Blow to farmers as maize locked out of receipt system

Maize growers in various parts of the country are facing a challenge after their produce was rejected under the warehouse receipt system due to poor farming practices.

Acting Warehouse Receipt System Council chief executive Samwel Ogola said the produce rejected did not meet the standards due to poor shelling and some of the maize had been not dried properly.

"Just before CS Peter Munya launched the warehouse receipt system last week, we did a sampling of maize in Kitale and Nakuru and you will be shocked that over 80 percent of their produce couldn’t qualify for the warehouse receipt system (WRS) because it was below the Kenya Bureau of Standards (Kebs) requirements,” said Mr Ogola.

However, the council's acting boss said extension service officers will address the farmer's challenges.

“When they are shelling they mix the bad and good cobs hence cannot meet the standards. More so heavy rains during harvesting seasons made it hard for farmers to dry their maize. But solar drying will resolve the matter,” he said.

Mr Ogolla said potato processors are also complaining that 30 percent of potatoes taken to factories are rejected because farmers harvest using hoes, which slash the potatoes which end up being rejected.

WRS is a process where commodities are deposited by producers and aggregators in certified warehouses and are issued with a warehouse receipt as proof of ownership. Currently, seven banks and microfinance institutions are ready to collaborate with farmers to finance them through the WRS.

“The receipt can be collateralised, negotiable and tradable. The banks are then able to finance it and that flows finance into agriculture,” he said.

Mr Ogola said saccos are yet to come on board however he said he will reach out to them. He said farmers are expressing concerns because they have suffered at the hands of banks and prefer Saccos.

Farmers want banks to sign an agreement with the government so that the financial institutions do not ‘mess’ them up.

However, Mr Ogola said due to the concerns the council is developing a warehouse receipt financing agreement that will be binding between the banks, warehouse operators and the depositors so that banks don’t shift goals after financing.

The International Finance Cooperation (IFC) will train the banks. Through their Global Warehouse Finance Program, IFC will lease out money to banks and support in setting up warehouses for cold chains such as potatoes, fish, beef and fresh produce.

“We have a challenge there as this limits us with commodities produced in Kenya, agricultural produce imported are not within their purview. This means people can import commodities and we will not know the qualities and quantities which may distort the food price system,” warned Mr Ogola.

He explained that people can import agricultural produce without the state knowing its

Mr Ogola said the system will help farmers through reduction of post-harvest losses, quality storage and aggregation, price discovery mechanism for farmers to know the worth of their produce, introduce structured markets and affordable financing.