By: GERALD ANDAE
Lack of a structured marketing system has left thousands of farmers at the mercy of exploitative cartels, denying them the full benefits of their toil.
The menace is already hurting the country’s food security because of skewed returns from investment by farmers, even as the government dithers with its long running plans to establish a vibrant commodity exchange.
The move has forced farmers to cut down on their investment in agriculture owing to low returns from their produce, which has seen coffee acreage dwindle over the years.
Cereal Growers Association of Kenya chief executive Anthony Kioko, says commodity exchange is the only way to tame the middlemen and ensure farmers earn handsome returns to spur productivity.
“A commodity exchange will establish a market in Kenya and this will help farmers to tell how much they would earn when they harvest their crop, hence informing the size of land that they should put under crop cover,” said Mr Kioko.
He added: “At the moment farmers are unable to invest heavily on agriculture as they are not certain whether they will make losses or profit at the end of the season,” he said.
Feasibility studies to ascertain the viability of the commodity exchange and the produces to be traded has been done and a Cabinet memorandum to this effect is currently with the secretary for Trade and East African Affairs.
“We have prepared a cabinet memorandum to be approved by the government, most probably in the next sitting,” said East African Affairs Cabinet Secretary Phyllis Kandie.
Ms Kandie said the project was being undertaken under the Northern Corridor Integration Projects initiative where Kenya, Uganda and Rwanda have agreed on the need to run a joint commodities exchange and warehouse receipting system to ensure transparency in standards and pricing of farm produce.
“Once each country has established its own exchange, then we shall harmonise the standards to allow trading across the East African Community member states,” she said.
The harmonised commodities exchange is expected to foster regional integration and bolster the bloc’s negotiating power with the rest of the world in the pricing of key exports.
It is only Rwanda that has so far created a vibrant commodity exchange in the region, Uganda’s Cabinet having approved the regulatory framework for the creation of one.
SELL COMMODITY AT A GOOD PRICE
Rwanda’s East Africa Exchange (EAX) is the third largest agricultural bourse in Africa after the South African Futures Exchange and the Ethiopian Commodity Exchange.
EAX plans to expand the commodities that it trades to include tea and coffee as well as broaden its warehouses beyond Rwanda as they aim to strengthen the capacity of farmers so that they can sell their crops throughout the year at good price.
The exchange has boosted farmers’ investment in agriculture as it has eliminated the cartels in the value chain and created transparency in pricing, enabling the growers to earn the most out of their enterprise.
The prices of commodities in Kenya oscillates between the highs in times of scarcity and the lows when there is a glut in the market.
For instance, the price of maize has presently hit a low of Sh1,500 in the country’s breadbasket of North Rift, from a high of Sh2,800 in October.
The prices have been pulled down by the ongoing harvest of the long rain season crop in the region.
Lack of the necessary infrastructure such as certified warehouse is likely to affect the establishment of the commodity exchange in Kenya as currently there is none in place.
FOCUS ON PRODUCTION
Mr Gerald Masila, executive director of the Eastern Africa Grain Council (EAGC) says the country needs to focus more on production in order to make the commodity exchange sustainable.
“It is a fact that we need a commodity exchange in the country, but we are far from getting there because there is no mechanism as well as enough produce in place to sustain this system,” said Mr Masila.
Currently, Kenya has two commodity exchange — tea and coffee but it benefits only a few farmers who venture on these cash crops.
But still, coffee farmers have to go through a number of channels before their crop is eventually sold to the market.
Coffee Marketers chairman James Mureithi supported calls for a commodity exchange, but pointed out that the benefits would be negligible if production was not increased.
In the 1980s, Kenya was producing more than 150,000 tonnes of coffee per year but is now yielding 50,000 tonnes, more than two thirds of decline.
Kenya is a relatively small coffee grower compared with other producers, but its speciality coffee is sought after by roasters for blending.
Coffee is one of Kenya’s top foreign exchange earners coming fifth behind tea, tourism, horticulture and remittances from the diaspora.
SOURCE: DAILY NATION