19 July 2014

Kenya: Warehouse Receipting to Scrap Farm Input Subsidies

Subsidies on agricultural inputs will gradually be scrapped once the country enacts a warehouse receipt system law, it has emerged.

The Cabinet last week approved a memo for the Warehouse Receipt System Draft Bill 2014, paving way for legal and stakeholder input into the proposed law.

The Ministry of Agriculture said Thursday the draft will be taken to the Attorney General Githu Muigai for legal fine tuning before being subjected to stakeholders scrutiny.

A warehouse receipt system law on the one hand will facilitate farmers to access bank loans using the warehouse receipts.

Kenneth Ayuko, the ministry's deputy director for policy, however said the government was aware of the bumpy road ahead in realising this goal, saying it has taken nine years to draft the bill from the first stakeholder meeting in May 2005.

Kenya's grain production and supply chain has historically faced a triple-play dilemma, he said, with farmers and traders wanting to make the most in returns while the government pushes for more controls.

"No one wins in that scenario and the consumer is left at the mercy of trader and government," Ayuko told a workshop of grain stakeholders in Nairobi.

"That's why we have decided as government to reduce the risk factors that make us give excuses for not supporting initiatives to remove price volatility and stabilise supply. It's an uphill task that may take us even 10 years but we will do it by providing evidence for our case."

The East African Grain Council has been facilitating establishment of warehouse receipt centres since 2008 after piloting one at Lesiolo Grain Handlers in Nakuru.

EAGC's executive director Gerald Masila said there are already 10 active warehouses that have handled 33,705 tonnes of maize over the last three years.

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