Warehouse receipt financing in the offing
Legumes farmers and traders have an opportunity to access loans from commercial banks through the warehouse receipt financing facility through AHL Commodities Exchange (AHCX).
In finance, warehouse financing is a form of inventory financing in which loans are extended to producers or farmers on the basis of goods or commodities held in trust as collateral for the loans.
AHCX communications manager Thom Khanje in an interview yesterday said while the commodity is in storage, the farmer or trader can use the warehouse receipt to access a bank loan of up to 70 percent of the commodity value based on the current price.
He said the loan amount will depend on the tonnage of the commodity stored, the spot price of the commodity on that particular day as well as the conditions of each financial institution.
Commodities that can be deposited at any of the 20 AHCX warehouses countrywide include maize, soya beans, beans, sunflower, pigeon peas and rice.
“We always have buyers looking for produce but sometimes farmers may not be happy with prices on offer, especially where there are prospects for price improvement in subsequent months.
“In such cases, a farmer can instruct us to keep their commodities as they wait for prices to improve,” said Khanje.
Commodity deposited at an AHCX warehouse is always tested for moisture and infestation, among other things, commodities that meet minimum standards are accepted for depositing.
The commodity is also fumigated and insured against fire and theft.
Using certified warehouses and the commodity exchange to sell commodities allows aggregation and competitive pricing on a larger scale locally and internationally.
A number of countries in Africa such as Kenya and Ethiopia are setting up commodity exchanges to develop agricultural market and improve food security.
