WAREHOUSE RECEIPT FINANCING FOR FARMERS: CHALLENGES AND WAY AHEAD

Abstract

Warehouse receipt financing (WRF) enables farmers to use their produce as collateral. Studies indicate that WRF can be an alternative credit tool for farmers and can help integrate them into the mainstream agricultural value chain. Successful WRF implementation would result in enhanced efficiency o f the country's agricultural system. It is also evident from studies that in developing countries where WRF is implemented, farmers are largely excluded from being WRF beneficiaries. This observation motivated the study, and through metasynthesis, it consolidates and analyses findings o f studies on WRF and farmers' interaction with WRF across different countries. It is observed through citation analysis that there is a shortage o f studies that focus on farmers' perspectives on WRF. The study is the first o f its kind that enumerates the challenges faced by farmers in availing WRF and it comes up with a theoretically suggested model to ensure their participation. High transaction costs in availing WRF and high interest rates are found to be the challenges thwarting farmers' participation. Exposure to price risk post storage is found to be another challenge. The study comes up with a theoretical framework to address these challenges and suggests a "one-stop solution" model for including farmers under the WRF ambit. The study also suggests exploring the possibilities o f cooperatives and farmer producer organisations (FPOs) as prospective collateral managers for the farmer-centric WRF mechanism, which is indicated in the study as future scope o f research.