The Ministry of Agriculture, Livestock, Fisheries and Cooperatives’ Agriculture Sector Transformation and Growth Strategy (ASTGS) 2019-2029, seeks to transform the agriculture sector in Kenya and ensure that there is national food and nutritional security besides ensuring that food is affordable especially to the needy.
In the new reforms, the SFR function will be placed under National Cereals and Produce Board (NCPB) as a new division called National Food Reserves. This division will be in charge of food security. NFR will deal with all matters pertaining to the Strategic food Reserve. For example it will manage the Strategic Food Reserve fund. In addition, it will collect data and undertake market intelligence (research) and monitor food prices. The NFR stocks will comprise maize, rice, beans, powdered milk, canned beef and fish. NFR will also advise the government on food production and how to boost it through a variety of incentives to farmers (Interventions).
The other division under NCPB is NCPB Trading division which will run all the Board’s commercial functions. Currently the Board trades commercially in commodities such as fertilizer and cereals and also offers a range of post-harvest services. All these together with commercial storage (leasing of storage space and warehousing) will be under the NCPB Trading Division (NTD). NTD will run NCPB’s own certified warehouses under WRS. It will operate a commercial agricultural hub, a centre for information and will coordinate a network of value chains to strengthen input and services delivery and enhance market access. This will involve clustering registered small-medium holder farmers and agro-dealers around aggregation centres (cooperatives or warehouses) for storage, bulk inputs sourcing, marketing and extension support.
After the NCPB and Strategic Food Reserve (SFR) reforms, all maize for the National Food Reserve will be purchased through Warehouse Receipting System (WRS). The reserve stocks will be bought in form of receipts from certified warehouses.
Under WRS, the farmers deposit their maize, beans or any other grain in a certified warehouse upon which they are issued with a warehouse receipt. This receipt is proof of ownership of the commodity held in the warehouse. The farmers will not sell their grain directly but will do so through the commodity exchange (KOMEX) platform. In the Komex, the prices will be determined by supply and demand or market forces (like in the trading of stocks and shares at the stock exchange). Farmers can profit a lot by forming strong cooperatives and have their warehouses certified or registered.
Farmers are also at liberty through their cooperatives to aggregate their grain and store them in registered warehouses. Registration of Stores is done by AFFA. With their grain in registered stores, farmers can negotiate with willing buyers over the prices of their grain; they can sell directly from the registered stores. They will not be in a hurry to sell cheaply to middlemen.
The government will not import and distribute fertilizer but the private sector will. Farmers will be registered by AFFA and allocated e-vouchers which they can redeem from agrovets and from other participating farm input sellers. Only genuine registered farmers will benefit from this system. NCPB on the other hand will compete with fertilizer sellers to buy fertilizer and sell to farmers at competitive prices. They will also store maize for National Food Reserve which they will buy competitively from the Komex. This is to say that the government will no longer set the price of maize or import and sell fertilizer.
The role of the government is to ensure that there is level playing field for healthy competition and competitive trading. To enable WRS grow, NCPB will competitively lease 25 % of its stores to private warehouse operators.