Warehouse Receipt Financing in Pakistan

Paper
Date Published: 
Nov 2017
Publisher: 

Assessing the status of this type of agricultural credit based on interviews with 23 organizations

This study assesses the uptake of Warehouse Receipt (WHR) financing in Pakistan. WHR financing is institutional credit extended by banks to farmers and traders against physical commodities stored in licensed warehouses as loan security. A well-developed ecosystem with strong institutional linkages between borrowers, banks, warehouses and auxiliary service providers is necessary for WHR financing to operate. WHR financing reduces post-harvest losses of agricultural commodities and enables growers to command better prices for their produce by avoiding distress sales immediately after harvest.

This study assesses the current status of WHR financing in Pakistan through in-depth interviews with current and potential users, suppliers and regulators of the scheme. An analysis of the price trends of major agricultural commodities over the last five years reveals that WHR financing could be a viable source of credit for wheat, rice, cotton and maize farmers in Pakistan.

The study finds that a certain minimum landholding is necessary for WHR financing schemes to result in profits for wheat farmers. This is likely to apply to the other grains referenced in the study.

Type: 
Paper
Region: 
South Asia
Country: 
Pakistan