Food Security through Storage Infrastructure Investment, an opportunity for warehouse receipt systems for ZAMBIA

Warehouse Receipt Financing System, Trading and Logistics of commodities

The partnership between AGR and AOL is already active in trading raw crops and its retail outlets are strategically located in the central farming block of Mkushi in Zambia. This is the agricultural hub for Zambia and AGR is the largest aggregation private hub.

AGR also provides third party logistics through road transport, rail and handling services (Weigh Bridge) to trucking companies and suppliers.

Food Security through Storage Infrastructure Investment, an opportunity for warehouse receipt systems for ZAMBIA

AGR has stepped up in line with the Government of Zambia’ policy for food security who called on the private sector to invest in grain storage facilities as the Food Reserve Agency (FRA) silos can only hold 900,000 metric tonnes of cereal.

During the past five years, Zambia has been recording maize bumper harvests of not less than three million tonnes, most of which goes to waste due to inadequate storage facilities in the country.

The coming up of the African Green Resources and Agri Options commodity exchange in Mkushi and other commercial agro hubs aggregation centers and food complexes has presented opportunities for AGR and its partners to invest in durable grain storage silos.

AGR’ vision is to contribute to the government’ objectives and committed to diversify the economy away from its overdependence on copper and we are moving decisively to transform Zambia into an agro-based economy, and this is why we are introducing AGR Grain Storage and Food Complexes in 5 provinces of Zambia that will favor our farmers and stakeholders in the agriculture sector.”

“For example, services at AGR’ commercial aggregation hubs and sites present opportunities for everybody and farmers should bring their inputs and crops in storage that will give them meaningful benefits. These grain silos, once certified, will enable AGR and its agro operators start issuing receipts, which the owners of grains can redeem for cash.

African Green Resources’ Warehouse Receipt Financing System will give access to finance which has been a challenge for the majority of small-scale farmers and traders in the agriculture sector.

“This is mainly due to the collateral they are required to provide by financial institutions, but are not able to meet the banks’ requirements.

With the coming of AGR, a farmer, trader or anyone with grain, can deposit their commodity in a certified warehouse, and the receipt issued will be used as collateral and can be used to obtain finance from financial institutions that will be collaborating with AGR.

Warehouse receipt system can provide a solution to the lack of assets that limits small and rural farmers from accessing traditional capital. Warehouse receipt systems allow farmers to store goods in return for a receipt. This means that they can sell their produce at a later time, when prices aren’t slumped due to high supply.

In addition to providing a secure place to store produce, farmers can also collateralize their warehoused commodities to cover credit from financial institutions. “As an innovative credit tool, warehouse receipt systems, among other benefits, reduce the pressure on the farmer to sell the commodity immediately after harvest, when prices are normally low and reduce post-harvest losses.

However, these warehousing systems have not yet been widely adopted in Africa. There are two main challenges. The first is securing the resources to manage the system.

The second is convincing farmers to choose storing their produce until it reaches a better price, over selling immediately after harvest. Regulations enabling bankers and insurers to accept stored produce as collateral will also need to be introduced.

For investment opportunities in grain, cold storage or grain storage silos contact AGR Engineering units at the following email:

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