NCPB seeks to streamline operations

April 24, 2009
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, NAIROBI, Kenya, Apr 24 – The National Cereals and Produce Board (NCPB) will soon be restructured to ensure that it operates efficiently.

NCPB Chairman Jimnah Mbaru said on Thursday that the reforms would include the strengthening of the trading arm of the Board as well as the research and development departments.

“We want to strengthen the trading arm (of the board) so that if the government wants to intervene in the agricultural sector then it has a strong institution which can play that role,” he said pointing to the purchase of maize and fertilisers, which had been taken over by the government.

The Board was rendered a weak institution following the full liberalisation of the grain sector in 1993 and thus the need for reforms. This therefore, Mr Mbaru maintained, called for the revision of the NCPB role.

NCPB was established in 1967 following the merger of the Maize and Produce Board with the Wheat Board of Kenya in order to streamline the management, handling and marketing of all grains.

The opening up of the (grain) market created gaps that included the regulation of quality and standards in the grain sector leaving an unfair playing ground, a completely broken down marketing and processing support for farmers and poor linkages between government policies and institutions with the private sector.

The Board was recently in the news following the disappearance of thousands of bags of maize from the Strategic Grain Reserve contributing to a shortage of maize and maize flour in the market. Its management and the Board came under criticism and were accused of colluding with rogue middlemen to steal the maize.

However, the strengthening of the research and development departments, Mr Mbaru said, would help the board predict the performance of the grain industry, determine whether there will be a shortage which would therefore enable them to advise the government accordingly.

“We will be able to monitor regularly the rain patterns throughout the country so that we can be able to determine whether they will be a bumper harvest so that we are able to give guidance to the government in this respect,” he added.

Addressing members of the Eastern African Grain Council, Mr Mbaru also said that the Board was looking for a strategic partner to help it create a robust and effective commodity exchange.

He said the establishment of this exchange, which would be developed with the East African Community in mind, would ensure transparency in trading activities and that market prices prevail and food security is achieved through market forces.

The prices of maize have continued to be unstable. For example, in Mombasa last week, the grain was selling for Sh2,150 per bag but had by Thursday morning shot up to above Sh2,400. In Kisumu, the same is selling at Sh2,700.

“The proposed Community Exchange will create a market for tradable documents generated by the warehousing network and their respective derivatives. It will also attract participants from the (EA) region and this will spur regional trade in commodities and contribute to the growth of the economy,” he emphasised.

Mr Mbaru hinted that the exchange would be designed on the South African model, which had been very successful.

Another initiative that the Board was looking at was the introduction of the use of Warehouse Receipt System. He said the warehouses would first need to be certified to ensure that they meet certain standards.

NCPB has 110 depots and silos with a combined storage capacity of 1.89 metric tonnes that are located all over the country, but which at many times are under utilised.

These facilities work in such a way that farmers take their grains to these go downs, receive receipts and these receipts can then be traded on the commodity exchange.

“This is a readily available asset for the proposed initiatives. The arrangement for use of the warehouses once certified shall be simple. NCPB shall be the landlord (owing the warehouses and silos but we shall set up a separate warehouse company which shall manage the stores and commodities placed there in. The strategic partners shall then finance,” he explained.

But before the idea is brought to fruition, Mr Mbaru reckoned that there’s need to urgently put in place a National Warehousing Act and related regulations, which can govern the certification of the warehouses.

The legislation would convert warehouse receipts into tradable documents that can be exchanged for money.

“There may be need to also look at the possibilities of having a regulator,” the Chairman concluded, adding that they needed the government’s support and facilitation in this.

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