Why warehouse system offers best deal
Warehouse Receipt System Council Acting Chief Executive Officer Samuel Ogola during an interview in Naivasha Town on April 23, 2021.
A year has lapsed since the government unveiled the Warehouse Receipt System Council (WRSC), whose task is to implement the new programme that seeks to cut post-harvest losses and ensure small farmers benefit from their ventures. WRSC acting chief executive officer Samuel Ogola spoke to Francis Mureithi on progress made in entrenching the warehouse receipt system across the country
Please explain in the simplest terms, what is warehouse receipt system?
This is a system where a farmer, a trader, an aggregator or any other person who has agricultural commodities like grains deposits them into a warehouse that has been certified by the Agriculture Food Authority (AFA) and licensed by the county government for storage. He gets a receipt, which is like a title deed, because it is proof of ownership that entitles the depositor to sell the produce when the price in the market is good. The warehouse operator must make sure that the quantity and quality of produce stored are maintained.
What are the benefits of the system?
Farmers get an assured market for their produce at best prices. It reduces post-harvest losses. The produce is cleaned and fumigated to remove impurities and pests and is graded. Thus, farmers sell the produce according to grades. With warehouse receipts, farmers can access inputs on the strength of the deposits at the warehouse. They can access loan facilities too from banks. Millers can do value addition as they have guaranteed raw materials.
The uptake of the service is still low among smallholders. What hinders its adoption?
Many farmers are not aware that the warehouse receipt system exists and will solve many challenges they face such as post-harvest losses, fluctuating prices, financial empowerment and exploitation by middlemen. We have launched a sensitisation campaign and already have visited Nakuru, Trans Nzoia, Uasin Gishu, Embu, Meru and Nyeri and held talks with farmers, county governments and other stakeholders on the roll-out of the scheme.
Is warehouse receipt system the panacea to post-harvest losses farmers incur, particularly those growing cereals?
That is what we're hoping to achieve. We're collaborating with AFA, counties and other players such as Cereal Growers Association, East African Grain Council, Kenya National Federation of Farmers and Kenya Farmers Association to make sure issues like harvesting, good agriculture practices, drying of produce on the farm and transportation to the warehouses are done professionally to reduce post-harvest losses, and other overhead costs.
One of the major challenges of the system is that financial institutions have been reluctant to offer farmers loans against their stored produce? How will your organisation overcome this hurdle?
The system will ensure the produce is kept at required standards and well-fumigated to be released when the market prices are favourable. This assurance will enable banks to lend the money to farmers. The produce will remain collateral in case of any default.
What produce can one store in the warehouses?
Maize, rice, processed fish, beef, macadamia, cashew nuts, powdered milk, cotton, pyrethrum, potatoes, coffee, tea, rice, beans, green grams and wheat. The council has formed technical committees to address structural issues and is working closely with regulators of the value chains and value chain actors like the National Potato Council for the benefit of the farmers.
Warehouse receipt system is geared towards the creation of an Agricultural Commodities Exchange. How far is the country from creating a functional commodities exchange?
The national government has formed the Kenya National Multi-Commodity Exchange (Comex). Comex is in the process of setting up the trading floor which should be up and running by the end of the year. Nairobi Security Exchange is a board member of Comex and will help in technology and knowledge transfer.
Comex is not solely for agricultural produce. It is a multi-commodity exchange. The services will also be rolled out across the counties. This will help farmers monitor the prices of various commodities and eliminate exploitation by brokers. Farmers bargaining power will be enhanced.
