Dear FSN Moderator
Well, financing for agriculture in developing and least developed countries is a major obstacle especially for the small scale farmers. Financial institutes are always reluctant in providing better financing products to these poor farmers and mostly on higher interest rate. This higher interest rate some time backed by some grantees to which majority of farmers failed, always pushes small farmers away in getting finances from these institutes. This situation ultimately open windows for middleman, who in turn get the whole produce on a very low rates.
To overcome this a possible solution could be a "Collateral Management Model". Under this model we can bring all the key stake holders in board where the key stake holder are individual or farmer groups, Banks and warehouses. Farmers can keep their produce into those warehouses on a very nominal fee where warehouse generate a Warehouse Receipt to a particular farmer. Here, the holder of warehouse receipt (Farmer) can go into bank and can get loan on the base of that receipt. Bank can keep this receipt as a grantee and can also sell the produce on behalf of that farmer into market or on a futures commodity exchange and later on can make settlement with that particular farmer. Warehouse can also buy that produce to sell it later on.
I can make more material on the said Collateral Management Model if some one want to know.
with best of my personal warm regards
Muhammad Irfan Kasana
Agriculture Corner
Email: [email protected]
Web: http://www.agricorner.com
Mr. Muhammad Irfan Kasana