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Business News of Monday, 21 January 2013

Source: B&FT

Bold step to help grain farmers

The Ghana Grains Council (GGC) has issued the first regulated warehouse receipt to a grain aggregator and member of the Council in Tamale.

The GGC Warehouse Receipts System (WRS) allows members of the Council, including farmers and traders, to deposit grains in a GGC-certified warehouse and be issued a receipt which could be transferred to other members of the Council or used as collateral against loans from GGC partner financial institutions.

The implementation of Ghana’s first regulated Warehouse Receipt System has been made possible by technical and financial support from the United States Agency for International Development (USAID) through the Agricultural Development and Value Chain Enhancement (ADVANCE) and Agribusiness and Trade Promotion (ATP) projects.

The GGC has developed its own set of rules and regulations to see to the functioning of the system and the proper conduct of members using the receipts.

CEO of GGC, Dr. Kadri Alfah, explained that this will discourage stockpiling as well as protect the warehouse operator from financial losses due to weight loss from moisture – as the warehouse operator is expected to deliver the grain according to the quantity and quality of the warehouse receipt.

Dr. Alfah added that the Council has taken steps to integrate smallholders into the WRS so they could benefit from direct linkage to more diversified markets, including buyers who are looking for standardised grains.

“The Warehouse Receipt System will enable the farmer to evolve from just selling at the farm gate and integrate to a much more diversified market system; through GGC warehouse receipts, the farmers will have their grains cleaned, graded and sold by weight.

“This will ensure that the farmer benefits from premium prices from grading and prevent them from being cheated on weight; as at now, the farmers are price takers, not price setters. Warehouse receipts can prevent distress among farmers by empowering them to sell their grains later when prices are better,” he said.

It is initially expected that over 10,000 farmers in farmer-based organisations will benefit from the scheme. The GGC is already supporting these farmers through a programme supported by USAID-ADVANCE, including educating them on grain standards set by the Ghana Standards Authority (GSA); grain quality assurance; use of formal contracts; and proper warehousing management practices.

By taking the lead role to organise the grain industry, the GGC is paving the way to support a future Ghana Commodity Exchange, Dr. Alfah said.

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