Govt unveils Warehouse receipt system to manage food stocks

The government has unveiled the Warehouse Receipt System (WRS) Council to oversee the operations of Warehouse Receipt System (WRS) in agriculture sector.

The WRS seeks 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.

Speaking Wednesday virtually when inaugurating the council at Kilimo, Agriculture Cabinet Secretary Peter Munya said the Council comprises of multi-sectorial representatives from the major agricultural commodities’ trade ecosystem in the public and private sector.

He added that WRS is intended to offer a range of solutions to farmers, especially the smallholder farmers who face several challenges related to inefficiencies brought about by lack of a transparent and structured market system.

“The Warehouse Receipts System is not an end in itself but principally a first step in the creation of a functional Agricultural Commodities’ Exchange,” he said adding that it will create flexibility in the sale process as farmers will not be forced to sell in distress at harvest when prices are low but will have a choice to wait for more favourable prices at a later time.

Munya further said  the warehouse receipt will  also encourage increased lending to the Agricultural sector by pledging the receipt, which reflects the value of the commodity, as an alternative collateral and mitigating risk associated with non-payment within a structured trading system.

It will also promote aggregation of produce by small scale farmers enabling access to large traders, processors and government at a better price, enable small scale farmers to participate in a modern and efficient market with standard produce quality and weights and also reduce price volatility and improving liquidity as the first step towards a Commodity Exchange and improved price discovery.

The CS called on the council to ensure that value chain actors get the benefits that come with the warehouse receipt system and hit the ground running and steer the WRS ship to deliver on the new mandate given to them.

“Going forward you will be expected to support and ensure that WRS Council management develops and refines a system for effective regulation of its activities and roll out the system for the benefit of the general public,” Munya said.

He added that the council will be expected to attract investments into the warehouse from the private sector actors who have been waiting for this system for over 10 years and even pioneered the system on their own.

 “You are coming into office at a time when reforms in Strategic Food Management are being rolled out by Government and thus you are going to be key to the success of these reforms and Government is relying on you to ensure the reforms successfully see the light of day,” he said.

Munya directed the council now to move with speed and implement the full provisions of the Warehouse Receipt System (WRS) Act No.8 of 2019 and the regulations.

The Council will focus on implementing the Warehouse Receipt System for coffee, tea, rice, beans, green grams, and wheat but progressively expand to cover other agricultural commodities.

They are expected to successfully set up the system in readiness for the main harvest season in October 2020.

Jane Ngigi, who is going to chair and steer the formation and operations of the council for the next three years said that as they roll out the WRS, farmers should be assured of a structured farmers access for their commodities and that they were committed to actualize the Agriculture Sector Transformation and Growth Strategy (ASTGS) 2019-2029 with reference to strategic food reserve reforms.

“We will create linkage to the existing networks and as expected we will reach out to most of the small scale farmers involved in the business that WRS will support going forward,” she said.

Ngigi added that while promoting the WRS, they will further strengthen value chains in terms of reducing wastage and improving productivity through efficiency improvement, both at County, National and Private sector involvement.

The Chair thanked the Ministry and contribution of development partners namely AGRA and IFC who developed the legal and regulatory framework for governing the warehousing receipt system.

Other members of the WRS council are Anthony Muriithi Ag. Director of Agriculture Food Authority (AFA);  Rose Mutuku from Eastern African Grain Council (EAGC); Eng. Kennedy Wandera  from the Ministry of Agriculture; Christine Mwai  from Kenya Bankers Association (KBA); Benson Loktari  from the Council of Governors (COG) and Samwel Ogolla who is the Ag. CEO of the Warehouse Receipt System (WRS) Council.

Warehouse Receipt Systems have successfully been operationalized in South Africa, Ethiopia and Rwanda. Kenya has successfully conducted piloted programmes on WRS by both public and private sector players in the last 5 years


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