Posted September 10, 2020 1:28 pm by

For many years, farmers in Kenya have suffered the brunt of low commodity prices, poor access to credit, markets and quality farm inputs, thanks to an exploitative, inefficient and rigged agricultural value chain.

But that is slowly changing as the government carries out bold reforms in the agriculture sector to improve productivity across the value chain, and more importantly, weed out cartels and middlemen choking the sector by fleecing farmers.

Key among these reforms is the enactment of the Warehouse Receipt System Act of 2019, which provides a legal framework for the development of a vibrant and stable agricultural commodities market in Kenya.

Although warehouse receipting is not new in Kenya, there has not been any formal legal and institutional arrangement to support its development. The Act, therefore, fills a major lacuna and facilitates the creation of a stable and reliable agricultural commodities market.

Specifically, it seeks to address marketing challenges associated with the grain sub-sector. The purpose of the Warehouse Receipt System (WRS) as established in the Act is to formalize the grain trade in Kenya; improve access to credit by farmers; promote good post-harvest practices and ensure proper storage of grains.

The Act also establishes the Warehouse Receipt System Council, tasked with among other things, overseeing the functioning of the WRS; maintaining a central registry for warehouse receipts; and promoting the development of a national network of privately or publicly managed licensed warehouses that can issue warehouse receipts.

The warehouse receipt system essentially works like this. A farmer delivers produce, for example, maize or wheat, to a warehouse that is licensed by the government to generate electronic warehouse receipts. The farmer gets a warehouse receipt which is basically a title document showing the type, amount and quality of produce delivered to the warehouse.

The receipt acts as evidence that the farmer is entitled to payment for known volume of agricultural produce and the terms of such payment. The receipt is like a motor vehicle logbook or land title deed and therefore can be used as collateral to access credit from financial institutions.

With the legal and institutional framework for WRS now in place, farmers in Kenya – and especially small-scale farmers – stand to reap many benefits.

First, the warehouse receipt system enhances access to credit by farmers, a crucial factor in transforming agriculture from a subsistence, low-value activity to an innovative, commercially viable and competitive affair, as envisioned in the Agricultural Sector Transformation Read More…Don’t let cartels frustrate warehouse receipt system  Don’t let cartels frustrate warehouse receipt system  Don’t let cartels frustrate warehouse receipt system  Don’t let cartels frustrate warehouse receipt system