Experts are pushing for use of Warehouse Receipt Financing(WRS) to improve farmers’ access to finance and lower trade costs, reports DANIEL ESSIET.
For Innocent Mokidi, Chief Executive of BROTE Urban Vegetable Farm and Processing Limited in Abuja, agribusiness can be profitable for youths with the right capital and skills.
However, like other young farmers, Mokidi faces some hurdles in trying to earn a living from agriculture. One of his challenges is crop failure.
Crop failure is caused by heavy or unseasonal rain, deterioration of stored food grains due to poor warehousing, and crash in prices. He finds it difficult to address these problems because of funding.
Pelumi Aribisala, a farmer in Osun State, sometimes faces the challenge of lack of facilities to store his produce. He is forced, just like his colleagues to sell his surplus produce during the harvest season when farm gate prices are low. These farmers cannot tackle this problem because of the difficulty in obtaining funds to address inadequate storage facilities.
Regrettably, produce buyers take advantage of them by offering very low prices for the produce and sell them during the most profitable market conditions.
However, farmers, such as Mokidi, are unattractive customers to banks, especially in getting credits from them. This because of the unpredictable nature of their farming business. Banks require collateral that they cannot provide and farm produce cannot be used as safe collateral to obtain loans. This situation has demoralised many a farmers, who are constantly thinking of abandoning farming altogether.
To Kebbi State Rice Farmers Association of Nigeria (RIFAN) Chairman, Alhaji Sahabi Muhammad, such a challenge could be addressed by the warehouse receipt system.
He said farmers would deliver their goods to a warehouse, which in turn issues them a receipt. They can use the receipt as collateral to access loans from banks.
Under Warehouse Receipt System (WRS), according to Muhammad, small-scale farmers are able to store their produce in warehouses during harvest when prices are relatively low and later release them to the market at better prices during the periods of low supply.