Professional Documents
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MODULE7
Warrantageof
agriculturalproducts
FacilitatorsGuide
Exercises
ReferenceSheets
Publication of this manual was supported by the Dutch Ministry of Foreign Affairs.
The manual was developed by technical experts of ICRA, partner within the 2SCALE Project.
The contents do not necessarily reflect the views of the Dutch Ministry of Foreign Affairs.
2SCALE, 2015
MODULE 7
MODULE 7
MODULE 7
Foreword
This module1 addresses a challenge faced by both individual small-scale farmers and
Producer Organisations (PO), i.e. lack of access to credit. Warrantage is an inventory credit
system (also called Warehouse receipt system) adapted to the needs of small-scale farmers
and at the same time an income-generating tool.
The following example illustrates the challenge.
The maize producers' cooperative XYZ has already harvested 100 tons of dried maize. The price of
maize is usually lowest at harvest time. The cooperatives members realize that if they wait a few
months before selling their crop, prices will probably be better. They are, however, in immediate need
of cash to meet their urgent needs and to prepare for the next growing season: purchase of inputs,
seeds and labour. Unfortunately, the financial institution (bank) is reluctant to lend them money to
buy fertilizers since the financial situation is uncertain and moreover, a good harvest and thus
repayment of the loan are not guaranteed. What to do?
Lack of access to credit ranks high among the many constraints to the intensification of
agricultural activities of small-scale farmers in Africa. The agricultural credit products that
banks and Decentralized Financial Systems (DFS) offer are often not adapted to small-scale
farmers conditions. The low solvability of loan applicants, combined with the fact that loans
requested are often small, and banks are not represented in remote areas, all increase
transaction costs and reduce the interest of financial institutions to finance agricultural
activities. In addition, banks often require unsuitable forms of guarantees, like personal
contributions, blocked savings up to 30% of the credit, and small-scale farmers have limited
financial resources, which reduce the possibility that banks or other financial institution can
positively respond to their credit/loan requests.
Thus, to be able to finance their input needs early in the season (fertilizers, seeds, etc.),
small-scale producers often have to fall back on the traditional credit systems granted by
local traders that are characterised by high interest rates. Moreover, repayments are often
made in kind, with the product calculated at the lowest price, as is the case immediately
after harvesting. Also, producers sometimes request for loans immediately after the harvest
to be able to store their products and sell them at higher prices in the lean period. It is on
this latter issue that producer organizations can think of an intermediate and suitable
solution: keeping the stock within the community, in a store controlled by a producer
organization or a DFS, so that it may serve as a collateral.
The module has been developed by Lonard Cossi Hinnou, Aurlia Dakpogan, Franois Dossouhoui, Bernard
Dedjelenou, Marie-Jo Dugu, and Toon Defoer.
2SCALE Learning Module 7 Warrantage of agricultural products Facilit. guide
MODULE 7
Learning Objectives
At the end of this training session, coaches will be able to support Agribusiness Cluster (ABC)
actors in mobilizing and controlling a part of their production that will allow them to access
credit and inputs for the development of their activities. In particular, at the end of this
workshop, participants will be able to control and be informed about:
The origin of the warrantage or warehouse receipt system and its characteristics
The warrantage concept
The reasons underlying a warrantage system
The actors involved in or affected by a warrantage system, their roles and interests
The operational mechanisms of a warrantage system in an agricultural and local context
The advantages and disadvantages/limitations of a warrantage system
The requirements or favourable conditions for the proper functioning of a warrantage
system
The basic rules of an effective warrantage system (dos and donts)
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Session 1: Introduction
This introductory session is for the participants to get to know each other and to get familiar
with the learning method that is based on interactive communication and constructive
feedback rather than through lecturing. The session also aims to build a team and share the
objectives of the workshop and its set-up. In most cases the session may be kept short as the
coaches and the trainer will know each other already. Depending on the situation, this
session consists of the following aspects:
A welcome to the participants: information on accommodation, the workshop program,
Learning objectives
At the end of this session, participants will be able to:
Define the concept of warrantage
Identify the characteristics of warrantage
Familiarize themselves with the various forms of warrantage
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Procedure/tools
The session begins with observing Figure 1:
Amina : Our cooperative has no
land nor house, but we do have
maize..
Akounon : Is it in a
store of which we can
have the key? Perfect!
Fig. 1: The stock of maize makes it possible to get a loan from the bank
Subsequently, the facilitator collects the participants' answers to the following questions:
What is Amina trying to obtain?
What is the credit guarantee under negotiation?
Why is it that Akounon accepts a stock of maize as a credit guarantee? Would he be able
time span of several months for which the stock of a commodity serves as a collateral in
kind for a banker, and thus as a guarantee for the reimbursement of the credit/loan in
case of failure (the warrant).
For a producer organization (PO) and/or its members, warrantage consists of obtaining a
loan that is guaranteed by putting in its harvest (soybean, sorghum, rice, maize, peanuts,
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etc.) as a collateral; the produce may increase in value over time and should not be easily
perishable.
Warrantage enables producers to get access to a credit while keeping control over their
products, and at the same time warrantage increases the credit security for bankers
and/or micro-finance institutions.
Warrantage is a short-term credit system, guaranteed by stocks of farm products that can be
stored in a proper storage facility and that may increase in value over time.
The facilitator then elaborates on the different forms of warrantage. There are basically four
types of storage for stocks of produce that can serve as collateral:
Storage by the banker: the financial institution holds the stock. It owns the storage
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Learning objectives
At the end of this session, participants will be able to:
Comprehend the soundness of the warrantage concept
Weigh the merits and shortcomings of warrantage
Identify in what situations it may be advantageous to opt for storage credit
Procedure/tools
Session 3 starts with a brainstorming exercise on the reasons behind the warrantage system.
The question is:
Why have a warrantage system for agricultural products?
The participants write the underlying reasons of an inventory credit system or warehouse
receipt system on coloured cards: What are the objectives of warrantage in an agricultural
production system?
Advice for the facilitator
Participants should list as many reasons as possible to get a rich list of reasons for warrantage. The
cards are collected and displayed on the board or wall. The facilitator explains to the participants not
to only look at market aspects. Warrantage can also ensure food security in households. In arranging
the cards and synthesizing the outcomes, the facilitator focuses on the definition and objectives of
establishing a warehouse receipt system.
The facilitator starts to link the definition of warrantage as developed by the participants and as
summarized by him/her with the reasons for warrantage. Key concepts that follow from the definition
and objectives of warrantage will allow to apprehend the coherence and new roads to explore in the
next phase of the workshop. The workshop is dynamic and part of a continuous learning approach.
The facilitator avoids having long summaries but leads participants to understand all concepts on the
checklist.
Then the facilitator summarizes the discussion, mentioning that nowadays warrantage
serves to secure farm credits but also aims at increasing revenues from agricultural
production, especially when marketing situations are difficult.
Warrantage is a technique that contributes to food security by developing:
Micro-finance services to farmers: By putting up their stock of food crops at harvesting
time as collateral, the farmers have a source of cash to conduct post-harvest income
generating activities.
A stock of produce that can be made available for producers when needed (e.g. as seed at
time of sowing and/or during the hungry season), either as an input for next growing
season or for home consumption.
A potential increase in value of the produce, as prices generally increase some months
after the harvesting period. After reimbursement of the credit, producers may, if desired,
sell their stocks on the market and profit from higher prices. With the profits, the
producer or PO may invest in inputs and materials/equipment for the next cropping
season (through a combined and creditworthy application).
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MODULE 7
A potential for the credit recipients to use the money (credit) to realize income-
generating activities and subsequently repay the credit, at least in part, and keep the
stock to sell in a period of higher prices. This practice also helps to cope with possible
storage losses (risk management).
A strategy against crop sell-off and a cash management strategy for producers to meet
their needs throughout the year.
The facilitator then restates that warrantage is not a panacea for the valorisation of
agricultural products and that, like all other types of micro-credit, warrantage has
advantages and limitations, both for the producers and for the finance institutions. A list of
benefits and limitations is developed through an interactive exchange and presented on a
flipchart in plenary.
Example of a table resulting from interactive exchange
Actors
MFI/DFS
Producers
Benefits
Protection against risks
Reducing/limiting of seasonal price fluctuations
Guarantee in kind through the stock
More secure credit and repayment
Higher volume of credit and development of a healthy
portfolio
Profitability
Price transparency
Food security
Quality and quantity of grain
No longer under the influence of speculative traders
and/or local moneylenders, besides the possibility of
generating additional revenue with higher sales prices
of the stored product
Increased investments in agricultural production and
reduced migration from rural to urban areas.
Better structured and more professional POs: the role
and usefulness of the organization's services (storage,
research and sponsorship credit, research opportunities
and improved income from marketing of agricultural
products, etc.) are well highlighted.
Improving the quality of agricultural products;
introduction of quality standards for proper control of
stored products
Improving the negotiation power of producers: a better
marketing of the products in time
Limitations
Warehouse management
Risk due to extreme
weather conditions
No storage facilities
Remoteness of DFS
Although in many cases the choice for a specific product will already have been taken, it is
important to realize that not all agricultural products are suitable for warrantage
speculation. It is vital to make a kind of product classification according to the suitability of
agricultural stock for the warehouse receipt system. The criteria for determining such a
classification are, among others:
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The potential of price increase of the commodity in the period after harvesting: so
Additional reading
Reference sheet 1: Identification sheet for warrantable products
Reference sheet 2: Checklist for producers of warrantable agricultural products
Learning objectives
At the end of this session, participants will be able to:
Identify the list of main operations of warrantage
Map the operations and explain the warrantage or warehouse receipt system
Agree upon and describe the main stages of the set-up and implementation of a
warrantage system
Procedure/tools
This session starts with an exchange in the form of a plenary. The facilitator asks participants
to identify postharvest operations (of e.g. maize) of a group of producers that is interested in
a storage loan in which the community is in charge of the stock. The various responses are
written (or symbolized) on cards and displayed on a board or wall. The facilitator then
summarizes the answers to get a short list that has the following operations:
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Harvesting
Collection
Bundling or regrouping the harvest
Storage (collective)
Obtaining the credit
Using the credit/expenditure (purchase of inputs)
Release of the stock and selling
Refunding of the credit
2SCALE Learning Module 7 Warrantage of agricultural products Facilit. guide
MODULE 7
The session continues with a group exercise (Exercise 1). The facilitator divides the
participants into two or more sub-groups based on the participants experiences with
warrantage. Participants may also be divided into same-gender groups. This will make it
possible to see differences in results between these subgroups and the possible factors
behind these differences (e.g. the role within the family and/or the usual activities). Women
and men may have a different perception of constraints at the different stages and may
propose different solutions as well. The perception may influence the functioning of the
warrantage mechanism.
In Exercise 1, the participants develop a diagram that visualizes the warrantage system. The
group results are presented in plenary and shared. The following diagram may be used as a
synthesis, specifying the product, money and input flows.
Example of warrantage system in which the community controls the stock system
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MODULE 7
bank/MFI on the loan that is given. In such a system, however, the bank/MFI will generally
ask for a regular inspection of the stock by a supervisory agent.
Based on the synthesis model, the groups continue with Exercise 2 to identify the phases
and steps in setting up and implementing the warrantage system and to describe each step
briefly but clearly. After identifying milestones or indicators for each phase, the groups
gather two by two to agree on the identified steps. The common results of the pairs of
groups are then presented and shared again. The final result (end of part 2 of Exercise 2) is
presented in a plenary session followed by a short discussion and some amendments, if
necessary. The following phases and steps should be included:
Phases/Steps
Phase 1: Preparation
Steps:
Analysis of the productive potential of all actors (distinguishing men and
women)
Information and creating awareness regarding warrantage
Decision making (determining the price and appointment of a warrantage
committee)
Planning of the warrantage (timetable)
Negotiations with the banker (decentralized finance system, DFS)
Phase 2: Setting up the system
Steps
Collection of the produce
Preparation of stores/warehouses
Stockpiling and registration of depositors, compiling of bags
Stock management and stock inventory
Conclusion of the agreement between the PO and the banker/financier
Credit issuance and distribution of funds
Phase 3: Follow-up
Steps
Checking stocks and maintaining stores
Follow market information (to decide when to sell and end the loan period)
Repayment of the loan to the banker
Market information and decision to market
Stock release
Phase 4 : Evaluation of the process
Steps
Evaluation of the warrantage system and results obtained
Restitution/refund to members of the producer organisation
Planning for taking a new loan
Timetable
The warrantage mechanism diagram as decided upon in Exercise 1 can now be amended, if
necessary, and a timetable schedule should be included. Like any other operation,
warrantage has to be planned in time and tuned according to the growing season. This
allows better empowerment of the stakeholder and taking timely provisions at the level of
both producers and the financial institution.
Knowing the crop production calendar on the one hand, and the operations, demands and
cropping time to implement them on the other hand, the credit warrantage timetable will be
12
MODULE 7
Learning objectives
At the end of this session, participants will be able to:
Identify key players involved in the implementation of warrantage
Describe the roles of each actor
Procedure/tools
This session begins with reading a short, hypothetical story that presents a realistic
warrantage implementation experience in a country in West Africa. Each participant gets a
copy for individual reading. The facilitator may also read the story aloud, and participants
take note.
Short history of the implementation of a warrantage system
Yacouba and his colleague maize producers of the PO of Saradougou Village have been encountering
difficulties selling their maize for many years now. At harvesting, maize prices are so low that they can
barely cover the production costs. They are forced to sell, however, to repay their debts and to have
sufficient money for their daily live. In addition, the inputs for the next crops also cost a lot of money.
Yacouba heard of a cereal storage system that allows farmers to obtain a credit and in which the grain
could be sold at a later stage, when market prices are higher. He tried to find out more about this
system with the extension agency. Binta, the extension worker, and Yusuf, from the NGO For a better
life, then organised a training on the warrantage system for the farmers of the village. As Binta and
Yusuf said, it is important to have a good number of member producers to have sufficient quantity of
produce as this is likely to lead to better terms with the micro-credit agency of the municipality (the
decentralized financial system, DFS). So, the representatives of the PO identified a location for storage
and organised a strong awareness campaign among colleagues maize producers in the village.
Despite their efforts, however, only 100 farmers were willing to participate and the negotiation with
the DFS did not result in a sufficiently attractive interest rate. So Yacouba contacted Lionel, president
of the union of producer associations, of which the Saradougou PO is a member. Lionel found the idea
of setting up a warrantage system very interesting and he managed to convince some of the other
POs that are part of the union to also join the warrantage system. A number of training sessions were
organised and financed and two weeks later, 7 POs, representing over 4,000 maize producers, were
interested in joining.
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The last part of the session is primarily in the form of a plenary brainstorming. A list of actors
is identified followed by a description of their respective roles in the set-up, implementation
and functioning of the warrantage system.
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RESPONSABILITIES
Participate in setting the rules and updating the warrantage
Participate in decisions on the use of the credit obtained
Respect the rules set by the PO and DFS in the warrantage practice
committee
PO Union or Federation
15
(Table Contd)
ACTORS
Decentralised Financial
System (DFS)
MODULE 7
RESPONSABILITIES
Guarantee security of the deposit
Grant the credit
Apply good warrantage practices
Sell the produce in case of non-repayment
Support MFIs and POs in training on the principles, rules and warrantage
technique
Support POs in training members in community life, administration and
accounting
Improve the availability of adequate storage facilities at PO level and the
availability of financial resources at DFS level
Facilitate the relationship between PO and DFS/banks
Capitalize on the experiences
At the end of session 5, it is important to review the key elements of the process and of
stakeholder roles.
Creating awareness
Awareness creating sessions are organized in each locality before the harvest period, under
the responsibility of the warrantage committee. Awareness creating elements are:
Prerequisites of the product before storing (including quality standards of the produce)
The planning of produce collecting days, for each store
The IGA credit characteristics during the storage period
The credit refund mechanism
16
store.
A check of the quality of the produce is done by the store manager at store level (by
spreading it on a tarpaulin) to determine the level of impurity, humidity, the presence of
foreign bodies, etc.
After positive assessment of the quality of the stock, the warrantage committee proceeds
with the packaging and the storage.
Each producer having stock in the store is given a deposit certificate as a warrant
document.
Producers whose stocks is rejected at the collection days are no longer eligible for a
credit.
After closing each store, one key is kept by the manager of the FI and the other by the
president of the PO.
MODULE 7
Obtaining credit
Any producer having produce in the store will get a credit of 70 to 80% of the value of the
stock at the moment of deposition.
In case of a credit for an income-generating activity, only the IGA activity serves the credit
repayment. The profitability of the IGAs will be evaluated by the FI before granting the
credit.
Controlling of stock
The storage period can range from three to six months. During the storage period:
The stored product be checked on a monthly base by the store manager together with
representatives of the PO and the FI. In case the checks reveal damage of some bags,
these bags will be destroyed and sale of this stock will need to be organized in the next
days in order not to lose all later.
Price fluctuations of stored goods are observed to decide on the right time to sell the
stock. The PO also ensures that the IGA credits received are appropriately used for the
implementation of IGAs.
Refunding and destocking
At the end of the credit, the PO ensures repayment of the loan and the interest due. When
prices are favourable, the PO organizes the group sale of the stock. If the income of the IGA
is not enough to pay off the loan, the PO reimburses the loan with the revenue from the sale
of the stock.
Learning objectives
At the end of this session, participants will be able to:
Procedure/tools
This session starts with a brainstorming session on the importance of tools for managing the
warrantage mechanism. The facilitator collects the responses and summarizes the main
objectives of the use of the tools.
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MODULE 7
The session continues with the presentation of each tool used. The next table gives a
detailed overview of most tools involved in the implementation of warrantage (see also the
list of references).
Tool
Model of rules and procedures
Identification form for types of
warrantable products (see Session 3)
Classification checklist of agricultural
warrantable products to be filled by
producers (see Session 3)
Deposit certificate for warranted goods
Stock register
Method of storage of products in the
store
Reports of joint FI/PO stock checking
visits
Rating scale/scoring grid for financing
business plans
Pledge agreement for produce
Credit contract
Aim
Ensure discipline within the PO as to
the management mechanism
Promote greater adherence of farmers
through diversification of products to
be stored
Choose the best warrantable products
per location
Presentation
Reference model
Deposit certificate
Scoring grid
Product identification
form
Product classification
checklist
Stock register of
warranted goods
Storage method
manual
Table for stock check
Subsequently the facilitator introduces Exercise 4, which allows participants to become more
familiar with the use of these tools. The work is done in small groups after which the
presentations are in plenary, followed by a discussion.
Additional reading
Reference sheet 3 : Reference model of rules and regulations
Reference sheet 4 : Model of deposit certificate (warrant)
Reference sheet 5 : Stock register
Reference sheet 6 : How to stock bags in the store
Reference sheet 7 : Table for stock check
Reference sheet 8 : Scoring grid
Reference sheet 9 : Stock deposit agreement
Reference sheet 10 : Warrantage contract
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MODULE 7
Learning objectives
At the end of this session, participants will be able to:
Identify and analyse factors that may positively influence the success of warrantage.
Identify and analyse the factors that may negatively influence the success of warrantage.
Procedure/tools
The facilitator explains that in this session participants will hold interviews with one or more
representatives of POs that have experienced warrantage. For the interviews, participants
have to prepare a checklist. This can be done in groups (see Exercise 3) or in a plenary
brainstorming session, in case there is not enough time.
Advice for the facilitator
The facilitator identifies some POs in the area that have good and some less good experiences in
implementing a warrantage system. He/she contacts the PO executives to get them interested to
participate in a training session for coaches. Ideally, the facilitator manages to identify a female and a
male producer, and possibly also the head of the FI that was involved in the warrantage with the POs,
and member of the warrantage committee. Date, time and location of the appointments are
confirmed and determine the day of the training session.
The results of the group work are presented in plenary followed by a discussion/summary on
good warrantage terms and principles. After this exchange, participants get time to read the
background material, and then there is time for questions on the subject.
Requirements to remember:
Existence of a dynamic and formal farmer organization: POs have a key role in the establishment
and management of sufficient and good quality stocks, the credit negotiations with DFS as well as
the distribution of credits among its members, credit recovery and repayment, eventual marketing
of stocks, and the decision to use credit in the development of income-generating activities.
Commitment of the farmers to keep the procude in the store up to the end of the operation
Availability of a suitable storage facility (healthy, safe, secure): Needed are warehouses that meet
the quality standards and that can be managed professionally, either privately or (desirably) by
committees in which funding institutions take part together with the POs or individual producers.
Availability of a stock of warrantable products that are likely to increase in value over time: Make
a wise choice of products to be warranted. Most interesting are products that are easy to store,
non-perishable, and that increase in price with time. Such products are also most likely to reassure
most FIs. If one of the three criteria is missing, certain precautions must be taken.
2SCALE Learning Module 7 Warrantage of agricultural products Facilit. guide
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MODULE 7
Additional reading
Reference sheet 11: The principles of implementing warrantage
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Learning objectives
At the end of the workshop, participants will be able to:
List the activities they will implement with the ABCs within this coaching programme
Agree on the dates for field coaching
Procedure/tools
The facilitator introduces the session with a tour de table to investigate the knowledge and
experiences on warrantage within the ABCs that are supported by the coaches.
For coaches who support an ABC that has already implemented a warrantage system, the
ToR will focus primarily on the analysis of the experiences. The checklists developed in
Session 6 form the basis for this analysis. Coaching will then focus on the origins of problems
regarding warrantage and on solutions to be found to do a better job for the next campaign.
The coaches get together and propose a coaching program, including objectives and
procedures and tools.
For coaches working with ABCs that have no experience with warrantage yet, it is important
to go over the key elements of Sessions 4, 5 and 6. The coaches get together and make a
short first review of key Sessions 4, 5 and 6 in column 2 of the next table. In column 3 they
specify the elements of the inventory credit system that they would be interested to develop
with the ABC and why these are relevant. In the last column they give an indication of how
to put this into practice (tools).
Session
Aspects known /
warrantage
experience
Why important?
3
4
5
21
2SCALE
MODULE7
Warrantageof
agriculturalproducts
FacilitatorsGuide
Exercises
ReferenceSheets
Publication of this manual was supported by the Dutch Ministry of Foreign Affairs.
The manual was developed by technical experts of ICRA, partner within the 2SCALE Project.
The contents do not necessarily reflect the views of the Dutch Ministry of Foreign Affairs.
2SCALE, 2015
MODULE 7
MODULE 7
Harvesting
Collection
Aggregation of products
(Collective) storage
Obtaining the credit/loan
Using the loan/expenditure (purchase inputs)
Destocking and product sales
Repayment of the loan
The diagram should be made on a flipchart, using symbols or images where possible.
MODULE 7
Group 1
Group 2
Group 3
Regrouping 1+2
Group 4
Regrouping 3+4
Regrouping 1+2+3+4
Part 3
Subsequently, each of the 4 groups will make a short description (bullet-wise) of the steps of
one of the 4 phases. This can be done in a table with two columns. Put the steps in the first
column and use the second column to describe the steps. For example:
Step/Phase
E.g.
4. Negotiations with decentralized financial system
(DFS)
Description
Identification of all DFS that exist in the area or
might be there
Determining criteria for choosing a DFS
Choosing the DFS to work with
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The groups working on the implementation and the monitoring may take the following
aspects into account:
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With this information, complete both the deposit certificate of the chairwoman of the village
group and the inventory control sheet.
2SCALE
MODULE7
Warrantageof
agriculturalproducts
FacilitatorsGuide
Exercises
ReferenceSheets
Publication of this manual was supported by the Dutch Ministry of Foreign Affairs.
The manual was developed by technical experts of ICRA, partner within the 2SCALE Project.
The contents do not necessarily reflect the views of the Dutch Ministry of Foreign Affairs.
2SCALE, 2015
MODULE 7
Referencesheet1:Identificationsheetforwarrantableproducts
Most
important
products
Maize
Suitabilityfor Keepingrate
storing
Sorghum
Cowpeas
Sesame
Chillipepper
Palmoil
Soya
Cashew
Saleable
quantity
Likelihoodof
increasedselling
prices
Periodofexpectedprice
increase(numberof
monthsafterharvesting)
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Referencesheet2:Checklistforproducersofwarrantable
agriculturalproducts
Expectedprice
difference
Keepingquality
Production
(quantity)
Rating
Whitemaize
Yellowmaize
Paddy
Cowpeas
Soya
Cashew
Sesame
Sorghum
Redchilli
Palmoil
Groundnuts(intheshell)
Legend
1:Poor
2:Fair
3:Good
4:Verygood
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Referencesheet3:Internalproceduremodelforthemanagement
ofawarrantagesystembyproducerorganisations
ARTICLE1:INTRODUCTION
Thisproceduredefinestheorganizational,managementandevaluationtermsofoperation
ofawarrantagesystemforaproducerorganisation(PO).
ARTICLE2:DEFINITION,STEPSANDSTANDARDS
Warrantageinthe"noncottoninputproject"consistsofcollateralizingapartoftheharvest
toobtainaninputcreditand/oraloanfor"IncomeGeneratingActivities"(IGAs).Itisatype
ofcreditthatcomprisesseveralsteps,including,inparticular,programming,needs
assessment,stockbuilding,creditgranting,inventorymanagement,repaymentofloans,
salesofstocks,andevaluationoftheactivities.Warrantagetransactionsarecarriedout
accordingtothestandardslaiddownintheseinternalregulationsandintheconditionsof
themicrofinanceinstitutions(MFIs).
ARTICLE3:OBJECTIVESANDTARGETGROUPSOFTHEWARRANTAGE
Throughthewarrantagesystemtheproducerorganisationaims:(i)tostrengthenthe
servicesitprovidestoitsmemberstomeettheirneedsandthustoincreaseitsmemberships
base;(ii)tocontributetotheconsolidationandprofessionalizationofthemembergroups;
(iii)tomobilizesignificantownresources;(iv)tofightpovertythroughimprovedaccessto
creditsforitsmembers,developmentofeconomicactivitiesandimprovementoftheir
incomes;(v)tosecuretheproductionofitsmembers;(vi)toincreasetheproductionand
improvefoodsecurityinitsareaofactivities.
Thebeneficiariesofthewarrantagesystemarethemembersoftheproducerorganisations
thatareinturnmembersofthevillagersPOs.Thecreditreportsareputonthenameofthe
villagersPOs.
ARTICLE4:PRODUCTSTHATCANBEUSEDASCOLLATERALTOOBTAINCREDIT
TheproductsselectedbytheGeneralAssemblyoftheproducerorganisationtoserveas
collateralforthecreditare:
..
TheGeneralAssemblycanadjustthislistofproductsannuallyduringthegrowingseason,as
proposedbytheclusteradvisororpartnershipfacilitatoranddependingontheactual
performanceofthecropsinthefield.
Productsofwarrantagecreditsforindividualgroupmemberscanalsobeincomegenerating
activities,includingthepurchaseofagriculturalinputs,etc.
ARTICLE5:STOCKPILINGANDINVENTORYMANAGEMENT
Theproductsmustbeofgoodquality,andshouldbeprocessedandpackagedwellto
eliminatelossesduringstorage.Startandenddatesofstockpilingarefixedeachyearbythe
GeneralAssemblynotlaterthan..............................,dependingonthedurationofthe
campaign.Theproductsmustbestoredinanappropriatestoreandasecuritysystemmust
MODULE 6
beinplace.Thecreditonincomegeneratingactivitiesisgrantedforanamountof80%of
thevalueofthestockheld.
ARTICLE6:COMMITMENTSOFPRODUCERORGANISATIONSFORAWARRANTAGESYSTEM.
Forthesmoothrunningofwarrantageoperations,theproducerorganisationiscommitted
toprovideseveralservicestoitsmembers.Theseinclude:
Sharinginformationandcreationofawarenessamongitsmembersonthewarrantage
system,itsbenefits,itsprinciples,itsrisks,etc.
Conveningpreparatorymeetingswithmembersfortheplanningandimplementationof
operations(settingtheperiodthatstockpilingneedstobedone,theproductstobe
stored,storagefees,etc.)
Negotiatingwithmicrofinanceinstitutionsonfinancingtheplannedactivities;
Acquiringsuitablestoragewarehouses
Receivingproducts,priorcheckingofqualityandquantityofproducts,buildingand
trackingthestatusofstockstogetherwiththepartneringmicrofinanceinstitutionand
thegovernmentadvisoryservice
Identifyingindividualandcollectiveinputneeds,developingthecorrespondingbusiness
plansandundertakeactivitiestosearchfundingfrommicrofinanceinstitutionsandbanks
Distributingthecreditsgrantedtothefinalbeneficiariesinaccordancewiththeamounts
andallocationsprovidedbytheMFIpartner.Inthecaseofinputcredit,thisisdone
throughinputdistribution
Monitoringtheuseofgrantedloans,toenableproperrepaymentbymembersand
ensurecompleterefundingtotheMFI
Followingpricedevelopmentsinthemarketforproductsunderwarrantandregularly
informingthemembersofthePO
Conductinganannual,participatoryreviewofthewarrantagesystem,proposingstepsto
improvethefunctioningofthewarehousereceipttransactions
Seekingthesupportofahandlingagenttocertifythequalityoftheproductduringthe
stockpiling
Toprovidetheseservices,andwhenneededthePOcanappointapersonwhoisspecifically
inchargeofthemanagementofthewarrantageprocess.
ARTICLE7:COMMITMENTSOFTHEWARRANTAGEBENEFICIARIES
Thebeneficiariesofwarrantageshallundergothefollowingobligations:
Respecttheclausesofregulationsincludingthetimeandotherstandardssetforstock
piling,useandrepaymentoftheloans
Participateininformationawarenessmeetings,inplanning,andinmonitoringand
evaluationofwarrantageactivities
PaythestoragechargesassetbytheGeneralAssembly
Participateinthemonitoringandevaluationofinventorycredittransactions
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ARTICLE8:CONTRIBUTIONTOTHEMOBILISATIONOFRESOURCESOFTHEPRODUCER
ORGANISATION
Anamountcorrespondingto..............%ofthevalueaddedonthestocksaccumulatedby
individualsandgroupswillbedonatedtotheproducerorganisationtoestablishitsown
funds.
ARTICLE9:SANCTIONS
Dependingontheseverityofthemistake,eachmemberisliabletothefollowingpenalties:
(i)warning,(ii)reprimand,(iii)suspension,and(iv)exclusion.Memberswhobytheiractions
orconductobstructthesmoothrunningofoperationswillbeexcludedfromwarrantage.
Anypenaltyresultingintheexclusionofamembershallbesubjecttoapprovalofthe
GeneralAssemblybyamajorityofthemembers.
Incasesofnonrepaymentofloans,aprocedureofamicablesettlementwillbeinitiated.If
thisisnotsuccessful,thecasewillbereferredtoacompetentjudicialauthority.
ARTICLE10:FINALARRANGEMENTS
Theserulesofprocedureareadoptedbythegeneralassemblyon........
TheBoardoftheproducerorganisationisresponsibleforensuringitsimplementation.
TherulesofprocedurecanonlybemodifiedbytheGA.
Compliancewiththeserulesofprocedureforwarrantageoperationsismandatory.
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Referencesheet4:Templateforawarehousedepositreceipt
(warrant)
Department/Municipality:
Nameofproducer:
.
Nameofthechairmanoftheproducergroup:.
Villageofthegroup:
.
Warehouse/storeof:
Nameofstoremanager:
Featuresofstoredgoods
Appliedtreatments Quality
Quantity
Typeof
Humidity %
Gradeof Appreciation
(bags/containers/bottles)
Quantity
products
content breakage impurity Good Average
Products
Dateofdeposit:
Signature
Nameofbookkeeper
Signature
Nameofstoremanager
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Referencesheet5:Registerofwarrantedstocks
Nameofgroup
Nameofvillage
Nameofunion
Nameofchairman
Dateofstorage
:.
:..
:.
:.
:
Product1
Nameand
No. surnameof
producers
Quantity
Product2
Quality
Totalvalueof
Initial
stock
valueof
stock
Signaturefor
receipt
Quality
Initial
valueof Quantity
stock
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Referencesheet6:Howtostorebags
Storagefacilitiesforwarrantedgoodsneedto:
belocatedinwelldrainedterrain,notsubjecttofloodingandwithouttheriskoffire(no
adjacenthousesnorbush),
haveaproperroof,protectingthestoredgoodsfromtheweather,
haveawatertightfloor,
besufficientlyventilated,
freeofratsandmiceandallstockshouldbekeptfreefrompests(termites,weevils,
beetles,moths),
havesafetydevicesondoorsandwindows,
benottooisolatedfromthevillage.
Howtostorethebags
Arrangeastackthebagsofseverallayers.
Thestackshouldnotexceedtheheightof
aman.
Eachlayershouldcontainsfivebagsof
threeinonedirectionandtwoataright
angle.
Neverstoreinfestedproductsinthesame
roomwithhealthystocks.
Leavespacebetweenthestacksofbags
andthewalls.
Makeseparatestacksforeachproduct.
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Referencesheet7:Tableforstocktaking/Reportofthejoinedvisits
ofthelocalbranchofthemutualagriculturalcreditscheme
producerorganisations(CLCAM)andtheRegionalCentrefor
AgriculturalPromotion(CERPA)
Nameofmunicipality:
Centralstoreno.
:
Namevillage
:
Stocklevelsatvariousmomentsintime
Commodity
Initialstocks
Quantity
Quality
Datefirstcheck
Quantity
Quality
Datesecondcheck Datethirdcheck
OBSERVATIONS
Firstcheck
.
FirstandsecondnameofcontrollerSignature
Secondcheck
.
FirstandsecondnameofcontrollerSignature
Thirdcheck
.
FirstandsecondnameofcontrollerSignature
2SCALE Learning Module 7 Warrantage of agricultural products Reference sheets
MODULE 6
Referencesheet8:Scoringgridforthefundingofbusinessplans
QUALIFIERS
ASSESTSOF
THEPO
STORECONDITIONS
CRITERIA
Theproducerorganisation
(PO)hasaliabilitydebt
ThePOhasalegalstatus
ThePOhasawarranty
ThePOhasanupdated
policydocument
ThecompetenceofthePO
regardinginputsupply
ThecompetenceofthePO
regardingjoinedmarketing
Proximitytomarket,
existenceofademand
Buildingmaterials
NOTES
New
New
Weak
Solidmaterials
Storeequipment
Sufficient
Storedoors
Withan
integrated
doublelock
system
Storetreated
againstpests;
noratholes
present,
Pestinfestations
NOTE
Tobeeliminated
Donoteliminate
Morethan1
year
Morethan1
year
Existing
Localbuilding
materials(mud,
straw,poles)
Nonsufficient
Withoutan
integrated
doublelock
system
Signsofpest
infestationin
thestocks
NOTE :/4
VERIFICATION
Documents,
interviews,
visits
Interviewand
contracts
NOTE :/12
NOTE :/4
NOTE :/4
NOTE :/4
Interview,visit
NOTE :/4
NOTE :/4
NOTE :/4
RATING
NOTE :/16
COMMENTS
MODULE 7
SAFETYOFTHESTORE
CRITERIA
Locationofthestore
QUANTITYANDETQUALITY
OFTHESTOCKDUSTOCK
Guardian
Physicalstoreenvironment
Quantity
Quality
Storageduration
NOTE
NOTE :/4
Immediate
surroundings
notliableto
flooding,no
combustible
materials
present
Sufficient
Immediate
surrounding
liableto
flooding,
patchesof
strawdrybush
near
NOTE :/4
insufficient
NOTE :/4
Required
unsatisfactory
bad
NOTE :/4
good
VERIFICATION
Interview,visit
RATING
NOTE :/12
Interview,visit
NOTE :/12
NOTE :/4
NOTE :/4
TOTAL../52
Note:TheindicationtobeeliminatedmeanspostponingthefinancinguntiltheProducerOrganisationmeetsthestandardsset.
11
COMMENTS
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Referencesheet9:Stockpledgeagreement/Collateralmanagement
agreementforagriculturalproducts
Group..of.villageofthecommunityof..,
representedby...,actingas,offersas
collateralforaloanof..(currencyunit),approvedbythefinancial
institution,in..thestockofthefollowingproducts:
Products
Descriptionofthequality
Maize
Rice
Etc.
Totalvalueofcollateral
Quantity(kg)
Value
(currencyunits)
Thestockislocatedin...,undertheresponsibilityof
..andmaynotbesoldinpartorintotalbeforetheentiredebthas
beenrepaid,withouttheagreementofthefinancialinstitution...
Thestockremainsthepropertyofthegroupthatisresponsibleforitbutisatthedisposalof
thefinancialinstitution...thatsuppliedtheloan,guardedbythegroup/unionaslongas
thecreditandtheinterestshavenotbeenrepaidforthefull100%.
Incaseofstockdamage(duetoflooding,fire,theft,etc.)thegroup/unionisentirely
responsibleforthelossandisobligedtoreimbursetheloanplusinteresttothefull100%.
Incaseofnonrepaymentoftheloanorpartoftheloanbefore..(date),dueto
factorsexclusivelycausedbytheunionsorthegroups,thefinancialinstitution...may
orderandorganiseasaleofthestockorofpartofthestockinordertorefundthe
remainderofthedebt.Thepenaltyonnotpayingbackloansintimeisseton
(currency)per..(periodoftime).
Ifnonrepaymentoftheloanorpartoftheloanby(date)iscausedbysocio
economicfactorsorbytheState,thelosswillbesharedamongthedifferentoperators
accordingtotheearliergainsobtained.
Thefinancialinstitution.............commitstosendarepresentativeatleastonceevery
.daystoassistinstocktakingwithrepresentativesofthegroupsorunions,tocheckonthe
qualityofthestock.Incaseofdamagetothestockbecauseofdisrespectingtheregular
checks,thelosswillbebornebytheresponsibleparty.
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Thefinancialinstitution..............................willundertaketofreethestockassoonas
thefulldebthasbeenrepaid(byashowofhands).
Madeupat.
On.(date)
Signatureofgroup/unionrepresentative
Signatureofrepresentativeoffinancial
institution
Nameandsurname
Nameandsurname
Function
Function
13
MODULE 6
Referencesheet10:Warrantagecontract
Between,
the..group,representedbyitspresidentofthecommunityof
village..Zone/Sector.
ontheotherhand
Itwasagreedthat:
Thegrouprequestedandobtainedfromthefinancialinstitution.........
1. awarrantagecredituponastockdepositguaranteeincentralstoreNo.worththe
valueoffrancsCFA/currencyunit,anddetailedasfollows:
Commodities
Maize
Rice
Total
Quantities
(bags)
Actualprize
(currencyunit)
Amount
(currencyunit)
Ataninterestrateof............................,thefilingfeesare...................CFA/currencyunit.
2. Thecreditperiodisonaverage..........months,butmaybeshortened.
3. Incaseoffailuretomeetthedeadlineofthecreditperioddueto:
factorsonlyattributabletotheUnionsandgroupingswithoutproperreason,the
groupagreestobearadefaultinterestrateof..................................underafixed
termagreement.Incasethetermisexceeded,saleswillbeforced.
poorsalesorfactorsattributabletosocioeconomicconditionsand/ortheState,the
financialinstitutionandthegroupworktogethertofindasolution.Inallcases,the
riskissharedbyallpartnersincorrespondencewiththeannualgains.
Signedin(place)...on(date)20..
Thechairmanofthegroup
Themanagerofthefinancialinstitution
NameandsurnameNameandsurname
MODULE 7
Referencesheet11:Theprinciplesofimplementationofa
warrantage/theinventorycreditsystem
Todevelopfairinternalrules(takingintoaccounttheinterestsofdifferentsocialgroups,
particularlythepoorest),thatareunderstandable,developedinaparticipatoryprocess,
translatedintolocallanguages,andareknownandrespectedbyeveryone
Torespectthedecisionofthemeetingonthetypesofproducts,qualities,quantities
producedandstored(amountpermember,totalamount)andontheretentionperiodof
thestock
Toovercomeatimegap,negotiatewiththedecentralisedfinancialsystem(DFS)sothat
stockcanbebuiltupinseveralstages
Toensurethatmanypeoplecanaccesstheinventorycredit,especiallythepoorest,one
can,forexample:i)limitthenumberofbagsthateachindividualcanbringin,ii)havea
managementcommitteethatfairlyrepresentsPOsmembership,iii)acceptgroupingof
peopleforstockbuilding
Tohavearegularsystemofmonitoringpricesinthemarketsoftheproductsstored:
Informationonmarketsareessentialforbothlenders(decentralisedfinancialsystem,
banks)andborrowers(producers,POs,traders,storekeepers)tominimizerisks
speculationrelatedtothestorageofagriculturalproducts
Toensureproperreimbursement,thecreditgrantedtotheproducerorganisation(PO)
mustnotexceed80%ofthevalueofthecropatharvesttime
TostrengthenthefinancialcapacityofthePOandtoallowittoincreaseitsstorage
capacityandtakecareofcostsrelatedtothewarrantage(storeinventoryand
maintenance,security,training,etc.),thePOmustsetupadepositorscontribution
systeminproportiontotheamountsdeposited(forexampleanamountperbag)
Tosetupincomegeneratingactivities(IGAs)andavoidwastingitonsocialspending
theIGAsselectedshouldallowtorefundthecredit.
Tomakesuretoidentifythestockofeachapplicantanddepositor(writingthenameson
thebags)
Tosticktoadoublelocksystem(withkeyskeptseparatelybytheDFSandbythePO)
Toavoidtoextendawarrantagecredittoanindividualtoreducerisksandanexplosion
ofstores
Topayattentiontosubsidizedsalesbythegovernmentasthesemaydisturbtheproper
settlementofwarrantageoperations
Tosetupa"businessintelligence"pricemonitoringsystem,ifpossiblewithahistorythat
wouldseeperiodsofsubsidizedgovernmentsales.Aquicksurveycouldbeusefulinthis
regard
Tomakesuretohaveagoodknowledgeoftheenvironment,oftheseasonalactivities,
andoffarmincomes
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