Seeds and fertilisers introduced during the green revolution had varying levels of success in increasing agricultural production. The greatest achievements were made in Asia; many parts of Africa did not experience the same growth. New approaches are needed to stimulate food production; these must be relevant to the needs of individual countries.

In Zambia, the ‘Warehouse Receipts’ project focuses on improving market opportunities for farmers. It is funded by the Common Fund for Commodities and other donors, and implemented locally by a new stakeholder-controlled body called the Zambian Agricultural Commodities Agency Ltd. (ZACA), with technical orientation from the Natural Resources Institute, UK, which has pioneered this approach in Africa.

The ‘Warehouse Receipts’ project enables members of the public, notably farmers, to have their crops stored for a fee by warehouse operators, whom ZACA checks and certifies as suitable and trustworthy to carry out this function. The warehouse operator grades the crop and gives the farmer a warehouse receipt, which they are free to sell on to a buyer, as title to the underlying goods, or pledge to a bank as collateral for a loan. This method has several benefits:

• The accurate grading of produce makes it possible for people to do business without seeing the crops, and increases the interest of remote buyers far away from where the farmers live. The warehouse operator guarantees the grade.
• Previous widespread cheating on weights and quality is now curtailed, as ZACA trains and certifies the graders, and there is a mechanism for dealing with grievances.  
• Farmers can bulk up substantial quantities of grain in the warehouse, and sell it further the down the marketing chain than was previously possible, thereby obtaining better prices than was previously possible
• Farmers, traders and processors are able to secure loans using the receipts as guarantees. This means they can avoid selling soon after the harvest, and time their sales to best advantage.

Changing market processes is difficult: governments are often reluctant to give up control over markets, or provide supportive policies, a problem which caused a similar scheme in Ghana to fail during the 1990s. To establish a strong system, it requires both the private stakeholders (notably farmers, traders, millers and bankers) to provide leadership, and the public sector to support their efforts. Prospects for success are greatly improved if there are parallel improvements in crop forecasting and market information, as this will help stakeholders predict price movements more accurately and provide more reliable information on which they can make their storage and financing decisions.

The warehouse receipts programme has been successful because it responds to the specific conditions in Zambia. The green revolution applied the same principles across vastly different areas; research projects now need to focus on the issues facing individual countries.   

Source(s):
“Making the transition to a Market-Based Grain Marketing System”, by Jonathan Coulter. Paper presented at DFID/World Bank workshop on Food Price Risk Management, Washington, 28th February and 1st March, 2005
‘The role of warehouse receipt systems in enhanced commodity marketing and rural livelihoods in Africa’, Food Policy, 27, 4, by Jonathan Coulter and Gideon Onumah
‘DFID's Agriculture Policy - Seventh Report of Session 2003–04’ Full document.

id21 Research Highlight: 27 April 2005

Further Information:
Jonathan Coulter
Natural Resources Institute
University of Greenwich at Medway
Central Avenue
Chatham Maritime
Chatham
Kent ME4 4TB
United Kingdom

Tel: +44 (0) 1634 883 070
Fax: +44 (0) 1634 883 386
Contact the contributor: J.P.Coulter@gre.ac.uk

Natural Resources Institute, UK

Other related links:
'Fighting hunger with free agricultural inputs: the experience of Starter Packs in Malawi'

'Making the most of African agriculture'

'Unsuccessful, undemocratic and unfair? How IMF and World Bank policies have undermined Zambia'

Grain as Collateral for Credit in Zambia

http://www.eldis.org/agriculture/index.htm

Using Warehouse Receipts in Developing and Transition Economies

Zambian Agricultural Comodities Agency (ZACA)