At the end of May, the Hub joined the Eastern Africa Grain Council (EAGC) to visit warehouses that they had recently graded. EAGC has defined four levels for warehouse grading; class A, B, C and D. Class D is the minimum grade and does not qualify for participation in the warehouse receipts program. Classes A, B and C maintain improved warehouse standards with respect to the physical facility, mechanization, security, administration and operations. They are all eligible for warehouse receipts, which means that farmers and traders can use their deposited grain in these warehouses as collateral for loans with banks, significantly lowering their financing costs.
A warehouse receipts system helps introduce liquidity for greater trade. It also provides much needed storage to producers, increases marketable surplus, increases food security and stimulates increased production.
The EAGC is working hard to develop a regional warehouse receipts system that can increase bulking capacity and producer access to finance. The Hub is exploring ways to partner with the EAGC on several of these types of structured trade systems.
To learn more about structured trade and some of the necessary building blocks to a competitive regional agricultural value chain? Visit the agricultural component of our knowledge center. There, you will find Hub resources, such as the Regional Toolkit for the Staple Foods Value Chain in Eastern Africa and outside resources such as CTA's Structured Grain Trading System in Africa manual.