The recently launched Warehouse Receipt System (WRS) in Kitale on 13th January 2022 is a welcome move by the smallholder farmers and Agro-processors who are set to reap substantially from their hard work.
The Warehouse Receipt System (WRS) is where farmers/traders/aggregators, co-operative societies/ community-based organizations deposit their commodities in a certified warehouse. They are then given a warehouse receipt as proof of ownership.
Established by the Warehouse Receipt System Act No. 8 of 2019, the system brings distinct actors and players on board. For instance, the County Executive Committee Members (CEC) for agriculture, which has the mandate to license the Warehouse Operators in the County. Other actors include; the depositor such as the farmer, the warehouse operator, financial institution, buyer/consumer, and, finally, the insurer.
Undeniably, the WRS seeks to iron out the longstanding problems the smallholder farmers have been facing for a long time, notably in obtaining loans from financial institutions. Financial institutions have been uncompromising in advancing loans to smallholder farmers because of their inability to provide collateral.
WRS also seeks to address the challenges of post-harvest losses, curb value chain inefficiencies, increase earnings for smallholder farmers and other players in the agriculture value chain. The system will ensure that the Kenyan farmers get high prices for their agricultural commodities. It will stamp out unscrupulous intermediaries who often grip the little out of the farmers’ pockets.
How does the Smallholder farmer stand to gain from the newly launched WRS?
Without a doubt, the use of WSR will be of immeasurable value to the agriculture value chain actors. The system will:
- Boost domestic and foreign trade, consequently contributing more to the economy’s growth.
- Encourage smallholder farmers to play a part in a contemporary and efficient market with standardized quality and weights. In addition, the Warehouse Receipt System will promote the accumulation of produce by smallholder farmers, granting them access to large traders and Agro-processors.
- The system will also serve as an alternative source of security to smallholder farmers, giving them access to loans from financial institutions.
- Farmers will have the autonomy and flexibility to plan and sell their produce at their own designated time, as the system provides proper storage.
A summary of how the WRS Works
- The warehouse operator makes an application to the Warehouse Receipt System Council (WRSC) for certification.
- WRSC will then inspect the warehouse, certify, and issue a conformity certificate.
- The operator then applies for a licence from the respective county government (The respective County Executive Committee member for agriculture does this).
- The depositor (farmer/trader) deposits commodities at a certified and licenced warehouse operator.
- Upon receiving the commodities, the warehouse operator will dry the samples, weigh them, grade them, and store them. (The operator is solely responsible for the safety and maintenance of the quality and quantity of the commodities deposited).
- The depositor (farmer/trader) will then be issued a warehouse receipt. The receipt is then registered at the central registry by the council.
- The depositor may then use the receipt to access loans from financial institutions.