February 25th 2018

Business / Markets

Proposed law to create local agricultural exchanges, empowering farmers

The passage and effective implementation of the bill would address trading challenges between millers and farmers which are common in the cereal and wider agricultural sector.

By Cyrus Mutaicmutai@kenyafreepress.comThursday, 14 Jul 2016 21:18 EAT

Farmers will benefit immensely if Members of Parliament pass the Warehouse Receipt System Bill under debate in the House. The Bill, tabled by the Leader of the Majority Aden Duale, seeks to standardise the warehousing and trade in agricultural commodities.

The proposed law, called Warehouse Receipt System Bill, seeks to incentivize private warehouse operators by providing a legal framework for the development and regulation of a warehouse receipt system for agricultural commodities.

Farmers will be able to store their produce in registered warehouses in exchange for receipt that can be turned into liquidity when necessary. The Act covers all agricultural produce whose storage, packaging, processing and all other forms of transformation will be determined by the regulations subject to the Act.

The Bill seeks the formation of the Warehouse Receipt System Council (WRSC), whose chairman will be appointed by the president and and board members appointed by the minister for agriculture.

The council will advise the cabinet secretary on matters relating to agricultural commodity trade and warehousing as well as promoting the development of national network of privately or publicly managed warehouses that have the capacity to issue warehouse receipts.

Warehouse operators will be required to apply for licenses that only the council may grant. WRSC would have the powers to suspend or revoke a license issued to a warehouse operator and will have to notify the affected warehouse operator including publishing the names of the suspended or revoked in a nationwide daily newspaper.

The Bill also gives a clear outline on the roles and the guidelines in which the warehouse operators will work under. For example, warehouse operators will have the duty of ensuring that the goods in his/her warehouse meet the standards required by the Kenya Bureau of Standards and are weighed and measured according to the Weights and Measures Act.

After depositing the commodities, the person (owner of the commodities) will be issued a warehouse receipt either in hard copy or electronic form indicating the title of the goods, name and address of the warehouse, date of issue, serial number of the receipt and the warehouse license number which are the key components of the receipt.

The depositor will be able to transfer the receipt to another person through negotiations and will be regarded as duly negotiated to a person who purchases it in good faith.

The holder of the receipt will be delivered the goods upon the presentation of the receipt.

This system will be efficient as the good holders will take their goods to the warehouse of their choice and when the goods are required for marketing, the owner can easily access their commodities.

The problem of grain damage in the country will now get a long term solution as the warehouse operators are given the responsibility of maintaining the standard of goods deposited to them by the holder.

The passage and effective implementation of the bill would address trading challenges between millers and farmers which are common in the cereal and wider agricultural sector.

Licensed warehouses all over the country will keep a database of the commodities in their hands either manually or electronically making it easy for the government to establish the amount of commodities in the country.

This being a challenge in the country led to the increase in maize flour prices with the millers and the ministry of agriculture disagreeing on the amount of maize grains available in the country at the time which could have never existed in the presence of this WRC.

The writer is a student of journalism at the Technical University of Kenya and intern writer at the Kenya Free Press, specializing in politics, sports, agribusiness and international affairs.

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