Farmers in Kenya will have a new avenue for selling their grains, following the opening of a warehouse in Eldoret by the East Africa Exchange, a regional commodities exchange based in Kigali.
The privately owned exchange is expected to start trading in maize this month.
It is also in discussions with the Uganda National Commodity Exchange to establish a joint trading platform in the country.
The expansion of EAX into Kenya and Uganda is likely to eliminate middlemen who keep farm gate prices low during harvest time, leaving farmers counting their losses.
For instance, in Rwanda, the government set the minimum price of maize at Rwf160 ($0.21) per kilo but the middlemen were paying 50 per cent less, an amount that is below the production costs. In Kenya, the administrative price for maize is 34 US cents per kilo but middlemen buy the grain for as little as 22 US cents per kilo.
Hence, Uganda, Rwanda and Kenya agreed on the need to run a joint commodities exchange and warehouse receipting system to ensure transparency in standards and pricing of farm produce.
The three countries under the Northern Corridor Infrastructure Projects agreed on a group of 18 commonly tradable commodities to be traded on the exchange.
“The Eldoret warehouse can handle 18,000 tonnes of maize. Later we shall start trading beans, paddy rice, beans, sorghum, wheat and dried soya beans,” said Dr Alfah Kadri, chief executive of EAX.
EAX operates a fully automated trading platform, Nasdaq, where traders can buy and sell their commodities from the convenience of their offices or use trading terminals provided by the exchange.
The trading platform powered by Nasdaq’s X-stream platform facilitates auctions, reverse auctions, spot trading, forward trading and future trading among the three East African countries, where the commodity market is driven by speculation and gaps in supply and demand.