Kenya wants to reproduce the ecosystem derived from Indian agriculture
The Kenyan government has shown keen interest in replicating the NCDEX agricultural futures trading and warehousing model, even as the Indian government recently banned derivatives trading in seven agricultural commodities due to of high inflation.
Jane Mumbi Ngige, Chair of the Warehouse Receipts System Council, said Activity area that a high-level council of Kenyan agricultural trade-related members is visiting India to understand the process of issuing electronic warehouse receipts. They visited NCDEX eMarkets accredited warehouses in addition to meeting with the warehouse development and regulatory authority to understand the process and implement it for the benefit of farmers.
The Kenyan government wants to reduce the waste of agricultural products by providing proper warehouses and helping farmers to store their products. According to recent reports, Kenya loses 30% of the food produced after harvest, of which about 20% is wasted on the farm while the rest is lost at the marketing stage.
Staple maize, which is harvested once a year, is wasted at 40-60% due to lack of storage facilities. The visiting high-level committee will share its inputs and recommend detailed guidelines to establish the agriculture futures trading ecosystem, Ngige said.
The country also grows rice, different varieties of potatoes, mangoes, avocados, tea, coffee and livestock. Its exports of agricultural products accounted for 150 billion dollars last year. “We will be more than happy to invite Indian warehouse suppliers to set up in Kenya, but this will not be viable unless they are given the right incentives. The government will decide whether to provide incentives or do it using local talent,” Ngige said.
Established in 1997, Kenya has a private agricultural commodity exchange that provides an information service to enhance price discovery and acts as a spot exchange. Futures contracts are not traded on the Kenya Agricultural Commodities Exchange.
“Trading in derivatives is a great tool for farmers to know the selling price of the product before sowing the first seed. It is a perfect platform to hedge prices,” she said.
Kenya also wants to set up farmers’ organizations to help aggregate produce from farmers and hedge price risk on the platform. She plans to seek help from experts in India to train Kenya’s young population on the IT front, she added.
May 23, 2022