Guinea-Bissau economy captive to cocktail snack

By Pascal Fletcher

BISSAUZINHO, Guinea-Bissau (Reuters) - The next time you grab a handful of cashew nuts at a party, think that you may be holding the economic heartbeat of one tiny West African state in the palm of your hand.

Cashew nuts are the main export of Guinea-Bissau, a former Portuguese colony wedged between French-speaking Senegal and Guinea. Its 1.6 million people are ranked among the third poorest in the world in development terms by the United Nations.

As world leaders chase solutions to the global crisis caused by soaring food and fuel prices that threaten millions with hardship, Guinea-Bissau's peasant farmers are looking to their cashew crop to see whether they will eat or go hungry this year.

Across this Guinea Coast state, which is watered by numerous creeks and rivers, large swathes of the tangled tropical bush consist mostly of leafy cashew trees, mixed with oil palms.

At Bissauzinho, a hamlet west of the capital Bissau, Janette Chico and her friend have collected a few kg of raw cashew nuts to sell at the store of Mustapha Issa, one of many Mauritanian traders who live from commerce in Guinea-Bissau.

As they chat in crioulo, the amalgam of Portuguese and local languages that is the lingua franca of the country, Issa weighs what they have brought and pays them in tattered CFA franc notes, the common currency of most of francophone West Africa.

Guinea-Bissau's farming families use the proceeds from their cashew sales each year to buy rice, their preferred daily diet.

So the comparative prices of these two commodities -- one a prized cocktail snack in the rich world, the other a food staple throughout the globe -- add up to the mathematics of survival for the bulk of Guinea-Bissau's rural population.

"It's an economy that's a captive of cashews," said agronomist Rui Fonseca, the assistant representative of the U.N. Food and Agriculture Organisation (FAO) in Guinea-Bissau.

The nuts make up 90 percent of the exports of the West African state, one of the top world producers of unprocessed cashews. Most of the crop is shipped to India which processes the nuts for added-value sale to U.S. and European markets.

Guinea-Bissau's exports this year are forecast by the IMF to total nearly $94 million, against $71 million in 2007. Cashew nuts are expected to account for $87 million of the 2008 total.

As a comparison, larger neighbor Guinea, the world's biggest exporter of the aluminum ore bauxite, had estimated total exports of $894 million in 2007, according to the CIA. Guinea-Bissau has bauxite deposits, but these are undeveloped.

Last year, government pricing and commercialization blunders triggered a collapse in local producer cashew prices that caused a disastrous cashew harvest for poor local farmers, who found themselves struggling to afford food for big extended families.

NUTS FOR RICE

"Last year, we could only sell our cashews at 25-30 CFA francs (6/7 U.S. cents) a kilo. We suffered a lot and couldn't buy rice," said Chico, a teenage girl with tightly braided hair.