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https://e-catalogs.taat-africa.org/com/technologies/warrantage-inventory-and-credit-system
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Warrantage Inventory and Credit System

Grain in the Bank: Future Assurance

The warrantage inventory and credit system is a practical solution for small-scale farmers. It operates through a warehouse receipt mechanism, allowing farmers to store non-perishable crops (such as millet) in secure warehouses. In return, they receive inventory credit—loans against the stored grain. If farmers default, the grain is sold to recover the loan. This system provides several benefits: farmers gain from rising prices during scarcity, address urgent financial needs, pool resources for collective purchases, and engage in income-generating activities during the dry season. Implementation requires clean, secure warehouse facilities, equity injection for lending, and policy alignment to recognize agricultural produce as collateral. By minimizing risk and promoting financial inclusion, warrantage empowers smallholder families and strengthens rural economies.

2

This technology is TAAT1 validated.

8•9

Scaling readiness: idea maturity 8/9; level of use 9/9

Cost: $$$ 0.25—0.5 USD

Woven polypropylene 90-kg bags:

ROI: $$$ 52—34 %

income increase

1—2 USD

90-kg hermetic bags

IP

Open source / open access

Problem

  • Limited Access to Credit: Smallholder farmers often struggle to access credit due to lack of collateral or formal financial history.
  • Price Volatility: Agricultural markets can be volatile, leading to uncertainty for farmers regarding the prices they will receive for their crops.
  • Seasonal Cash Flow: Many smallholder farmers experience fluctuations in income throughout the year, which can make it difficult to cover expenses during low-income periods.
  • Limited Market Access: Without access to secure storage facilities, farmers may be forced to sell their produce immediately after harvest, often at unfavorable prices.

Solution

  • Access to Credit: By allowing farmers to use stored crops as collateral, warrantage provides them with access to credit, overcoming the barrier of limited collateral or formal financial history.
  • Price Stability: Warrantage enables farmers to store their crops during times of excess supply and sell them when prices are favorable, reducing the impact of price volatility and uncertainty.
  • Cash Flow Management: With warrantage, farmers can access credit when needed, helping them address urgent financial needs during low-income periods and smoothing out cash flow fluctuations.
  • Market Access: By providing secure storage facilities, warrantage allows farmers to store their produce and sell it when market conditions are favorable, avoiding the need to sell immediately after harvest at unfavorable prices.

Key points to design your business plan

In this section, you will soon discover essential elements to develop your business plan. You'll find a brief list of important questions to consider before launching your business, along with information on the technology's value proposition, target audience, key resources, strategic partners, and cost structure. This compilation will assist you in evaluating the various crucial aspects to ensure the success of your business.

In the meantime, use the 'Request information' button if you need to contact us.

Adults 18 and over: Positive high

The poor: Positive medium

Under 18: Positive high

Women: Positive high

Farmer climate change readiness: Significant improvement

Countries with a green colour
Tested & adopted
Countries with a bright green colour
Adopted
Countries with a yellow colour
Tested
Egypt Equatorial Guinea Ethiopia Algeria Angola Benin Botswana Burundi Burkina Faso Democratic Republic of the Congo Djibouti Côte d’Ivoire Eritrea Gabon Gambia Ghana Guinea Guinea-Bissau Cameroon Kenya Libya Liberia Madagascar Mali Malawi Morocco Mauritania Mozambique Namibia Niger Nigeria Republic of the Congo Rwanda Zambia Senegal Sierra Leone Zimbabwe Somalia South Sudan Sudan South Africa Eswatini Tanzania Togo Tunisia Chad Uganda Western Sahara Central African Republic Lesotho
Countries where the technology has been tested and adopted
Country Tested Adopted
Burkina Faso Tested Adopted
Mali Tested Adopted
Niger Tested Adopted
Nigeria Tested Adopted
Senegal Tested Adopted

This technology can be used in the colored agro-ecological zones. Any zones shown in white are not suitable for this technology.

Agro-ecological zones where this technology can be used
AEZ Subtropic - warm Subtropic - cool Tropic - warm Tropic - cool
Arid
Semiarid
Subhumid
Humid

Source: HarvestChoice/IFPRI 2009

The United Nations Sustainable Development Goals that are applicable to this technology.

Sustainable Development Goal 1: no poverty
Goal 1: no poverty
Sustainable Development Goal 2: zero hunger
Goal 2: zero hunger
Sustainable Development Goal 5: gender equality
Goal 5: gender equality

  • Identify a Farmer Group: Find a group of farmers who are interested in the warrantage system.
  • Training: Train the farmers on how the system works, including how to store their crops properly and how to negotiate prices.
  • Find a Warehouse: Secure a clean, safe place to store the crops. This could be a rented facility or a specially built one.
  • Store the Crops: After harvest, the farmers store their crops in the warehouse. The quality and quantity of the crops are recorded.
  • Get a Loan: The stored crops act as collateral for a loan from a bank or microfinance institution. The loan amount is usually less than the value of the stored crops.
  • Invest the Loan: The farmers use the loan to invest in their farms or meet other financial needs.
  • Sell the Crops: When market prices are favorable, the farmers sell their stored crops.
  • Repay the Loan: After selling their crops, the farmers repay the loan. If there’s any profit left, it’s shared among the farmers.

Last updated on 22 May 2024