The National Cereals and Produce Board (NCPB), as part of plans to restructure the government, will to be revamped into a commercial outfit. Its identity will change to Grain Corporation of Kenya (GCK). And for it co competitively operate as a commercial entity, it will exempted from the Provisions of the State Corporations Act Section 5A.
The far-reaching shake-up proposed by consultancy Ernst & Young will see hitherto NCPB transformed from just handling cereals to magnify its scope in dealing with a wide range of products. Currently, it is restricted to dealing with maize, sorghum, wheat and rice. “Being a commercial entity, its products will have to compete with those from the private sector. GCK will therefore trade its food products through “Nafaka Products” trademark to protect it from competition,” it says.
Analysts expected the new outfit to be captained by directors from the private sector, for it to have a comparative advantage, especially on farm inputs supply, given its rich network across the country. President Uhuru’s advisor on food security James Nyoro says the crucial ingredient in the restructuring is the separation of social and economic functions. “NCPB has for a long time played these two central but competing functions, which needed to be separated. But the challenge is whether the new commercial roles entrusted on NCPB will compromise operations of the private sector by crowding them out,” said Dr Nyoro.
Since 1988, a private sector marketing channel has competed with NCPB with prices in the private sector being set by market forces. “Will NCPB still be used in price stabilisation? Will it be of any help” Dr Nyoro posed. Indeed, this has been the dilemma facing NCPB. On one hand, there has been pressure to ensure that maize farmers receive adequate price incentives to produce and market their crop. On the other hand, the food security of a growing population requires keeping maize prices low. The report calls for a co-operation between GCK and County Governments in food basket areas such as Trans-Nzoia, Uasin Gishu, Bungoma and Nakuru to import fertiliser on their behalf in order to boost food production in Kenya. The Grain Corporation would be divided into two main business units, Nafaka Products and Warehousing operations. With a network of 110 warehouses throughout the country, Ernst & Young says this is a crucial prerequisite for a successful regulated Warehouse Receipting
System (WRS) “to support an efficient agricultural commodity trade”. “We recommend GCK to start warehouse receipting division, which will graduate to a national warehouse operator. In order to operationalise the WRS, the government should provide a policy and legal framework for licensing and supervising independent warehouse operators,” the report said. For a warehouse receipt system to be viable, it is proposed that there must be a robust legal system to support pledge instruments, such as warehouse receipts, as secure collateral. Ernst & Young says this calls for a warehousing legislation, which must meet a number of conditions such as warehouse receipts must be functionally
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