By FELICITY NKIROTE BIRIRI
Traditionally, Kenyans and Africans used to employ age-old methods of food storage, like granaries for grains and specially grass-woven baskets for millet ensuring both dryness and protection against pests. Milk would be stored in smoked guards. This practice dates back to ancient times, even mentioned in the Bible, where Joseph managed warehouses for food security that secured the Egyptians for seven seasons of rainfall failure.
In contemporary Kenya, many traditional approaches have dwindled with farmers opting to sell their produce through intermediaries, jeopardizing food security and compromising their income.
Unfortunately, some who store in granaries often lack facilities that meet proper storage standards. This exposes them to the unpredictability of nature, leading to issues like grain rotting and aflatoxin contamination during rainy seasons.
Presently, Kenyan farmers face a staggering 40 per cent post-harvest loss due to inadequate harvesting techniques and improper storage. For instance, out of an expected 40 million bags of maize from the long rains, poor storage facilities and post-harvest mismanagement leads to a loss of 16 million bags, surpassing the 10-12 million bags of maize imported annually.
In response to this critical issue, Kenya passed the Warehouse Receipt System Act No. 18 of 2019. This legislation aims to regulate quality storage facilities and warehouse operators for agricultural commodities. The law empowers farmers to access quality storage facilities, receive warehouse receipts as proof of ownership and transfer storage liabilities to operators for a fee.
Combining this with fully functional commodity exchanges transforms farmers from price takers to price negotiators, enabling them to sell at opportune times and to use warehouse receipts as collateral, especially beneficial for individuals without traditional collateral such as women and youth.
For traders who seek to increase their turn-over, effectively respond to market fluctuations and produce marketing, warehousing can multiply their proceeds as they can access financing after the initial deposit, secure a loan using the warehouse receipt and continue to purchase additional consignments.
During a bumper harvest, the stored commodities can then fetch high prices and provide food security when food is scarce. The Government can also intervene for the purpose of price stabilization by purchasing warehouse receipts through the national food reserve when prices are low and releasing receipts to the market to stabilize food prices when prices are high.
The Warehouse Receipt System Council (WRSC), responsible for implementing the Warehouse Receipt System Act, 2019, is certifying quality warehouses capable of issuing warehouse receipts. Additionally, WRSC conducts awareness programs and training sessions on grading, sorting, drying, storage, marketing, and accessing financing using warehouse receipts as collateral.
To further ensure the security of farmers’ commodities, WRSC collaborates with County Governments to inspect warehouse operators, enforcing standard operating procedures that minimize post-harvest losses. Specific standards for commodities and warehouse facilities have been developed and where non exist, they are created through multi-sectoral committees involving the Kenya Bureau of Standards and agricultural experts.
This approach aligns with global practices that have boosted economies as seen in India which is able to feed her 1.2 billion people. The WRSC aims to reduce post-harvest losses to below 15 per cent within five years and under 5 per cent within a decade, leading to decreased imports, improved balance of payments and overall economic enhancement.
So far, the WRSC has certified warehouse operators in Nakuru, Trans Nzoia, Uasin Gishu, Meru, Narok, Mombasa and Kirinyaga counties. Potential investors are urged to explore opportunities in the warehouse receipt system sector including infrastructure development, management, financing, aggregation and off-takers.
Kenyans need to understand and embrace proper food storage not only to reduce post-harvest losses but to also contribute to achieving food security, aligning with HE President William Ruto’s agricultural transformation and structured commodity trading agenda.
We call upon investors willing to invest in the warehouse receipt system sector to contact WRSC via info@wrsc.go.ke
The writer is Chairperson, Warehouse Receipt System Council
