<p>In most cashew-producing countries, cashew apples, by-products of cashew nut production, remain largely unused despite their nutritional value. Similarly, cashew nut shells, a by-product of nut processing, are often wasted, even though they contain a toxic liquid (cashew nut shell liquid, CNSL) which can pollute the soil but has industrial applications in paint, varnish, and pesticide production. The residual cake left after CNSL extraction can be used to generate bioenergy and biofertilizer. This study analyzes the effects of enhancing the processing of these cashew by-products in Benin using a single-country Computable General Equilibrium model. Based on an empirical study we identify a high potential domestic demand for cashew apple juice indicating a potential to utilize currently wasted cashew apples. A key novelty of our work lies in the extension of the General Equilibrium model to incorporate “unemployed intermediate inputs” (here cashew by-products). Our findings reveal that stimulating demand for cashew apple juice can catalyze growth in the cashew-apple-processing sector and incentivize cashew farming. In addition, targeted subsidies for promoting the cashew-apple-processing sector could further support sectoral development and enhance cashew apple utilization. These developments result in reductions of waste, land use per calorie, trade deficit, and poverty, while increasing domestic value-added, household income, and nutritional security. These findings reflect circular economy principles by showing how waste becomes value, closing loops in the agri-food system. Overall, this study highlights the potential of processing cashew by-products for enhancing the economic, social, and environmental sustainability of the agri-food system.</p>