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The use of warehouse receipt finance in agriculture in transition countries.







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    Document
    Lithuania: Financing of Warehouse Receipts - Legal Review
    Report N. 1 - October 2002
    2002
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    Warehouse receipts are used to facilitate the financing of primary agriculture, agricultural trade and food processing. By storing grain or other agricultural commodities in licensed warehouses, farmers, traders and agri-processors have the possibility to obtain receipts that can be used as collateral with local credit institutions. This system has proved particularly useful in Central and Eastern European countries where agricultural enterprises do not have strong credit histories and have few assets to pledge as collateral. In these circumstances, local banks often prove reluctant to lend to the agricultural sector. For warehouse receipts to become a convincing instrument to secure loans to agricultural enterprises, a coherent institutional and regulatory framework is required. Banks need to be able to trust warehouses, which should be licensed and supervised properly, and banks must be certain that the receipts can be used as effective deeds to exercise their rights in case of loan default.
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    The Use of Warehouse Receipt Finance in Agriculture in Transition Countries 2013
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    This study discusses possibilities for warehouse receipt finance in the agribusiness sectors in Eastern Europe and Central Asia (ECA). Warehouse receipt financing is a proven instrument for allowing farmers, traders, processors and exporters to obtain finance secured by goods deposited in a warehouse. The warehouse operator issues a receipt for the stored goods, which can be used as a form of portable collateral to request a loan from a financial institution. Warehouse receipt financ ing is especially interesting for rural small and medium enterprises, which are often unable to secure their borrowing requirements owing to lack of sufficient conventional loan collateral. Warehouse receipt finance has a long tradition in many Western countries and in parts of the developing world, but in most ECA countries it has only been introduced since the collapse of the Soviet system. So far, results have been mixed and there remains considerable scope for enhancing warehouse receipt financing. Despite several donor-supported initiatives to introduce a legal framework and other elements of a warehouse receipt system, and practical applications of collateralized commodity financing by international and domestic banks in various ECA countries, little consolidated and up-to-date information is available on experiences, current status in different countries and lessons learned. This study contributes to closing the gap. Part 1 provides an overview of the dif ferent types and applications of warehouse receipt finance and discusses key issues and the core elements of a warehouse receipt financing system. Part 2 reviews experiences and the current status of warehouse receipt financing in a number of ECA countries and sets out possible areas for further support.
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    Designing warehouse receipt legislation
    Regulatory options and recent trends
    2015
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    Effective warehouse receipt systems allow agricultural producers to access credit at competitive rates by borrowing against receipts issued for goods stored in independently controlled warehouses. These systems enable producers to delay the sale of their products until after harvest, to a moment when prices are generally more favourable. Warehouse receipt systems can therefore mobilize credit for the agricultural sector and improve agricultural trade. A supportive legal framework is a common pre condition for confidence in and acceptance of warehouse receipts for producers, credit providers and market participants. This publication aims to shed light on the development of warehouse receipt legislation for agricultural commodities and good regulatory practices worldwide, and to provide countries with guidance and country-based examples on how to develop enabling legislation.

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