The Board holds storage capacities of more than 20 million bags by 90kgs which consists of conventional stores and silo bins. Some of these facilities are not fully utilized and are leased out to third party. The rates vary from region to region but basically driven by market demand. Upon request for any of the facility, we enter into an agreement with a customer before signing a lease which stipulates the terms of the contract.
Some of the facilities are offices, houses and canteens and undeveloped land. The rates for these facilities are also determined by the market rates.
This is where a customer is charged within a period of one month depending on the area occupied whereby the space is measured in square foot or bag capacity. The Board is in-charge of the store because other customers share the same store.
Lease of Minor equipments
Board also leases minor equipments such as elevators and mobile weighing scales. These equipment are used to lift and weigh bagged grains. We also lease out tarpaulins for sun-drying cereals and dunnages for stacking bagged cereals.
WAREHOUSE RECEIPTING SYSTEM (WRS)
(WRS) is the use of a stored commodity, evidenced by the issue of a Warehouse Receipt (WR) acceptable by banks, as collateral for loans to the producer/trader of the commodity.
This system involves a three- cornered arrangement between the bank, a borrower (producer/trader) and a warehouse operator.
This initiative aims at strengthening the commodity supply chain through a certified linkage of warehouses systems.
The certified warehouses issue tradable receipts/warrants for commodities delivered.
OBJECTIVES OF WRS
The Warehouse Receipting System can play an important role in ensuring that the liberalized grain market in Kenya becomes more responsive to the domestic market opportunities.
It will also create competitiveness in relation to the world markets by:
i. Increasing the willingness of banks to lend for agriculture and wholesale trade.
ii. Linking post- harvest credit, through Warehouse Receipt Financing, to funding for agricultural inputs, thereby raising agricultural productivity.
iii. Improving grading systems and facilitating the sale of commodities at reduced cost.
iv. Improving price-risk management, by providing more secure basis for forward transactions and for the development of commodity exchange trading.
v. Reducing the cost of public support for agricultural marketing
WAREHOUSE RECEIPTING SYSTEM PROCESS
1. After the producer has harvested his crop, he transports it to a certified warehouse. The grain is checked to ensure that it meets the stipulated quality standards.
2. If the grains pass the quality inspected and the quantity is within the minimum set by the Warehouse Operator (for example 100MT), they will be received by the Warehouse Operator, who will then issue a Warehouse Receipt to the farmer.
3.The farmer may present the Warehouse Receipt to a bank, which may offer him/her short term financing, which will be a proportion of the market value of the grain deposited in the warehouse.
This enables the farmer to meet his basic financial obligations such as domestic needs or preparing for the next planting season, as he waits for the price of his grains to improve in the market. The Warehouse Receipt remains in the custody of the bank.
4. When the market prices improve, the farmer sells his grain and the buyer is instructed to pay direct to the bank. The bank then deducts the loan and interest from the proceeds and the Warehouse Operator also recovers any storage charges.