Feed the Future
This project is part of the U.S. Government's global hunger and food security initiative.

Ag Sector Council Seminar Recap: Transformative Technology for Smallholders and Warehouse Receipts

Four years ago, Agrilinks hosted an Ag Sector Council (Warehouse Receipts for Food Security: Benefits and Challenges), exploring a state-of-the-art method of providing financial services to farmers using warehouse receipts. For the May Ag Sector Council, we invited USAID's Development Credit Authority (DCA) back for an update on these programs, alongside an overview of a pilot project in Kenya that uses Information and Communications Techonology (ICT) to make warehouse receipts even more accessible to smallholder farmers.

The webinar began with an introduction from Judy Payne (USAID/BFS) who gave a quick overview of the various ways ICT is being used to improve the impact of Feed the Future projects, including mobile aps, low cost video, TV, web and radio. Payne outlined a number of ways ICT improves agricultural value chains, and invited anyone working in these areas to contact her with topic suggestions for future ICT-related webinars.

After Judy's introduction, Scott Haller (USAID/DCA) began his presentation with a brief overview of DCA, a background of the warehouse receipts method of finance, and an update on the program in Tanzania that was highlighted in the 2010 Ag Sector Council. Scott explained that, in short, DCA makes credit available to people who are traditionally left out of the financial services sector, like smallholder farmers. Warehouse receipts are a document that quantifies the amount of harvest being held. Groups purchase yields from a farmer at a certified price, aggregate the commodity in a warehouse, and provide a receipt. The receipt is then considered an asset and can be used as loan collateral. DCA provides pre-harvest and purchase financing for working capital loans, warehouse construction, and initial yield purchases (for more information, watch the webinar screencast or check out the DCA website). Since we last heard about DCA's warehouse receipts activities in 2010, DCA found that despite their offers of financial support, banks were still unwilling to make loans for a variety of other reasons. They found that the enabling environment needed to be there in order for the loans to work.

Following Scott's presentation, Erin Connor (Grameen Foundation) discussed the Grameen Foundation's agricultural finance pilot project in Kenya that uses technology to promote an "e-warehouse" that provides information on processing, storage, financing and markets. Erin noted that a typical smallholder faces many challenges: inadequate crop storage, lack of access to financial services, and limited market access, to name a few. E-warehouse solutions are customized to address these three needs. To register themseleves in the e-warehouse system, farmers complete a demographics survey via their mobile phones. The eWarehouse sends out SMS messages with price data as harvest-time gets closer, and when farmers are ready to sell they complete a sale survey, come to a sale agreement with the buyer through the mobile app. Once the sale is made, a confirmation SMS is sent to the farmers phone letting them know when the money is available. Learn more about the eWarehouse pilot by visiting the project page.

The seminar concluded with a lively round of Q&A about warehouse receipts and the eWarehouse model. To learn more, check out the webinar screencast, transcript, presentation, or audio recording on the event page.