• System will allow farmers to deposit commodities in NCPB warehouses, get receipts they can use for collateral and wait to sell when prices improve.
• It is to be in effect for the coming October harvest .
Image: MATHEWS NDANYI
Farmers will begin using the Warehouse Receipt System in the October harvest season to get better prices, loans and improve their livelihoods.
Agriculture CS Peter Munya on Wednesday directed the Warehouse Receipt System Council to ensure the system is working by October. This will reduce pressure on farmers to sell their produce immediately after harvests when prices are usually low. They can wait for higher prices.
The CS spoke during the virtual inauguration of the Warehouse Receipt System Council.
Under the Warehouse Receipt System (WRS) owners of commodities, who may be producers or dealers, deposit produce in certified warehouses. They are issued a title document called a Warehouse Receipt as proof of ownership.
Munya said the system will enable farmers access credit as they wait for favourable prices; they can use the receipt as collateral.
They will also realise a threefold production increase per acre due to their ability to purchase farm inputs on time, he said.
The system will create flexibility in the sales process as farmers are not forced to sell in distress at harvest when prices are low, and they can choose to wait for favourable processes later.
WRS will also increase lending to the agricultural sector by pledging the receipt, reflecting the value of the commodity, as collateral.
This will reduce risk associated with non-payment within a structured trading system, Munya said.
The system will also promote aggregation of produce by small-scale farmers, enabling access to large traders, processors and government at better prices than those for individuals.
Warehouse Receipt Systems are used in South Africa, Ethiopia and Rwanda, and it has been piloted and conducted by both public and private sector players in Kenya over five years.
Munya told the Warehouse Receipt System Council to ensure value chain actors get benefits of the system.
"You are coming into office at a time when reforms in Strategic Food Management are being rolled out. You will be key to success of these reforms," Munya said.
He promised that starting in October the Agriculture ministry's management of newly acquired SFR stocks will be under the Warehouse Receipt System.
In June 2019, Parliament passed the Warehouse Receipts Systems Act 2019, providing a legal and regulatory framework for development of the WRS and establishment of the Warehouse Receipt Council.
The Warehouse Receipt System Council will oversee the operations of the system in collaboration with county governments and other stakeholders.
Samwel Ogola will be the acting CEO of the council that includes representatives from the major agricultural commodities’ trade system in the public and private sector.
(Edited by V. Graham)