Market Prospects for Groundnut in West Africa COMMON FUND ...

conservative tendency among European buyers, who are unlikely to take any
unnecessary risks as regards aflatoxin.
An unfortunate and direct economic consequence is that for West Africa
to re-enter the world groundnut market (and particularly the European
market, which offers perhaps the greatest potential), export prices would
have to compete favorably with Chinese groundnut, which is abundant, cheap
and enjoys a favorable reputation in terms of reliable supply and reliable
quality.
Recent prices for Chinese groundnut are on the order of $650 per MT –
the same price as production of a ton of edible groundnut (arachide de bouche
or ARB) under irrigation in Senegal. This means that the current and
foreseeable margins of return are not in any case favorable to the re-entry of
West African exports on to the world market, even without regard to product
quality and perceptions of international buyers.
On the other hand, though the trade linkages are not as established (or
cheap) as between West Africa and Europe, the South African market does
represent a significant potential opportunity for West African producers. Due
to a poor harvest in 2003, South Africa has been importing groundnut from
southern Africa and even Argentina at premium prices – over $700 per MT
(unsorted and CIF) in Malawi. There may be scope for entry into the South
African market once aflatoxin has been addressed by improved management
and monitoring of product quality at the crop level.
The primary conclusion of this study is that resources should be devoted
to improvement of the production chain of the groundnut sector in each
producer country, with initial emphasis on production to satisfy national, subregional
and even regional demand.
While the structural details of such a program would be negotiated on a
country-by-country basis – and state intervention is in any case likely to
remain limited – common features might include the establishment of public
warehouses and/or buying points, at which production would be sorted,
graded and tested for aflatoxin contamination and other parameters of
product quality.
In assessing the current and foreseeable market opportunities for
groundnut of West African origin, it will be crucial to build slowly and
deliberately on existing strengths (including the availability of improved seed
through the current project). It needs specific and focused attention to the
production chain – specifically cultivation, harvest and postharvest methods
2