B1.2 Warehouse Receipts Development

I. Objectives

1.  The  farmers   normally  sell  the  produce  immediately  after  harvest  because  there  is  no arrangement for storage and farmer has immediate need of money for his livelihood. They often need to settle loans taken from money lenders and banks for cultivation or consumption needs during lean period and to make payments for inputs taken on credit. However, the prices usually tend to be low during harvest season and increase later. Because of this, there is a glut of the produce in the market after harvest and the farmers have to sell under distress. The realization of the produce is very low as compared to the prices which could be realized after 4-5 months from  the  harvest,  i.e.  during  the  lean  season.  The  problem  can be  addressed  by providing scientific  storage  and  interim  financial  credit  to  the  farmer  against  the  stored  agricultural produce.

2.  Since  1990,  Maharashtra  State  Agricultural  Marketing  Board  (MSAMB)  has  successfully supported  a Pledge Loan Scheme operated  by selected  APMCs.  Under this scheme,  farmers obtain  loans  to  the  extent  of 50-75%  of the  value  of the  commodity  they store  in APMC godowns. These loans are provided by APMC using funds provided by MSAMB. The APMCs participating in this program have a 100% repayment rate on loans made under this program4. However, limited  funds available with MSAMB for this activity have limited the number of farmers  who  are  able  to  benefit  from  this  service  provided  by APMC.  Hence,  the  project proposes to enhance access to this service by facilitating the expansion of the warehouse receipt financing for farmers through selected godowns of Maharashtra State Warehousing Corporation (MSWC). The scope would increase further with the Warehousing Act of 2007 which allows private godowns getting accredited for warehouse receipt through financial institutions.

3.   This sub-component  aims to improve access to price risk management  services for farmers. Availability  of  finance  against