Electronic warehouse receipts (EWRS)

Small-scale grain farmers incur significant losses as a result of poor practices during harvest, postharvest processing, and storage. Farmers also lose out because they lack financing to take of their immediate needs, which would allow them to hold off on selling grains at often low prices immediately after harvest. These farmers lack access to alternate market channels, and are dependent on middlemen who take on most of the risks associated with aggregation, transportation and pre-financing, significantly reducing farmers’ profits. The absence of standardised grades, proof of ownership of commodities, and poor storage facilities limit the growth potential of agriculture in Nigeria, as well as farmers’ ability to access finance.

In March 2014, Propcom Mai-karfi (PM) and Africa Exchange Holdings Limited (AFEX) partnered to assess the potential of including smallholder farmers in a warehouse receipting programme which allows farmers to safely store their grains until market prices are favourable. The feedback received from this assessment has since led to a pilot electronic warehouse receipts scheme which is providing smallholder farmers with access to modern storage facilities, postharvest handling training, access to finance, grains for fertiliser swap options, and access to premium buyers and pricing information.

Access to secure storage

AFEX in partnership with PM is providing smallholder farmers with access to modern secure storage facilities. This reduces the incidence of post-harvest losses and helps farmers to gain premium prices during peak price seasons. Farmers are able to store bags of grains at AFEX warehouses located in Kaduna state. Farmers pay a fee of NGN1/day and NGN30/month to store one bag of grains.

Access to premium market

In rural markets, smallholder farmers typically sell their grains to middlemen who have better bargaining power due to information asymmetry. Middlemen buy grains from farmers at low prices and sell off at higher prices, hence capturing much of the market value. The AFEX and PM partnership facilitates farmers’ access to end users, thereby ensuring that farmers receive higher prices for their produce. Farmers are also provided with price information through AFEX outreach officers to enable farmers peg suitable prices to their grains.

Access to finance and inputs

Propcom Mai-karfi created a linkage between microfinance institution, Lift Above Poverty Organisation (LAPO) and AFEX to facilitate loans to smallholder farmers using their electronic warehouse receipts as collateral. During the 2015 wet season, LAPO provided input financing to farmers registered under AFEX in Saminaka, Makarfi and Pampaida local government areas of Kaduna state. Under a ‘fertiliser swap’ sub-component, farmers were also able to exchange their bags of maize for bags of fertilisers from Golden Fertiliser.