Agriculture is the engine of Guinea-Bissau’s economy. The sector relies mainly
on cashew nuts, rice, and the subsistence production of food crops. Cashews
represent 90 percent of the country’s exports and the principal source of income
in rural areas. Unfortunately, cumbersome administrative arrangements,
weak legal systems, and an absence of credit often lead to high transaction
costs for cashew buyers and exporters, which help decrease the farm-gate price
of the raw nuts. This chapter provides a review of the cashew sector in GuineaBissau,
as well as estimates of the likely impact of changes in farm-gate prices
and export taxes on poverty among cashew producers and in the country as a
whole. The chapter also notes that over the last three decades, the production
of rice has significantly decreased in favor of cashew farming. This situation
represents a threat to food security. For the rural sector to ensure food security
and create new jobs, policymakers would need to adopt a coherent agrarian
development strategy in the context of the PRSP, which would aim at rehabilitating
and encouraging rice production, and also promoting the processing of
raw cashews into exportable cashew kernels, in order to generate more value
added in the cashew sector.