National Warehouse Receipt System officially launched

Ministry of Trade and Regional Integration launches a national Warehouse Receipt System /WRS/, a legal regulatory framework for licensing and overseeing warehouses that can store the product of farmers and other value chain actors. The ministry has launched the system after 18 years since the Warehouse Receipt System Proclamation was legislated in 2003.
“Modernizing the marketing system in the agricultural sector, improving product quality and reducing waste as well as improving access to finance are work needed to be done to increase productivity. In this regard, as the experience of many countries shows that Warehouse Receipt System is a modern system to reduce the problems in the trading system and for the farmers as well to create a better financial supply for agricultural producers,” said Endalew Mekonnen State Minister of Trade and Regional Integration on the launching event held on Friday November 26, 2021 at Hyatt regency hotel.
The regulatory body will be established under the Ministry and be tasked with supervising the development of the warehouse receipt system and issue a certificate of competence to warehouse operators, inspectors and agricultural product certifiers.
The regulator will also have an advisory board, which will be comprised of representatives from the ministries of Trade & Industry and Agriculture, the National Bank of Ethiopia (NBE), the Ethiopian Standards Agency, the Federal Cooperatives Agency, the Ethiopian Bankers Association, the Association of Microfinance Institutions and the Ethiopian Chamber of Commerce & Sectoral Association.
Through the scheme by storing their produce, farmers and other depositors can preserve their produce from the high levels of post-harvest loss that Ethiopian agriculture currently suffers from. Additionally, the scheme will improve the quality and safety of the stored produce, and – by accessing bank credit secured against the stored commodity collateral – avert distress selling soon after harvest when prices tend to be lowest. Moreover, the WRS will help the entire value chain overcome high current working capital constraints to more efficiently access and aggregate raw materials, a key requirement to help Ethiopia achieve its vision for value addition through agricultural industrialization.
The Ministry of Trade and Regional Integration has established a WRS Regulatory body within the Ministry for purposes of warehouse licensing and oversight which will be governed by the WRS Proclamation No 372/2003. The Ministry has partnership with different stakeholders and development partners from the cooperative, agro-industrial, logistics and financial sectors to pilot the WRS in the coming agricultural season. Since 2017, the International Financial Corporation /IFC/ has been supporting the Ministry to implement the system through a partnership known as the Collateralized Commodity Finance (CCF) Project.
As part of this work- the stakeholders have put in place enabling regulations, established a national agricultural warehouse standard with the Ethiopian Standards Agency, liberalized the warehousing sector in partnership with the Ethiopian Investment Commission to enable Foreign Direct Investment, and performed capacity building with farmers and their cooperatives, other value chain actors such as agro-processors, and financial institutions.
Five cooperatives have been selected from Amhara and Oromia regions for the pilot project and two agricultural producers will participate in the test. The application is mainly for selected agricultural products such as wheat, maize, teff and beer barley.
Depending on the market situation, in addition to the above mentioned actors additional interested agricultural producers and actors could be allowed to participate by covering their own expense.
Optimized by the Ethiopian Commodity Exchange alongside the national pilot implementation, the Receipt Credit system is also operating in selected cooperatives and agricultural producers from the Southern, Amhara and Oromia regions trading corn, soybeans and chickpeas through the ECX.
WRS has been established in a wide range of African and international countries – for example, South Africa, Malawi, Tanzania, India, China and the United States of America – as an integral part of the institutional framework to enable the efficient financing and marketing of agricultural produce.