Across Southern Africa, smallholder farmers sell their produce right after harvest when markets are in surplus and prices are low. If they could wait to sell, they would reap the benefit of more favorable prices. With the support of the Trade Hub, the Agricultural Commodities Exchange for Africa (ACE) has developed a warehouse receipts system in Malawi. The system enables farmers to deposit their crops in a warehouse, receive a receipt for the product, and access bank loans against the receipt as collateral. The farmer thus has access to funds to cover basic needs and can wait to sell the product in response to market demand.
In order for the receipt system to work, comprehensive rules, procedures, and documentation satisfying bank requirements must be provided. On behalf of ACE, the Trade Hub rewrote the warehouse receipt process and created a credit policy model which was submitted for approval to the credit committees of participating banks.