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

to withdraw it at different times to meet family consumption needs or generate cash, and; (b)
by the failure of most producer marketing cooperatives. Identity-preservation is questionable
in many areas of Tanzania and Uganda, since farmers have quite large surpluses, and it
results in inefficiencies in the use of storage space and marketing. In Tanzania, certain
players remarked on this with regard to the AMSDP-supported Chimala warehouse in
Tanzania, at a time when (allegedly) farmers found were trying to sell heterogeneous lots of
paddy but the buyers wanted to make large orders with a clear knowledge of the type and
quality they could expect.
Approach 3.C: Technological improvements in rural storage
This is not a warehousing or trade financing initiative, but a complementary response needed
to tackle the problems of seasonal food shortages in rural areas, such as those occasioned by
‘overselling’ and consequent circuitous movements of grain. Such cases were particularly
cited in Malawi – see Annex 3. The approach is included here to ensure that these issues are
dealt with comprehensively and holistically, covering the physical dimension of the problem,
in addition to the marketing tools dimension.
The problems described can be product of both farmers’ financial constraints and of the
difficulties they experience in protecting their products from pests over a period of many
months. The latter problem is most prevalent with high-yielding dent or semi-dent hybrids
maize which are more pest-prone than varieties that farmers have traditionally stored, and in
pulses. Technological innovations can be introduced on their own, or in combination with
financial support provided under one of the other approaches. An MF-linked approach may
be appropriate, since the farmer can use MF to acquire the hardware, and finance his
consumer expenditure while he holds grain in it.
Often the most cost-efficient way of reducing storage losses is to improve handling and pest
control procedures, but with weak extension systems it may be best to invest in hermetic
storage structures where insect populations can be controlled by deprivation of oxygen, or by
fumigation. Hermetic structures involve much more up-front investment but have the
advantages of low recurrent cost and absolute assurance against storage losses (providing
he/she dries and cleans the grain and uses the structure correctly). Considerable work has
already been done in this area, notably with the introduction of family sized galvanised iron
tanks and silos in Swaziland, Central America (with more recent FAO initiatives in Malawi,
Burkina Faso and elsewhere), triple–bagging of cowpeas in West Africa. As noted in the
case of Malawi (Annex 3) there is probably scope for increasing the adoption of these
structures by marketing them as consumer durables, with suitable promotion, quality control
and financial support. Due to the high cost, it is probably best to introduce them first to
larger surplus-producing farmers, wealthier farmers producing cash-crops like tobacco, and
who can more easily bear the cost, or to small groups whose members are willing to take on a
joint-liability loan. Indeed the primary aim should be simply to increase reliable storage at
rural level, because this will tend to reduce the outflow to urban areas and mitigate increases
in lean-season prices that impact so heavily on the majority of farmers who run short and
have to buy on the market.
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