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{
    "id": 831141,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/831141/?format=api",
    "text_counter": 238,
    "type": "speech",
    "speaker_name": "Nambale, ANC",
    "speaker_title": "Hon. Sakwa Bunyasi",
    "speaker": {
        "id": 2511,
        "legal_name": "John Sakwa Bunyasi",
        "slug": "john-sakwa-bunyasi"
    },
    "content": "- had heavy financial losses for the taxpayer. Instead of collecting losses to the taxpayer, they use market-like systems that spread the risks and put that risk back in the private sector through some systems of this nature. That then is going to spread along many producers and so on. Here we are. We are farmers who produce the surplus for the market, but who are living at the poverty level. That is why my colleague, Dr. Eseli, was saying that we should subsidise farmers. They are living at the poverty level even though they are producing surplus relative to their needs. So, how do you ensure that you do not push them further down? We have to think through those risks. They are major risks and you do not want to end up with the system that is benefiting that large-scale producer of 5,000 or 10,000 bags who would otherwise insure that risk himself through financial systems. I understand all this textbook argument and I see it every day in my own community. In Nambale, for example, throughout the month of August and September, the price of a kilogramme of locally produced maize in the area was about Kshs15. They sell it as a two- kilogramme unit called gorogoro – the two-kilogramme tin that used to be a Kimbo tin. Half of it is a price of a kilogramme. It is as low as Kshs15 a kilogramme but it rises in some bad years to about Kshs120 per gorogoro. That is four times more . The theory is why sell when it is at the minimum? Give it to the warehousing management system. You can draw down a little cash if you need it or simply borrow against it, and when the price goes up, you can repay your loan comfortably, and you will draw down the money when the price is at the peak or near the peak. The warehouse system does not take the risk. They all manage that risk. You still have the risk that you face. The key thing is that you can only do that. You can put your 50 bags or 10 bags, whatever you have put in there, you take a bit of the cash or borrow against it and you go home with trust that when the prices truly rise in the market as you expect they will, you can go back and cash it out. Let me remind you that we used to be major cotton producers in Nambale. Our cotton was one of the best back then in 1950s and 1960s. There was such trust at the time initially that you could deliver your cotton and go back a month later when funds had been released from the Cotton Marketing Board through the banks and collect your money. There are farmers who have died with those receipts in their pockets. If the money ever came, they never saw it. So, we have a risk here of setting up a system, giving it a legal cover and selling as the best thing beyond sliced bread and then setting up a system that will become a collector system that benefits itself. We may get uncontrolled imports because we do not control the global system of marketing. When prices are supposed to have risen from Kshs15 a kilogramme in Nambale to Kshs30 a kilogramme you get huge imports and they fall back to Kshs20. We have seen that with other commodities. We have a major risk. So, it may be a great idea but it is not the right time for Kenya. It is not in the right context in the way we manage our institutions. I do not believe that we will be able to manage the trust that the farmer will have placed in this. Finally, this system is espoused greatly because it is a collateral system to the dipping of the financial systems. It is a collateral system because through improvements like this, through the real economy like that of commodities, you can develop the rural financial intermediation systems. Instead of the farmers selling their entire grain at the beginning, they will rely on the financial system where they can borrow from against the collateral of their commodity - that is storage. That way, you are dipping the financial system bringing even those little producers who otherwise would not have been operating in that system. But now, we have huge problems, for example, the capping of interest in the financial system. They are reluctant to go there. Are we going to sustain the system? All these good ideas The electronic version of the Official Hansard Report is for information purposes only. Acertified version of this Report can be obtained from the Hansard Editor."
}