Kenya, East Africa’s largest economy, plans to begin operating a commodities exchange by December so that farmers can act on better price information, improving incomes for rural residents.
The commodities exchange will start trading in corn, wheat, and beans, the country’s main dietary staples, Jimnah Mbaru, Chairman of the state-run National Cereals and Produce Board of Kenya, said today in an interview in the capital, Nairobi.
The crops will be stored in government-certified warehouses, where inspectors will weigh shipments, grade the quality, and issue farmers with a receipt.
Brokers will handle that paper, initially for spot-trading on the floor. Contracts for future delivery and electronic trading may be introduced over time, said Mbaru.
Farmers in far-flung regions of Kenya are often forced to sell crops at prices dictated by middlemen. The exchange means producers will be able to secure fair market prices, resulting in bigger profits and lower transactions costs as it cuts out steps, said Mbaru.
“It will open up transparency in the whole grains industry, with farmers no longer manipulated,” Jimnah Mbaru said.
Agriculture, which accounts for about a quarter of Kenya’s gross domestic product, has suffered from the impact of last year’s post-election violence and inadequate rainfall for the last four rainy seasons.
“If there is a grain surplus in one part of the country and a deficit in another, this system will help ensure that surplus is distributed,” said Jimnah Mbaru.
South Africa and Ethiopia run commodities exchanges in sub-Saharan Africa.
National Cereals and Produce Board of Kenya
Source(s): Bloomberg News
