The Use of Warehouse Receipt Finance in Agriculture in Transition Countries
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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.