Notes to broadcasters
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As in many other countries, farmers in Malawi have often been forced to sell crops quickly, soon after harvest, when prices are low and there is a glut in the market to meet their household needs. Also, few farmers manage to protect their crops well in storage because of insufficient knowledge and lack of funds, cause high levels of post-harvest loss. But, with a warehouse receipt system in place, these problems can be things of the past.
Warehouse receipt systems started in Malawi to address crop losses related to crop storage, handling, and marketing. Farmers often experience post-harvest losses when they keep crops for a long time at home. The warehouse receipt system reduces this high level of post-harvest loss through high quality storage facilities.
The warehouse system also enables farmers to store crops as they wait for better prices and receive bank loans worth 70% of the value of the crops they keep in the warehouse. Farmers are then able to this cash for immediate household needs while they wait for prices to rise.
The warehouse receipt system also provides farmers with access to insurance and assurance against fire and other accidents. And last but not least, it connects farmers to better markets because large quantities of goods from many farmers are sold to larger buyers who pay better prices.
The script is based on real interviews with farmers who are members of a co-operative called Gwiritse Cooperative, located about 60 kilometres from Lilongwe City at Nsalu Trading Centre. We also interviewed the field coordinator of Agricultural Commodity Exchange, an organization that operates warehouses in the system.
You could produce this script on your station by having voice actors or station staff role-play the host and three farmers. The part of the expert could be taken by a local expert who operates a receipt system so that they can explain which company operates warehouse receipt systems and how they operate in your area. The host can use the questions in this script as models for their own interview.
If there are no receipt systems in your country, but you want farmers and experts to know about them, find someone to play the role of the expert and to inform your audience that receipts system are happening in Malawi and other countries, and that the program will inform them about how they work.
Before the program, you may wish to ask some of the farmers in your area the following questions:
- What are the major post-harvest problems that farmers face with oilseed crops such as soybeans?
- What systems, if any, are in place in your country to help farmers sell at good price and store crops such as soy safely for a longer time as they wait for better prices?
- If there are no systems in place, what is the impact of this?
- Have farmers ever heard of warehouse receipt systems?
The duration of this script, with intro and extro, is 25-30 minutes.
LIVENESS ELIYA: Members register at a business centre before becoming members of a co-operative. This is where they are certified as full members and qualify to receive all the benefits of the co-operative.
But the co-operative buys enough soy seed to distribute to its members as a loan. That way, all members plant good seed and get a high yield. Farmers pay back the seed in kind based on the market price of the crop. We calculate how much seed the farmer received and how much that farmer is required to pay back in cash. And then we calculate how many kilograms of seed the farmer is required to pay back, based on prevailing market prices.
Soybean is very easy compared to tobacco farming. It has been a women’s crop until recently when men noticed that soy prices are increasing.
As a result, many women joined the co-operative that promotes soybean and other crops that are seen as women’s crops in this district. It is only recently that men have discovered that soybean is more profitable than tobacco and have started joining the co-operative and growing soybean in large quantities.
ACE also trained one of the farmers how to fumigate crops in the warehouse. So, now the co-operative manages crop quality in the warehouse.
What does ACE do, Mr. Semba?
When a depositor takes a commodity to a warehouse, the storage operator inspects the commodity to verify if it is on the list of acceptable commodities. We do not keep tomatoes, for example, in these warehouses, only grains. We keep maize, legumes such as soybean, different types of beans, as well sunflowers, rice, etc.
The storage operator checks the quality, the moisture content, and other characteristics because once the grains are accepted, they are in the hands of the operator. So, when the depositor wants the grains back or wants to sell them, they should have the same quality as when they were received by the warehouse.
The depositor receives a receipt which states that they are the owners of the commodity. They can use this receipt as a surety to get financing from banks. The financer is the bank that agrees to support the system. At the moment this is MyBucks Bank. Last year it was another bank, and banks have changed over the years.
When a farmer stores his product at the warehouse, the ACE regularly gives the farmer a list of prices at which buyers are buying, often on a weekly basis. After the farmer chooses a price, he or she signs a contract with ACE that contains instructions to sell a certain volume or weight of the commodity at that price. ACE acts as an agent for the depositor. The buyer pays through the ACE account to make sure that all of ACE’s charges are deducted, including charges related to any loan that the depositor received.
Our main goal is to help farmers store their grains and wait for a better price. But farmers can also choose to withdraw the crop completely and use it at home. In this case, the famer settles all the required fees and takes the commodity home.
But people keep goods in warehouses because they want to sell them later and know that they’ll get higher prices if they keep their crops in a safe place.
ACE also helps with marketing. Insurance and assurance are also included in the warehouse system—farmers are insured if there is a fire, for example.
We also connect them to markets that pay better prices and give them loans while they wait for a better price. These are some of the reasons why the warehouse receipt system started.
Because buyers have to spend less on transporting goods that are all in one place and in large quantities, they are willing to pay higher prices. As more farmers contribute crops, the total quantity of soybeans, for example, becomes large. That way, a buyer does not waste time hunting for commodities. The buyer can get a large volume in one place within a short period of time—and hence offers a higher price.
To evaluate the quality of the crop, we have quality assessment tools. Our system is legitimate and that is why banks join the system as financers.
Warehouse systems require a warehouse manager who is paid to manage the warehouse. ACE has some warehouses that use the receipt system which are owned by farmers, while some by owned by operators who are not farmers, and some are owned by ACE. Also, projects sub-contract ACE to train their staff, for example, their warehouse managers.
Gwiritse co-op uses a receipt system, but they manage the warehouse themselves. ACE only helps them make good price decisions and decisions about charges that farmers must pay. This ensures that the co-operative does not overcharge its members and makes some profit after paying salaried warehouse staff. The cooperative’s money passes through ACE, but the fees that ACE deducts from individual farmers are given back to the co-operative, as they are with other warehouse owners, so that the co-operative can run the warehouse to the standards that are required.
Remember too that, when you have a receipt that shows that you are storing goods at a warehouse, you can get a loan from a bank as you are waiting for market prices to increase.
Having learnt about this initiative, what are you going to do? Send your views to telephone number ______.
You were with me, your host, _______. Until next week same day and same time, I say that nothing comes from nothing, or it shall be called a miracle. Try it, it will work for you.
Contributed by: Gladson Makowa, Info-Exchange Agency, Blantyre, Malawi.
Reviewed by: Tymon Mphaka, Programme Officer-MSME support, Green Innovation Centres for the Agriculture and Food Sector, GIZ Malawi
Kettie Fulayi, Vice Board Chair of Gwiritse Cooperative, Mgoola village, member of Mgoola business centre
Liveness Eliya, member of Gwiritse Cooperative, of Mgoola Village and Mgoola Business Centre
Rufina Deodato, Treasurer for Gwiritse Cooperative, from Mkhalazyulu village.
Bertha Bulazizi, Secretary of Gwiritse Board, from Mphonje Village and member of Mphonje Business Centre
Adrian Semba, field coordinator, Agricultural Commodity Exchange (ACE)
All interviews took place on November 27, 2021 at Gwiritse Cooperative in Nsaru and ACE Headquarters at Kanengo in Lilongwe.