Structured Trading Systems (STS) is an orderly way of trading grain under a harmonised trade regime. It involves a harmonised flow that allows movement of grains from the farm on to the consumer in an efficient manner. It also entails development of markets for grains. STS includes improved post-harvest solutions, harmonisation of grades, standards and regional trade policies, development and promotion of Warehouse
Receipt Systems which include certification of warehouses, warehouse receipt financing, market linkages through secure and transparent trade platforms such as commodity exchanges.
Benefits of STS
- Increased intra-regional trade
- Increased availability and safety of food.
- Increase liquidity to small scale farmers
- Availability of market information for policy intervention and trade
- Choice of alternative procurement systems
- Grain sector price stability
- Attracts grain sector investment
- Smallholder income generation benefits
The Eastern Africa Grain Council has been promoting Structured Trading System which includes organising farmers into farmer groups and encouraging aggregation storage of grains in more efficient facilities, guarantee delivery of quality commodities by warehouse operators, use of stored commodities by depositors as collaterall for loans and provision of a credible and formal market for grain commodities with inventory financing opportunities.
EAGC started implementing the Warehouse Receipt System (WRS) in Kenya in 2008 and there has been substantial benefits attributed the system including encouraging storage of grains in more efficient facilities, guarantee delivery of quality commodities by warehouse operators, use of stored commodities by depositors as collateral for loans and provision of a credible and formal market for grain commodities with inventory financing opportunities.
Encouraged by the above achievements, the system needed to be strengthened and integrated across the region in order to facilitate trade and enhance food trade. It is based on this need that EAGC in partnership with Virtual City, a Kenya based IT Company, and with the support from the UK Government funded Food Trade ESA project developed a private-sector driven electronic Grain Trading platform known as EAGC G-Soko Trading System.
The EAGC G-Soko Trading Platform is an electronic system comprising of a network of automated grain bulking/ aggregation centres and certified warehouses, linked to a virtual trading platform, as well as participating banks for settlement and clearing and trading houses (grain buyers/millers) all regulated and administered by EAGC, under the law of contract and operating under defined set of protocols, procedures, rules and regulations.
The technology gives confidence that, irrespective of where the warehouse is located, the uniform quality of the stored grains can be guaranteed.
The platform is expected to provide an ecosystem for structured grain trade in the region through:
a. Procurement of grain through 100 regionally certified warehouses-this will guarantee reliable supplies;
b. Increase the utilisation of East Africa Standards for 18 grain commodities and products;
c. Automate the operations of all certified warehouses from grain intake to dispatch
d. Establish and strengthen 180 producer aggregation centres that are linked with certified warehouses to incorporate over 50,000 smallholders in structured trade;
e. Grain actors including sellers, buyers, service providers (banks, inspectors and agro-dealers e.t.c) and certified warehouses are linked through an electronic trading platform.
f. Provide efficient and transparent trade information that informs buyers and sellers on spot market conditions regionally.