Chinese involvement in the Senegalese peanut trade: threat to local markets and processing industries?

Chinese involvement in the Senegalese peanut trade: threat to local markets and processing industries?

To deal with household socio-economic difficulties in rural areas in Senegal, peanut cultivation was introduced by French colonial powers at the beginning of the 20th century. The cultivation was to enable Senegal’s domestic agricultural economy to generate revenues and contribute to the development of its agro-processing industries. Over the years, it has become a source of revenue for many families living within the groundnut basins across the country as well as being an important resource for peanut processing industries. In 2010, the liberalisation of the peanut trade in Senegal enabled Senegalese peanut farmers and producers to directly sell to foreign buyers; including the Chinese.

Chinese investment in the peanut sector in Senegal are linked to the country’s interests to satisfy its people’s rising demand for peanut products (oil, butter, nuts and so on). At the same time, the construction of a peanut processing unit in Senegal could be an opportunity for the Chinese company to export to Europe which is an important import market for peanuts.

This briefing males the following recommendations:

  • in order to recover peanut production in Senegal, the government must ensure that the seeds distributed to farmers are of good quality. To protect the local market and enable peanut processing by local industries, the government needs to reach an agreement with peanut processing companies in order to assist them with credits from financial institutions which will enable them to face fluctuation in the international peanut (and derived products) market
  • in order to satisfy domestic demand for peanuts and to make sure that peanut processing industries have important quantities for their production, the government should set a reasonable peanut purchasing price and pay farmers in cash. This has the potential to prevent farmers from selling to foreign buyers who have sophisticated peanut processing technology. Over the long term, peanut exports through foreign buyers will lead to peanut shortage in terms of both local consumption and the Senegalese peanut processing industry.
     
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