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CFC Savings and Credit Bank, Madagascar Common Fund for Commodities GCV Common Village Granary (Madagascar) CLUSA Cooperative League of the United States CMA collateral management agreement CSBF Commission for Banking and Financial Supervision, Madagascar EAGC Eastern African Grain Council eWR electronic warehouse receipt FICO Financial Cooperative (Tanzania) FRA Food Reserve Agency, Zambia FSDT Financial Sector Deepening Trust (Tanzania) ICAR International Association for Agricultural and Rural Credit IFAD International Fund for Agricultural Development KIFWA Kenya International Freight Forwarding and Warehousing Association LRP local and regional purchase (by food aid agencies) MAWTCO Malawi Agricultural Warehousing & Trading Company MCA Moshi Coffee Auction MF microfinance MFI Microfinance Institution NCPB National Cereals and Produce Board, Kenya NFRA National Food Reserve Agency (separate agencies in Malawi and Tanzania) NMC National Milling Corporation NRI Natural Resources Institute, University of Greenwich OIBM Opportunity International Bank of Malawi PCB participating commercial bank (in AMSDP warehouse receipt project, Tanzania) PS Primary Society SACCOS Savings and Credit Cooperative Society PO producer organisation SAFEX South African Futures Exchange (part of Johannesburg Stock Exchange) UCE Uganda Commodity Exchange UNCTAD United Nations Conference on Trade and Development WFP World Food Programme WR warehouse receipt WRS warehouse receipt system ZAMACE Zambia Agricultural Commodity Exchange ZACA Zambia Agricultural Commodity Agency Ltd. ZIMACE Zimbabwe Agricultural Commodity Exchange ZNFU Zambia National Farmers Union v
SUMMARY Introduction The report is the result of a review of warehouse receipting, inventory credit and similar initiatives in six countries of Eastern and Southern Africa, including Zambia, Malawi, Madagascar, Tanzania, Kenya and Uganda, the objective of which is to share lessons with practitioners, policy makers and funding agencies. Warehouse receipting is normally part of a package of innovations designed to modernise, and enhance the efficiency of, agricultural marketing systems. It can play a very important role in the development of agriculture, by permitting farmers to hold food back to the lean season, allowing them to access markets on more equitable terms, and enhancing the efficiency of the entire commodity chain. Donors are supporting warehouse receipt initiatives of one kind or another in all six countries. The report starts with a review of international experience and follows with a discussion of collateral management and other warehousing systems that have developed spontaneously in Africa. The remainder of the report mainly focuses on new departures going beyond these activities. Each country’s experience is discussed in turn under three major categories: 1. public warehousing, 2. private warehousing, and 3. farmer-focused approaches. The first two of these categories (public and private warehousing) are called “commercial approaches”, to distinguish them from farmer-focused approaches. The first and third categories (public and farmer-focused approaches), are further subdivided, making a total of eight different approaches – see footnote 1 . Observations on the different approaches Category 1: Public warehousing This term does not imply public ownership, but refers to a situation where a company stores goods on behalf of the public in general, on behalf of whosoever wishes to deposit in the warehouse, and issues to the respective depositors warehouse receipts that can be used for trading purposes (as documents of title), or as collateral for raising finance. Farmers are often the leading users of this service, but they are open to deposits by all-comers, including traders, millers, public agencies and others. Public warehouses have for long operated in ports, but it is only since the 1990s that they have been used for bulking agricultural commodities in supply chains. They are most evident in the coffee and cashew export industries of Tanzania, in the case of coffee aided by trust in a pre-existing institutional structure, and in the case of cashew resulting from a Government initiative which combines warehousing with the reestablishment of a cooperative primary procurement monopsony. Combined annual lending in these two industries is in excess of US$ 50 million. As far as could be ascertained, the cashew system has so far improved 1 Category 1 (public warehousing) is divided into four approaches: (1.A) unregulated independent ‘elevators’; (1.B) warehouses regulated by the State; (1.C) warehouse regulated by a trade body, and; (1.D) bulking by private trade intermediaries. Category 3 (farmer-focused approaches) is divided into: (3.A) cooperative approaches, supported by bank lending; (3.B) microfinance-linked approaches, and; (3.C) technological improvements in rural storage 1
Page 1 and 2: Review of Warehouse Receipt System
Page 3 and 4: CHAPTER 5: ALTERNATIVE APPROACHES F
Page 5: GLOSSARY OF ABBREVIATIONS Collatera
Page 9 and 10: Category 3: Farmer-focused approach
Page 11 and 12: involvement in EAGC, its regional f
Page 13 and 14: Purpose and activities CHAPTER 1: I
Page 15 and 16: and ungraded, due to a chicken-and-
Page 17 and 18: CHAPTER 2: REVIEW OF INTERNATIONAL
Page 19 and 20: oversight system is funded by user
Page 21 and 22: Where implementation has failed or
Page 23 and 24: to the silo operator; or investors.
Page 25 and 26: CHAPTER 3: COLLATERAL MANAGEMENT AN
Page 27 and 28: CHAPTER 4: EASTERN & SOUTHERN AFRIC
Page 29 and 30: Malawi The main food crop is maize,
Page 31 and 32: Although the CECAM network has rece
Page 33 and 34: companies), who hold the processed
Page 35 and 36: curing companies), and the requirem
Page 37 and 38: Kenya is in some ways suited to fol
Page 39 and 40: to see it through its current initi
Page 41 and 42: decade 25 . The WRS Regulations of
Page 43 and 44: these are purely private initiative
Page 45 and 46: officials never accepted moving the
Page 47 and 48: eceipts, unreceipted third party st
Page 49 and 50: The networked MF system has certain
Page 51 and 52: TABLE 1: ALTERNATIVE APPROACHES FOR
Page 53 and 54: 3c. Technological improvements in r
Page 55 and 56: It is even more important to streng
Page 57 and 58:
distrust of the unknown and interes
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FIGURE 2: CAUSE AND EFFECT IN THE D
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Of particular, but not exclusive, r
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BIBLIOGRAPHY Beaurre d’Augères,
Page 65 and 66:
ANNEX 1: LIST OF PEOPLE INTERVIEWED
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South Africa - half-day meeting at
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ANNEX 2: ZAMBIA CASE STUDY Backgrou
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with other parties. USAID provided
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trading in the same, along South Af
Page 75 and 76:
ANNEX 3: MALAWI CASE STUDY Backgrou
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uyers. The mere availability of mor
Page 79 and 80:
operators who can offer a ‘one-st
Page 81 and 82:
With this in mind the author has pu
Page 83:
The CECAM (Caisses d'Epargne et de
Page 86 and 87:
TABLE 4.1: RATE OF PEPAYMENT BY CEC
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duration of the loan; (b) by a tech
Page 90 and 91:
committee and carries out a classic
Page 92 and 93:
ANNEX 5: TANZANIA CASE STUDY Note:
Page 94 and 95:
While the Warehouse Licensing Board
Page 96 and 97:
which farmers in different district
Page 98 and 99:
TABLE 5.3: MAIZE & PADDY STORED, BY
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Expenses directly related to storag
Page 102 and 103:
TABLE 5.5: FINANCIAL ANALYSIS OF ST
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WFP’s involvement with ‘new mar
Page 106 and 107:
Work by David Tschirley (2009), of
Page 108 and 109:
ANNEX 7: QUESTIONS AND ANSWERS 1. W
Page 110 and 111:
and arbitrary basis, in order to me
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