, especially when private traders paid cash either directly to farmers or to the cooperative societies. The activities of private traders undoubtedly put pressure on the 42 Data on producer prices for cashews provided by the Marketing Development Bureau are thus misleading as they do not take into account these cesses. When taken into account, the share of farmers in the export value this past season was only 40-45%, depending upon location.

43 The evidence, coming from surveys by the ODA Cashew Research team and from the loan applications<sup>of</sup> the commercial banks, does indicate that it is primarily farmers with above average landholdings and other assets which are obtaining finance and making the investments to restore cashew productivity. The vast majority<sup>of</sup> smallholders have not made such investments.

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