Farmers will from October sell their maize through a Warehouse Receipting System (WRS) as the government ceases purchasing of the produce from growers in favour of commodities exchange trading.
Farmers will be required to deposit their maize in certified warehouses and get issued with warehouse receipts as they wait for the price to be in their favour before selling it at a later date, which is a departure from a long-standing tradition where the State buys the commodity through National Cereals and Produce Board (NCPB).
The main crop harvesting season starts this October and Agriculture Cabinet Secretary (CS) Peter Munya has directed a WRS council that he unveiled on Wednesday to ensure farmers’ maize trades through WRS this year.
“I have given my undertaking and pronounced that come the next harvesting season, starting early October 2020, the ministry’s management of newly acquired stocks will be under the WRS,” said Mr Munya.
Parliament passed the Warehouse Receipts Systems Act 2019 in June last year providing a legal as well as regulatory framework for development and regulation of WRS and establishment of its council.
The CS said one of the key interventions of the WRS will be to improve commodity storage, reduce average post-harvest losses, curb value chain inefficiencies, increase financial earnings to farmers, traders and service providers in the agricultural commodity trade.
Last year alone, farmers lost close to 10 million bags of maize due to post-harvest losses. In Kenya, it is estimated that a grower loses up to 30 percent of their produce due to poor handling and storage.
Mr Munya urged the council to attract investments into the warehouse sector from private actors who are very vibrant in Kenya. He said the private sector has been waiting for WRS for over 10 years and has been forced to pioneer its own system.
Kenya now becomes the fourth country in Africa after Ethiopia, Rwanda and South Africa to have a fully functioning commodities exchange.
The new development comes at a time when private sector and agriculture think tanks have been opposed to the government's directive in setting prices of maize in the market.