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COMMON FUND FOR COMMODITIES
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Grain Farmers’ Access to Warehouse Inventory Credit in Ethiopia and Tanzania (CFC/FIGG/38FA)

 

This project focuses on the opportunities created by warehouse receipts and inventory credit in East Africa to improve financing of smallholder farmers and increase their incomes. Greater financial flexibility achieved through the use of warehouse receipts is expected to strengthen the farmers’ position in marketing their crop and contributed to improved quality control and marketability of the produce. 

The project approach is based on improving the rulral warehouses to achieve WHR certification. This would allow local farmers to deposit their grain and use warehouse receipts as collateral for bank financing. Enforcement and monitoring of quality and storage standards also makes warehouse receipts a convenient instrument in exchange based trading of locally produced grain. This improves market transparency, provides for more accurate price information and improves the bargaining power of farmers. 

Specific outcomes pursued by the project include: 

  • Refurbishment of warehouses in selected target areas important in grain production;
  • Refinement of quality standards and operational procedures of warehouse licensing bodies;
  • Development of verification procedures, registry of warehouse receipts, and default protection mechanisms;
  • Capacity building at primary producer level to give farmers the possiblity to benefit fully from warehouse receipts;
  • Support for the use of warehouse receipts in exchange trading operations. 

One of the key findings of the project is that smallholder farmers require a great deal of support in marketing their crop. marketing problems result in lost opportunities, missed markets, financial losses, etc. Project staff has developed a Marketing Training Program that is effective in addressing marketing issues for smallholder farmers. In Malawi, warehouse receipts have been integrated with the local community exchange (ACE).