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Farmers now shun State’s warehouse receipt system
A warehouse. Kenya established the Warehouse Receipt System Council in 2021 to help smallholder farmers address challenges related to post-harvest management, trading, and marketing.
Farmers have ignored the government-backed warehouse receipt system to manage their harvests, a new audit has revealed, citing red tape in the licensing of facilities.
Under the system, commodity owners deposit their produce in a certified warehouse and are issued with documents known as Warehouse Receipts as proof of ownership.
The receipt may be negotiable or non-negotiable. Negotiable receipts allow the transfer of ownership of that commodity without having to deliver the physical commodity. Non-negotiable receipts must be endorsed upon transfer.
The Auditor-General Nancy Gathungu, in her latest report on operations of the Warehouse Receipt System Council, notes that by December last year, farmers in at least four counties with huge agricultural production, were not using warehouses established for the management of their harvests to prevent post-harvest losses.
“Farmers have stores at home and therefore may not adopt the initiative,” the Auditor-General notes.
Most of the farmers, the audit adds, failed to use the warehouses for being turned away for taking maize that did not meet standards, as others preferred using their stores at home.
“Field verification to licensed warehouses and Cooperatives in Uasin Gishu, Trans-Nzoia, Kakamega and Bungoma counties in December 2023 revealed that there were no commodities deposited in the warehouses by farmers or farmer groups,” Ms Gathungu notes.
Ms Gathungu indicates that when auditors interviewed farmers during the field visits, they cited at least seven challenges that have blocked them from using the warehouses.
The challenges include some of the farmers having been “turned away with maize that did not meet specified grades” as others offered to sell their maize to middlemen, who offered them lucrative prices and “therefore farmers have no need for storing their produce.”
“The lengthy process of certifying and licensing warehouses has discouraged farmers from depositing grains at their local stores and there’s high transportation cost to the licensed warehouses,” she says.
The audit notes that only two operators with six warehouses in the country were licensed by December last year, since the council started operations in 2021.
“This signals slow uptake of the receipt system or lack of aggressive sensitisation and implementation of the system. In the circumstances, effectiveness and sustainability of the Council services is doubtful,” Ms Gathungu states.
She also cites the high cost of maintaining warehouse operations compared to the yields as another challenge facing users of the warehouses, with the lack of Warehouse Receipt System Council staff in the counties also noted to hinder its operations.
The government established the Warehouse Receipt System Council in 2021 to help smallholder farmers address challenges related to post-harvest management, trading, and marketing, following the creation of the Warehouse Receipt System in 2019.
The council’s mandate is to facilitate the establishment and development of a warehouse receipt system for agricultural commodities produced in the country, to ensure structured trading of the commodities.
