EASTERN AFRICA GRAIN COUNCIL Structured Trading Systems & Trade Promotion Strategy Board Meeting/Induction Program May 2013 Samwel Rutto, STS Manager 1

About Structured Trading System (STS) 2

What is Structured Trading Systems (STS) These are systems where stakeholders across the grain value chain-farmers, traders, processors, millers, banks and others are organized, and are regulated for purposes of promoting orderly marketing and flow of grains. 3

STS Components – Grades & Standards – Trade Contracts & Arbitration – Storage/Warehousing – Warehouse Receipt System (WRS) – Commodity Exchange (COMEX)/electronic trading platforms – Capacity Building & Training on STS Training ( STS, TOT, MIS) of stakeholders Agribusiness Fairs (2010, 2011)

Objective of STS program The broad objective of STS program is to increase the capacity of grain market institutions for structured trading including warehouse receipt systems, grain bulking systems, commodity exchanges as well as electronic trading platforms, trade contracts, arbitration as dispute resolution mechanism and financial systems. 5

Key Achievements

Key Achievements (1) Draft WRS bill in place as a result of the process of establishing the legal and regulatory framework in Kenya Increased opportunity for structured trading through introduction of WRS in Kenya and support to Tanzania (STS working groups) and Uganda (MOU with UCE). Increased pool of Small holders benefitting from EAGC’s activities in the region due strengthening of FBOs and TA’s Direct Market linkages between EAGC members millers, traders and farmers

Key Achievements (2) Regional Harmonised Standards available for improved intra-regional trade -regional harmonisation of 22 EAC staple food standards. Development of 4 standards trade contracts which are available for use. Set up an Arbitration Mechanism with arbitration procedures and rules…trained 9 arbitrators Increased credit access to farmers through financing EAGC WRS Increased awareness on the benefits and operation of STS. Increased pool of technical service providers through TOT to support STS.

STS Strategic Direction

Key strategies to implement STS (1) 1. Support the development of Market institutions Strengthening existing Grain Warehouse Receipt Systems (WRS) and Commodity Exchanges (WRS) in target countries Support the conceptualization of WRS and Commodity Exchange initiatives in other target countries Promote investment in grain storage facilities /regional assessment and mapping out of available storage capacities for grain warehousing Linking WRS to Financial institutions in target countries. Convening regional workshops to share experiences and information on STS tools. Establish strategic trans-boundary grain trading hubs. 10

Structured Trade Systems in the ESA Region ECX WRS and Comex UCE WRS + Comex ACE- Comex + WRS MACE-Comex ZAMACE WRS and Comex SAFEX EAGC-WRS TWLB-WRS 11

Key strategies to implement STS (2) 2. Promote the Adoption and Use of Regional EAC Harmonized Grain Standards Conducting surveys on existing practice, grading facilities, Sanitary and Phytosanitary (SPS) & quality standards constraints. Creating awareness on recently harmonized EAC quality standards and SPS issues. Collaborate with bureaus of standards to support implementation of EAC quality standards & SPS. 12

Key strategies to implement STS (3) 3. Establish Grain Bulking Systems for Smallholders Organize smallholder farmers into business entities Establish grain aggregation centres for farmers and small traders. Link aggregators to regional and domestic markets. 13

Key strategies to implement STS (4) 4. Establish Sustainable National and Regional Market Linkage Systems Promote the use of EAGC electronic trading platform. Promote the use of trade contracts. Facilitate trade linkage forums/workshops bring smallholders and buyers Conduct Annual Agribusiness Expos 14

Key strategies to implement STS (5) 5. Development of Suitable Financial Instruments Holding consultations with financial institutions (banks & insurance firms) to develop financial products suitable for grain actors. Linking financial institutions with STS initiatives. 15

Thank you…….