Kenya’s government has expressed interest in the agriculture futures trading and warehousing model developed by India’s NCDEX.
A high-level council of Kenyan agriculture trade members is visiting India to learn about the process of generating electronic warehouse receipts, according to Jane Mumbi Ngige, Chairperson of the Warehouse Receipt System Council. To gain a better understanding of the process and how it may benefit farmers, they toured NCDEX e-Markets accredited warehouses and met with the Warehouse Development and Regulatory Authority.
The Kenyan government wants to reduce agricultural produce waste by providing proper warehouses and assisting farmers in storing their produce. According to recent reports, Kenya loses 30% of food produced after harvest, with approximately 20% wasted at the farm gate and the remainder lost at the marketing stage.
Due to a lack of storage facilities, waste in the staple crop maize, which is harvested once a year, can reach 40-60%. According to Ngige, the visiting high-level committee will share its inputs and recommend detailed guidelines to establish the eco-system for agricultural futures trading.
Rice, various potato varieties, mangoes, avocados, tea, coffee, and livestock are also grown in the country. Last year, it exported $150 billion in agricultural products. “We will gladly invite Indian warehouse providers to set up shop in Kenya, but it will not be viable unless proper incentives are provided.” “The government will decide whether to provide incentives or use local talent,” Ngige said.
Kenya has a private Agricultural Commodity Exchange that was established in 1997 and provides information services to enhance price discovery as well as acting as a spot exchange. The Kenya Agriculture Commodity Exchange does not trade futures contracts.
“Derivatives trading is an excellent tool for farmers to use to determine the selling price of a commodity before planting the first seed.” “It’s an ideal platform for price hedging. Kenya also intends to establish farmer produce organisations to help farmers aggregate their produce and hedge price risk on the platform. It intends to seek the assistance of experts in India to train Kenya’s young population in information technology,” she said.