Part of a warehouse receipt system in Uganda: The quality controller checks the moisture content of dried maize.
Photo: WFP/M. Hofer

11.06.2013

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Grain markets in Africa suffer from a range of constraints. Smallholder farmers are particularly affected owing to their vulnerability to price fluctuations and their weak bargaining position. Many African governments as well as donors reckon with improvements through warehouse receipt systems. The article illustrates the theoretical potential of the WRS and some of the obstacles in setting them up in African countries.

Warehouse receipt systems (WRS) consist of a set of interrelated structures and procedures instituted to ensure that contractual obligations associated with a warehouse receipt are fulfilled. The receipt proves that a named person has transferred custody of a specified commodity (e.g. grains) to another party storing the commodity at a stated location (warehouse or silo).

The named depositor may be a farmer, farmer group, processor or a trader. The issuer of the warehouse receipt, who may be described as the warehouse operator, holds the stored commodity by way of safe custody – meaning that the operator does not own the deposited goods and so, in case of liquidation, his/her creditors will not be able to seek recourse to the commodities stored. This is because legal title to the commodity remains with the depositor or, where existing legislation recognises the warehouse receipt as a document of title (as is the case in Uganda), any other party to whom the receipt is properly transferred.

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