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Potato incorporated into Warehouse Receipt System

Potato is the latest crop to be incorporated into the Warehouse Receipt System (WRS) that was dealing with maize, beans, green grams, coffee, wheat and rice.

Chief Executive Officer to the WRS Council Mr Samuel Ogolla said the system would enable potato growers to access credit by borrowing against receipts issued for goods stored in controlled warehouses.

Chief Executive Officer to the Warehouse Receipt System (WRS) Council Mr Samuel Ogolla (R) and County Liaisons Officer Linnet Echessa (L) at the Mauche Potato Cold Storage Facility. Photo by Dennis Rasto

It also targets bringing to an end exploitation of farmers by brokers as they would now be able to sell their produce when prices are favourable.

While speaking at Mauche potato cold storage facility within Njoro Sub-County Mr Ogolla noted that the WRS would help improve commodity storage, reduce potato post-harvest losses that stood at 30 per cent, curb value chain inefficiencies, and increase financial earnings to farmers, traders and service providers in the agricultural sector.

In June 2019, Parliament passed the Warehouse Receipt System Act, providing a legal framework for its development and governance.

Later that month, President Uhuru Kenyatta assented to the Warehouse Receipt System Bill. The law provides for the establishment of a system whereby warehouse receipts are issued by licensed warehouses to depositors upon delivery of agricultural commodities produced in Kenya.

“The receipt is proof of ownership. The document can be used as collateral to get a bank loan. These systems enable producers to delay the sale of their products until after harvest to a moment when prices are generally more favourable,” added the chief Executive Officer

He said the system provided an opportunity for a national commodity exchange making it possible to trade in agricultural commodities, an important development that would further improve profitability, liquidity and price stability in the trade of agricultural commodities.

“It is expected that the warehouse receipt will lead to the development of aggregation and off take centres across the country, a network of modern certified agricultural produce warehouses, and linkages with structured trading platforms such as commodity exchanges and auctions,” Ogolla said.

WRS seeks to change the way the country trades, not just in cereals but other commodities. Private operators providing warehousing facilities have to be registered by Warehouse Receipt Council and Agriculture and Food Authority (AFA) to be eligible for the WSR,” noted the CEO. He confirmed that there is still a lack of information on the system among farmers.

“The council has embarked on educating farmers, so that we can move to this modern and more civilized way of doing trade which even neighbouring countries like Rwanda and Ethiopia are doing,” Ogolla said.

The Warehouse Receipt System Act established the Warehouse Receipt System Council, which was inaugurated by Agriculture Cabinet Secretary Peter Munya on July 29, 2020.

The council is mandated to oversee the establishment, maintenance, and development of the WRS for agricultural commodities produced in the country in collaboration with county governments and other players in the value chain. The council also ensures the efficiency, effectiveness, and integrity of the system.

It is also mandated to provide for the registration, licensing and inspection of warehouses and warehouse operators.

The council comprises multi-sectoral representatives from the major agricultural commodities trade network in the public and private sector.

Ogolla noted that the journey of introducing the Warehouse Receipt System in Kenya, which started way back in 2009, was near completion and that a total of 58 National Cereals and Produce Board warehouses have been identified as suitable for WRS.

He said the council is aware of inaccurate information in the public domain that was causing anxiety among stakeholders especially farmers.

“I wish to assure the Cabinet Secretary, stakeholders and general public that the council has prepared a communication and outreach plan for vigorous awareness, sensitization and education of the value chain actors and the general public on the benefits of the WRS. We will continue to engage with stakeholders to make amendments that address emerging issues,” Ogolla said.

By Anne Mwale

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