Dr. Gideon Onumah, an agricultural economist and rural finance specialist has presented a research conducted on the applicability and benefits of the use of warehouse receipts systems in Liberia.
Warehouse Receipts Systems help to modernize and enhance the efficiency of agricultural marketing systems and enable farmers to store commodities. This allows them to sell commodities when the price is attractive, rather than be forced to act as “price takers” right after harvest.
Dr. Onumah was hired by GROW Liberia to conduct a Market Systems Assessment of warehouse receipts systems in Liberia.
GROW is a private sector development initiative operating in Liberia to promote pro-poor economic growth and stability through partnerships with Government and private companies.
They (GROW) also work in the cocoa, oil palm, rubber, vegetable and fruits and aquaculture sectors to improve and strengthen value chains.
His research identified the positive impacts of introducing the program and how the system can improve the efficiency of commodity trading and access to inventory backed financing for small farmers and cooperatives.
During his research, he visited stakeholders at the Ministry of Agriculture, the Liberia Produce Marketing Corporation (LPMC), the Cooperative Development Agency (CDA), banks, micro-financing institutions and cooperatives in Nimba and Lofa counties to obtain vital information about those sectors.
Making the presentation last Friday, July 24, Dr. Onumah said the warehouse receipts system will help to improve the performance of the agricultural sector in Liberia as critical for driving economic growth and poverty reduction in the country.
His presentation was aimed at improving the performance of the agriculture sector in Liberia, which he said is critical for driving economic growth and poverty reduction.
Currently, there is no warehouse receipt system in the country. As a result, farmers sell their goods for little money to avoid their products getting rotten. In Liberia and other parts of Africa, smallholder farmers have very limited access to markets and lack facilities to store their produce. Based on that, they are forced to sell their surplus produce during the harvest season, when farm gate prices are low.
Traders who can afford adequate storage sites often take advantage of smallholders’ constraints: they collect agricultural products at very low prices and sell them during the most profitable market conditions. In addition, farmers face enormous difficulty in obtaining credit for their agricultural activities because of the lack of financial services in rural areas.
The banks require collateral that farmers cannot provide; as agricultural productivity is uncertain due to weather conditions and other external factors, farm produce cannot be used as safe collateral to obtain a loan.
But at a one day stakeholders meeting held at the offices of GROW Liberia, stakeholders in Liberia have seen the need to introduce the system in Liberia, saying it will help to bring relief to farmers wanting to sell their products to bigger companies.
Dr. Onumah indicated that due to non-maintenance, large portions of farms and very low yields do not have access to warehouses; while affordability and skills to apply yield-enhancing inputs are limited.
Outreach of replanting programmes, he said, appear limited because farmers started nurseries but their uncertainty remains about quality of planting materials, inadequate physical infrastructure; lack of modern fermentation, drying and facilities (weather during harvest) as well as poor rural road network, which increases cost of evacuation of beans to the port
He believes that centralized warehouses are important at county level. The warehouses, he said, can be run by independent collateral management companies due to scale economies.
In related development, Dr. Tillekeratne, a well-known international rubber expert who was formerly the Executive Director of the Sri Lanka Rubber Research Institute, was contracted by GROW in April of 2015 to provide technical assistance to introduce Ribbed Smoked Sheets (RSS), a value-added, processed form of rubber, in Liberia.
Dr. Tillekeratne has spent the last two months preparing training manuals, training rubber farmers in the production of quality RSS and the improved exploitation of latex, and farm management.
He will provide an exit debriefing for all interested stakeholders about his findings, observations and activities.
While in Liberia he met with a broad representation of rubber sector stakeholders, including the Government, banks, the Rubber Planters Association of Liberia (RPAL), Business Cluster Developers (anchor businesses) and smallholder rubber farmers.
It is estimated that a GROW-sponsored pilot Warehouse Receipts System will be started in key commodity producing areas for both cocoa and rubber in Nimba or Lofa toward the end of 2015.
The program is a 5-year Swedish International Development Cooperation Agency (SIDA)-funded market development initiative that employs the ‘Making Markets Work for the Poor’ (M4P) approach. In addition to promoting the increased profitability of smallholder farm operations, the program seeks to contribute to sustainable growth and stability, with a particular emphasis on women and youth and the environment.