actual sales values to less than $400/ton, compared with invoice prices of more than $600/ton. 37 Despite all this confusion, marketed production did increassl by 38% over the previous season, reaching 41,238 tons. Favorable weather, an increase in sulphur dusting in some locations (especially in Tinduru where a major government- and cooperative-directed campaign took place), increased real producer prices, and prompt payments to farmers all contributed to a larger proportion of cashew owners actually harvesting their crop and probably to a higher level of output.' While exporting most nuts in raw form, the TCMB did put into operation two of its factories, processing 9000 tons of nuts. Once again, however, this resulted in negative value added as raw nut prices were favorable and Tanzania's kernel exports received price discounts. Although providing employment opportunities, TCMB's processing operations were loss-making as a result of high unit costs and relatively poor technical results.

The competitive disadvantage faced by the TCMB is clearly illustrated in Table 10 below. TCMB's use of mechanical processing, together with the organization's apparently poor technical efficiency in utilizing this equipment and weaknesses in the raw material grading system, have resulted in a situation where the kernel-based revenue per ton of raw nuts processed in Tanzania is nearly 26% lower than that obtained in India. This huge difference, stemming from Tanzania's lower yield of kernel material and much lower proportion of realized whole kernels, has been a major reason why India has been able to pay seemingly high prices for raw nuts and why the TCMB frequently achieves low or negative value added through processing.

The beginning of the 1992/93 season was characterized by uncertainty and confusion.' The experience of the prior season, together with pessimistic predictions about the Indian market for raw nuts, led some former or would-be private traders to delay their registration or buying operations. The uncertainty was compounded by mixed signals from the TCMB concerning whether or not it would buy nuts from private traders. If not, then private firms would need to depend entirely upon their own export channels. While the Lindi branch of TCMB did announce that it would buy from private traders, this branch did not have funds at the beginning of the season and thus issued IOUs to traders. The Mtwara branch of TCMB waited until December to announce its intention to buy from private traders, with this delay designed to protect the procurement interests of the regional cooperative union (MARCU).

Uncertainty and confusion spread to the financing of crop procurement and to the prices which producers would be paid. Under pressure to recover past loans and to weed out non-paying clients, the commercial banks (particularly the parastatal National Bank of Commerce) denied overdraft facilities to several of the cooperative unions and made loans to others contingent on agreements regarding guideline producer prices and inter-store TCMB buying prices. Negotiations on these matters were protracted and things were not sorted out until December, three months into the buying season.

37 For example, MARCU had a contracted price of $700/ton for 3500 tons, although realized sales earnings were only _$394/ton._ 3S The Cashew Farmer Practices Survey (1992), conducted by the ODA Cashew Research team, did show a greater propensity of farmers to harvest nuts.

39 The analysis below is based on field work conducted by the author in March 1993. Interviews were conducted with government and commercial bank officials, with officials of the TCMB and several cooperative unions/societies, and with twenty-four private trading companies/individuals. The field work concentrated in the Mtwara and Lindi Regions and in Dar es Salaam. Tremendous assistance was provided by Commercial Unit of the Cashew Improvement Programme.

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