Inventory credit: an approach to developing agricultural markets

The last decade has seen a gradual trend towards the liberalization of many economies, both in the developing world of Africa, Asia and Latin America and, more recently, in Eastern Europe and the new states of the former Soviet Union.

An important feature of these changes has been the liberalization of agricultural markets. This has involved an increasing role for the private sector in food marketing and, to a lesser but nevertheless significant extent, in the marketing of export and industrial crops.

In most countries the lack of finance for private traders has emerged as a significant constraint to the emergence of a dynamic private sector able to take over the bulk of trading and storage functions from state trading bodies. The authors, and their colleagues in NRI and FAO, recognizing this constraint, identified inventory credit as constituting, at least in part, a useful approach to resolving the problem. Initially, our two organizations worked separately, but when it was realized that we were working along similar lines it was felt beneficial to collaborate on this publication.

      Risk management
AGS main series:
  FAO Agricultural Services Bulletins
  Jonathan Coulter and Andrew W. Shepherd
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