By Tongai Mwenje
A one day workshop, which was sponsored by USAID, Zimbabwe Farmers Union (ZFU) and Zimbabwe Agricultural Competitiveness Program (Zim-ACP), brought farmers Unions, Regulators, Traders, Millers; Stock feed manufacturers, insurance, bankers, securities, warehouse operator’s and technology experts under one roof to discuss ways of utilising the ever growing technology advancement in Agricultural sector.
Speaking at a 2nd Private-Public Stakeholder Consultative Meeting on the Operationalization of the Warehouse Receipt Systems and Agriculture Commodity Exchange for Zimbabwe held today at Rainbow Towers Hotel in Harare, the Director and Research Services Division Dr Mguni said, ¨Steps must be taken to ensure that smallholder farmers, who dominate agricultural production in Zimbabwe, effectively utilize and benefit from the Warehouse Receipt System(WRS) through strengthening primary-level farmers organisations and strengthening their capacity to undertake collective marketing using modern market institutions¨.
The Warehouse Receipt System (WRS) is a technological model designed specifically for farmers for them to be able to meet their basic financial obligations such as domestic needs or preparing for the next planting season, as they wait to sell their grains in the market when the price is right.
The farmer who is the depositor in WRS terms will transport their produce to the certified warehouse operator where their products are checked by a licensed warehouse operator for quality test. If the produce meets the stipulated quality and quantity standards the warehouse operator is obliged to receive the commodity where the farmer will be issued a Manual Warehouse Receipt (MWR).The manual document will be stating the quality and quantity of the product delivered.
¨After the completion of the said processes, the farmer will take the manual receipt to the Central Depository, upon the presentation of the Manual Warehouse Receipt the Central Depository will generate an Electronic Warehouse Receipt (EWR) ¨, said Mr Bwenje, the Director, Economics and Markets, which will then act as collateral security in the event they might need short term financing from the financing houses.
The financing will be in proportion to the discounted value of the commodity; this enables the farmer or depositor to meet their basic financial obligations. The Electronic Warehouse Receipt remains in the custody of the bank for it forms the security for the financing. This technological model is very essential to the farmer as it gives them time to settle their financial problems whilst the market price of their commodities improves or appreciates.
When the market price improves, the farmer sells their products and the buyer is instructed to pay directly to the bank, the bank recovers its money from the proceeds and the warehouse operator also recovers any storage or handling charges, the farmer then gets the balance of the proceeds.
The commodities covered under WRS are depicted on the chart below
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