Grain corporation to start warehouse receipt system

Many Rwandans still consider farming as a job for villagers, especially the school dropouts. This is one of the reasons that have contributed to low uptake of commercial farming in the country, with most people still engaged in subsistence agriculture, which does not even satisfy individual households’ food requirements.
EAX workers sort maize at one of their warehouses. Grain and cereal farmers working with RGCC will soon start selling their produce under the warehouse receipt system. (File)
EAX workers sort maize at one of their warehouses. Grain and cereal farmers working with RGCC will soon start selling their produce under the warehouse receipt system. (File)

Many Rwandans still consider farming as a job for villagers, especially the school dropouts. This is one of the reasons that have contributed to low uptake of commercial farming in the country, with most people still engaged in subsistence agriculture, which does not even satisfy individual households’ food requirements. 

Wenslars Bahati, the Rwanda Grains and Cereals Corporation (RGCC) general manager, says Rwandans have now realised that crops, like maize, beans, and sorghum, which were mainly cultivated on a small scale mainly for home consumption, could become a source of income for farmers. He says many Rwandans are poor and fail to provide for basic needs, like healthcare, because of the ‘old mentality’, where farming was not considered as a business.

 

The good news is that this belief is beginning to change, thanks in part to efforts by government and organisations like, RGCC and the East Africa Exchange (EAX), the Kigali-based commodity exchange, to promote agriculture activities as profitable businesses.

 

RGCC, which could be one of the biggest grain buyers, plans to establish a warehouse receipt system to strengthen their operations and give more support to farmers. Bahati says the corporation is going to set up storage facilities in each district to support the initiative.

 

Under a warehouse receipt system, farmers get a warehouse receipt after depositing produce at the store. The receipt issued by warehouse operators specifies the commodities quantity and quality, and the location where the produce was deposited. EAX is already operating one, which has enabled farmers to access loans from selected banks working with the commodity exchange, using receipts issued by EAX.

Already, farmers working with RGCC under their respective co-operatives, sign pre-planting contracts with the corporation to grow particular crops at a given price, Bahati says. After harvest, farmers deposit the produce at a transit warehouse in their area, where the grains and cereals are further dried, and sorted to ensure standards and quality. Farmers can use the contracts from the corporation as collateral in selected financial institutions, including KCB Bank Rwanda and Unguka Bank, to get soft loans or emergency finance.

The arrangement and the benefits have left smiles on faces of many farmers in Rwanda, thanks to the assured source of revenue for their produce. The corporation buys maize, beans, sorghum and soya beans through a chain of co-operatives spread across the country. Bahati says this arrangement has increased farmers’ morale because it assures them of ready and reliable market for their produce.

“Farmers are now able to plan their activities because they are assured of the source of income. They can now also carry out other income-generating projects using the money from grain sales. All these have helped improve the living standards of farmers,” he adds.

According to statistics, Rwanda produces over one million tonnes of maize annually. For agricultural season 2016A, 285,203 hectares of maize were planted and a yield of 908,723 tonnes is expected, while 510,168 metric tonnes of beans are expected from 406,698 hectares of beans which were planted.

Bahati says regulating maize prices has safeguarded farmers from unscrupulous dealers, helping boost incomes of ordinary Rwandans in the sector. This, he notes, has encouraged more people to produce grains and cereals on commercial basis. The price of maize is presently Rwf200 per kilo, up from Rwf180 a kilo last year. Bahati attributes the increase to growing competition in maize trade, which he says is being driven by quality grains and the fact that more buyers have joined the business.

Bahati says they have formed partnerships with the Uganda Grain Council and the Kenya Cereal Board, which ensures a regional market for Rwanda’s grains, among other benefits. As one of the big grain buyers in the country, such incentives ensure farmers have a ready and sustainable produce market, he says. RGCC maintains quality of the produce by setting up of modern storage facilities, as well as hiring skilled personnel.

Challenges

The issue of standards and quality along the value chain is still a major challenge. “Usually, farmers must dry grains to a moisture content of 40 per cent, but they have failed to achieve this, putting the quality of the produce at risk,” Bahati says. He notes that Rwanda is still using poor storage techniques that could compromise standards and quality of produce. He says they are looking to provide each transit warehouse with a drier so that the grains can be dried to the recommended moisture content.

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