A farmer inspecting his maize crops. [Photo/farmersforum.com]
Farmers will benefit from a new arrangement by East Africa Grain Council ( EAGC) and Rentco asset leasing firm that will see them hire farm equipment.
The farm equipment will see the cost of post-harvest handling drop by almost 25 percent.
Speaking during the signing of the MOU today EAGC Executive Director, Mr. Gerald Masila said farmers attached to EAGC will be able to access to dryers, cleaners and storage facilities such as Silos
"This move will not only lower the cost of handling maize after harvesting but also reduce on post-harvest losses," Masila said.
He noted that leasing option is more flexible and customizable to meet unique grain business needs than most funding options which have standardized repayment schedules.
"Grain farmers often lack access to long-term credit needed to acquire equipment because they do not have the required collateral but through this, farmers will not be constrained by restrictions such as interest rate ceilings and sector quotas," Masila explained.
Henry Emuye, the Chief Operating Officer of RentCo East Africa stated that they will own the equipment while at the same time permitting the farmers to use it in exchange for periodic payments.
He noted that most assets farmers own cannot be used as collateral and are often non-existent and movable assets such as livestock and warehouse receipts which are not yet legally permissible as collateral.
Emuye said that under the new arrangement, buyers will get all the services such as storage, drying and cleaning of their grain under one facility.
Today’s economy is uncertain and the costs associated with running a business continue to increase, so leasing is an excellent way to help grain value chain actors save money, improve productivity and keep their companies in good financial standing.
Masila added EAGC also plans to establish a Fund to ease access to finance for its members.
Rent Co Group and EAGC will ensure that the leases are designed around members’ specific business needs, such as crop seasonality, cash flow and budget fluctuations EAGC Kenya Country Director Rose Mutuku asserted that companies in the grain sector find their financial conditions not rebounding fast enough to purchase new equipment outright, despite the prevailing need.
For a small to mid-sized company, regardless of the economic and market conditions, financing the acquisition of equipment rather than using cash will offer significant benefits while mitigating business risks, Mutuku said.
This She added will enable grain businesses to stay competitive while conserving their working capital and retaining the cash.
Farmers have been paying up to Sh35 to for every one percent drop in moisture for a bag of maize at the National Cereals and Produce Board a coast that has been too high for some of them.
With Kenyan Government’s plan to achieve 100% food security in Kenya by 2022, such collaborations will facilitate the importation of more efficient and advanced equipment thereby improving the economy by releasing demand for capital equipment.
During the Meeting EAGC also signed another MOU with Enterprise Holdings Ltd that will see them working together to facilitate access to capital as well as capacity building of EAGC members in finance and risk management.