KENYA – Kenya is set to launch its agriculture commodity exchange platform in the first quarter of 2020 as the east African country gears up to drive growth in the agro-processing industry.
Industry and Trade Cabinet secretary Peter Munya, said the ministry has set a nine-month deadline beginning July this year to set up the commodities exchange.
Peter Munya said the ministry has allocated cash towards upgrading and modernisation of State-owned warehouses to meet international standards for warehouse receipting system, reports Business Daily.
“The commodity exchange whose creation is at advanced stage will assist in improving earnings for Kenyan producers as well as increase exportable goods.
“Our target is for the first agricultural produce to begin trading at the Commodity Exchange in the next nine months. Thereafter we hope to incorporate all major cash crops as well as minerals in the commodity exchange,” Mr Munya said.
He said that the regulations for the commodity exchange have already been developed to guide the operations of the platform after President Uhuru Kenyatta signed the Warehouse Receipt Bill 2018 into law.
The receipt system will be used by micro-, small- and medium-sized enterprises (MSMEs) to supply produce to agro-processors through the proposed exchange.
Suppliers of agricultural commodities such as staple maize, rice, tea, coffee and cotton will be issued warehouse receipts — proof of quantity and quality of materials supplied — which can be used as collateral to access credit.
The exchange is expected to address constraints faced by both smallholder farmers and consumers by providing an organised market through a single platform where buyers and sellers meet.
It will further ensure better farm gate prices for farmers and provide access to proper storage and warehousing especially for primary producers, miners, and farmers during bumper harvests.
“We can’t get the best prices for our produce under the current circumstances. The exchange will open up the market. The department of Trade has already developed regulations which we will be gazetting soon, Mr Munya said.
The exchange will also facilitate local, regional and international trade, enable price discovery, and offer risk management system.
Further, it will provide stability in product quality, guaranteeing better profit margins and reduce risks associated with lending to the agricultural sector.
Some of the warehouses earmarked for renovations include Kenya National Trading Corporation (KNTC), the National Cereals and Produce Board, Kenya Farmers Association and Kenya Planters Cooperative Union.
KNTC owns 514,685 square feet of go-downs in all major towns including Nairobi, Mombasa, Naivasha and Kisumu and 16,659 square feet of leased warehouses in Meru, Machakos, Kitale, Kapsabet and Wote.
KNTC acting managing director Joel Imitira said in February it will spend an initial US$1 million (Sh100m) for renovating the warehouses targeted for exchanges in Nairobi and Mombasa from July.