review of warehouse receipt system and inventory credit initiatives in ...

Since 2005, the Agricultural Marketing Systems Development Programme (AMSDP) 17 has
piloted a MF-linked WRS for grains, making use of Tanzania’s large stock of underutilised
rural warehouses. Warehouses must have a minimum capacity of 300 tonnes, there are four
participants (farmers, SACCOS, participating commercial banks and collateral managers),
stocks must be insured for fire and theft, and collateral managers must have professional
indemnity cover. As in Madagascar, farmers deposit their grain (maize or paddy rice)
individually and have it stored identity-preserved.
AMSDP has implemented the scheme in 12 different locations, and has established clear
grain handling and pest-control procedures. In has proved largely successful for paddy rice,
but unsuccessful for maize, due mainly to farmers’ difficulty in foreseeing price movements
in a market subject to considerable Government intervention, notably export bans. The
success of the paddy rice pilots is highlighted by CRDB (the lead bank involved) which says
it has a TSh 2.9 billion portfolio of MF-linked loans, equivalent to about 10,000 tonnes of
paddy. However CRDB’s system is not free of problems, with SACCOS sometimes acting
in contravention of agreed protocols. The above-mentioned SACCO networks (USAWA and
Dunduliza) have also embarked on warehouse receipting, the latter focusing heavily on
paddy. WFP and FSDT are moreover putting together a proposal to support SACCO
networks in purchasing maize, rice and coffee. Appendix 5 contains further details of MFlinked
grain warehousing initiatives.
Paddy is also the preferred cereal for RUDI, a rural development NGO that is assisting the
establishment of cooperative marketing of grains, through two-tiered cooperative structures
(on of them composed of 30 groups x 80 members) and with financing from FBME bank.
Unlike the case with the MF-linked warehouses, grain is not being handled on an identitypreserved
basis, but being marketed by the cooperative apex organisation which also runs a
warehouse.
The leading grain trader in East Africa (Export Trading Company, or ETC) also offers
warehouse receipting services (Approach 1.A) at some of its Farmer Service Centres (FSCs)
which have storage facilities – each typically with 10,000 tonnes capacity. ETC buys paddy,
maize, wheat, millets, beans, sesame seed, cashew nuts and legumes. It is using FSCs to
supply independent farmers and tenants (who lease land and irrigation facilities) with inputs
and machinery, under out-grower arrangements. ETC says it supplies some 150,000 tonnes
per annum of fertiliser to the market. In marketing the crops, it gives the farmers a minimum
guaranteed price and buys outright, deducting costs of inputs and services rendered. If
farmers wish to store their crop with ETC in attendance of higher prices they must pay drying
and storage charges), interest at 10% per annum, as well as a fixed ‘cover charge’ $50 per
tonne. So far, there has been little uptake among farmers.
Main conclusions. Of all the countries visited, this one has made most use of WRS, above
all in the case of coffee and raw cashews. Some African countries may find it useful to start
with cash crops of this kind, as it allows them to avoid the thorny political issues which make
it more difficult to establish WRS for food crops like maize. In this way they can build a
foundation that allows for subsequent inclusion of maize when the policy environment is
more favourable. In the case of coffee, much of the progress can be attributed to a supportive
policy environment, the survival of some of the cooperative structures (including coffee
17 Reports to Presidency, funded by IFAD, ADB and Swiss Development Cooperation
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