WAREHOUSE RECEIPT SYSTEM
By Noel Chanza (4th Year Agronomy Student at Bunda College
Warehouse receipt system (WRS) is a
system that enables farmers who deposit their grain in secure and
certified warehouses to have access to finance from reputable
financial institutions using the stored commodity as loan
collateral. In Malawi, the warehouse receipt system was started
in 2010. The system was designed for small scale farmers
(individuals or cooperatives) but it is also open to traders.
Currently, ACE facilitates operations of three rural warehouses in
Malawi namely Kafulu, Nathenje and Balaka. But ACE also uses urban
storage operated by large operators such as Rab and Farmers
Looking at the challenges small
scale farmers face in Malawi, this is one method to assist rural
farmers in the value chain to avoid the 25 % estimated loss due to
post harvest losses (due to pests, post harvest disease etc). It
includes a number of inter-related components to allow farmers more
flexibility in the timing of their sales until they can secure
competitive prices in the local market.
The warehouse receipt also
certifies the farmer with the title for them to either keep or
pledge to provide to third parties. He can also offer it for sale
on the trading platform. The warehouse receipt allows farmers to
induce confidence in the financial institutions as commodity is
available, secure and in good quality. This is also beneficial to
the banks as they are able to reach a new set of customers for
financial services and products.
Martha Tchesa from mtiti village in
Dowa, 70 Km north of Lilongwe is one of the farmers who has
benefited a lot through warehouse receipt system. She deposited
about 21.4Mt of maize at Kafulu Warehouse in Dowa. She used her
warehouse receipt as collateral to obtain a bank loan of MK 550,000
(about $1800.00). She used the money to boost her grocery store.
She is now happy because her maize is safe, secure and already
prices have gone up. "I have already seen that the prices are going
up, I intend to sell my maize at around Mk 80 later in the year"
Malawi suffers food shortages in
some districts especially in the south. Warehouse Receipt System is
perhaps the answer as it also helps to improve food security
through a "buy back" function that allows rural farmers to collect
their food during vulnerable periods after they have paid the
finance and storage.
Inside Kafulu Warehouse