the role and importance of developing vibrant commodity ...€¦ · •eagc wrs programme ......
TRANSCRIPT
AFRICA FEEDING AFRICAThe Role and Importance of Developing Vibrant Commodity Exchange Systemsi
Warehouse Receipts SystemsExperiences from Eastern Africa.
Gerald Makau MASILA, Executive Director, EAGC
Presented to the ReNAPRI WORKSHOP4th- 5th Nov 2014, Lusaka, ZAMBIA
Contents....
• Introduction to EAGC• Key EAGC Initiatives• EAGC WRS programme• Achievements• Challenges • Lessons Learnt
EAGC Mandate……
Main Grains/Cereals
•Maize
•Wheat
•Rice
•Sorghum
•Millet
•Beans
•Green grams
•Pigeon peas
•Soya beans
•Teff..Etc... Inclusive…◦ Farmers/Producers – small holder and large◦ Traders, Handlers, Warehouses◦ Processors/Milling/Manufacture
As Members of EAGC…Active, Affiliate, Associate
EAGC Object……• To develop and promote regional
structured grain TRADE • Advocate for an enabling
environment, • Reduce transaction costs, trade
barriers, • Increase incomes/reduce poverty,
improve food security
GRAIN VALUE CHAIN.....
•PRODUCTION ( SMALLHOLDERS 70-80%)
•INPUTS(SEEDS, AGRO-INPUTS, FERTS
•FINANCE ACCESS
•MARKET ACCESS,
•MKT INFORMATION
•RISK MANAGEMENT
•PRICE VOLATILITY
•COMPETITION (INTERNATIONAL/REGIONAL
•POLICY – MACROECON
•FISCAL
•MONETARY
•NATIONAL POLICIES
•IMPORT/EXPORT
•REGIONAL POLICIES(RECS)
•AFRICAN UNION(AUC)
•IGAD,COMESA,EAC
•SADC, ECOWAS etc
Key EAGC InitiativesStructured Trading Systems (STS)
Grades and Standards
Storage and Warehousing, Post Harvest
• Warehouse Receipt System,• Trade Contracts, ADR• Financing Systems –Inventory Credits
-Collateral Management •Grain Trade Platform/Commodity Exchange
Market Information Systems (MIS)
Capacity Building
Trade Policy •Policy Dialogue•Regional harmonization of Trade Policies•Regional Food Balance Sheet•Removal of Trade barriers
Structured TRADING System
SILOSSTORES
WRS
FARMERS/ TRADERS
PROCESS/MILLING
STANDARDS & GRADING
RULES OF TRADE/CONTRACTS/ARBITRATION
TRADING PLATFORM/COMMODITY EXCHANGE
BANKS
ENABLING POLICY ENVIRONMENT/LEGAL & REGULATORY FOR STS
EAGC WRS Programme.....
• WRS Kenya Pilot ...2007
• Development of WRS process & Protocols
• Certification criteria for Warehouses
• Awareness creation to Stakeholders
• Participation of Financial Institutions/Banks
• Farmer/ Trader mobilization to utilize WRS.
• Market linkage – Sale of commodities in WRS
• Market Information Services to support WRS
EAGC WRS PROCESS.......
EAGC WRS PROTOCOLS...• WAREHOUSE CERTIFICATION
– INSPECTION CRITERIA –, INSURANCE, SERVICES
– FACILITY – SILO OR FLAT BED WAREHOUSE
– APPOINTMENT OF INSPECTORS
– ISSUE OF WAREHOUSE CERTIFICATE & WHSE RCPTS
• COMMODITY CARE RULES
• WAREHOUSE RECEIPT REGISTRY
• TRIPATITE CONTRACT – EAGC/WHOUSE/BANK
• RULES OF TRADE & ARBITRATION - ADR
• MARKET LINKAGE/TRADE PLATFORM
WRS ACTIVITIES.......• Warehouse Identification & Certification
• WRS concept awareness creation/sensitization
• Farmer Groups formation & Training
• Grain Aggregation/bulking centres
• Issue of PHH equipment for Quality Control
• Warehouse Operators Training
• Monitoring/Facilitating Grain deposits to Certified Warehouses
• Surveillance, Impromtu Inspections
FARMERS TRAINING.....
SUPPORT TO FARMERS....
GRAIN HANDLING EQUIPMEMENT..
WAREHOUSE OPS TRAINING
GRAIN BULKING & TPT.....
GRAIN WAREHOUSING....
Achievements....• Certified Warehouses – 10 (Ten)
• Certified Warehouse Capacity – 33,705MT
• Commodities Deposited in WRS – 21,000MT
– MAIZE, WHEAT & PULSES
• Total farmers reached – 13,233
• LOANS advanced to date – Kshs.108 Million
• Depositors to date – 1,100
• Financial Inst/Banks - 4
Equity Bank, Krep FSA, Unaitas Sacco, Chase Bank
EAGC WRS CERTIFIED
WAREHOUSES
WRS Cost Analysis.....
0%
20%
40%
60%
80%
100%
Gogar Farm J.K Koech Minua C. A
STG
TPT
FINANCE
WRS benefits• Warehouse Receipt System – is a market instrument that
enables aggregation & safe storage of produce at harvest for eventual release to the market and thereby enable;
– Aggregation of produce from smallholder farmers at village bulking centres to access certified warehouses
– Transaction costs reduced – for farmers, traders, millers etc which allows for increased earnings for all.
– Market Access – Buyers can purchase directly from the warehouses where quality and quantity is guaranteed.
– Finance Access – Warehouse receipts used as collateral for borrowing
– Stabilizing prices – by eliminating excess supply at harvest
EAGC Experience....&..................Lessons Learnt• Warehouse Receipt System(WRS) WORKS!
• It’s a Win- Win for all Stakeholders
– Depositors i.e. Farmers/Traders, Warehouse Operators, Financial Institutions, Commodity BUYERS/Processors/ Consumers
• Risk Management is key –Professionalism & Insurance
• Governance - Roles & Responsibilities clear
• Commodity Trade is key and critical to spatial redistribution of food from surplus production areas to deficit demand areas.
• Region as a unit for production and consumption. Cross border trade in Eastern Africa is the avenue to achieve this.
• However, XBT faces many challenges and barriers, tariff and non-tariff all which increase transaction costs.
EAGC Experience....&..................Lessons Learnt
Lessons....cont....
• TRADE POLICY and predictability of policy is either a support or a disincentive especially to private sector investment in the grain trade value chain.
• MARKET INFORMATION – about available stock levels and to inform POLICY decision as well as supporting buy/sell decision by the value chain actors is necessary.
Challenges.....• Low Awareness & Participation in structure
trade by FARMERS, TRADERS etc
• WAREHOUSE FACILITIES – Under utilized / Few
• MARKET/BUYERS – Low Awareness, Commodity Standards &Grading, Delivery, Procurement Procedure/Tendering
• POLICY – Legislative, Trade/Market limitations
• SIDA - Sweden
• USAID– USAID/Compete
– USAID/MLI
– USAID/Lead
• FSD
• AGRA
• CTA
FAOWFP
CGA/UCEUNCTAD
IFCRESAKSSASARECAICRISAT
ACDI/VOCA/KMPDNile Basin Initiative
EACCOMESA
African UnionAFRACA
aBi Trust -UG
Donor Support Partners
APPRECIATIONS…….
EAGC - Vision
“To be the leading voice for the grain industry in Africa”
Mission.....“To advocate for an enabling environment and promote structured grain trade for optimum stakeholder benefits”