11.06.2013

They cannot delay the sale of their crop in order to benefit from seasonal price increase because they lack suitable storage facilities and cannot meet household consumption needs without selling their crop, as they have little or no access to consumption credit. Also, farmers wanting to buy inputs for the next planting season a couple of months after harvest sometimes cannot delay the sale to their advantage. But with the WRS, farmers are able to access inventory credit and therefore match their crop marketing strategy with price movements.

Warehouse operators can only release deposited stocks on presentation of the receipts and farmers and other depositors are only to transfer the receipts to parties who have paid for them. This ensures that farmers get paid for the stocks sold. In most farming communities where such a system does not exist, farmers trade only on cash basis or only with traders with whom they have long-term trust-based relations.