CashNews.co
A workshop that aims at creating awareness on warehouse receipt financing to agro-processing companies working in Integrated Agro Industrial Parks in Ethiopia was held today in Addis Ababa.
Warehouse receipts are used to facilitate the financing of primary agriculture, agricultural trade and food processing.
By storing grain or other agricultural commodities in licensed warehouses, farmers, traders and agri-processors have the possibility to obtain receipts that can be used as collateral with local credit institutions.
Speaking at the workshop, Infrastructure Development and Input Sector Advisor at Ministry of Industry, Daniel Olani highlighted the importance of warehouse financing in reducing harvest loss and enhances the productivity of companies engaged in the agro-processing sectors.
He said that the warehouse receipt system enable manufacturing industries to get quality products in the amount they need without interruption with saving losses during harvesting and ensures benefits of farmers through getting appropriate market price of their products.
Daniel stated that there is up to 30 percent loss of agricultural products during harvesting which affects the sufficient provision of inputs for agro-processing industries.
Insufficient and low quality provision of inputs for industries have an adverse impact on the productivity of agro-processors, Daniel pointed out.
He also underscored the need for financial institutions like banks to engage in warehouse system financing in the effort for ensuring provision of inputs both in quality and quantity for the integrated agro-industry parks of the country.
Warehouse financing is also untapped investment potential of the country, he noted; calling up on investors to engage in this lucrative sector.
Warehouse Receipt System Manager at Ethiopian Commodity Exchange, Berhanu Tiruneh said that warehouse receipt financing ensures access to finance for companies particularly during the harvest season and secure better storage facilities that reduce post-harvest loss, prevent quality deterioration and improve quality and quantity of commodity supply for local and export markets.
Furthermore, warehouse financing improves value chain efficiency—to have shorter, efficient and traceable agricultural value chains, he stressed.
Sidama Integrated Agro-Industrial Park CEO, Hailu Etera on his part reiterated that warehouse receipt financing enable industrial parks to have uninterrupted supply of goods and products.
He added that the system would further increase productivity of industrial parks since it allows production to continue without interruption due to lack of supply of inputs.
It was learned that the warehouse financing decree was issued in 1996 E.C but it has not been fully implemented for a long time although it has been implemented on a trial basis since 2014 E.C.
The awareness creation workshop on warehouse receipt financing to stakeholders was organized by Ministry of Industry, Ethiopian Commodity Exchange and United Nations Industrial Development Organization.