Mtendere Mchakama

Warehouse Receipt Systems for food security and resilience building

Food, Income and Markets Programme

• Five-year programme in three districts (Lilongwe, Nkhotakota, and Nsanje)

• Targets 21,000 poor and extremely poor smallholder farmers

• Overall goal is to enable poor and vulnerable households to achieve adequate and sustainable access to resource and livelihoods necessary to achieve their rights

Most pressing needs for smallholder farmers

1. Farm inputs e.g. Seed, Fertilizer

2. Capacity Building Technical knowledge in good agriculture practices Agribusiness Management Skills Access to good markets

3. Access to Financial Services Savings Credit

Does WRS play a role in meeting those needs?

1. Markets Link farmers with reliable buyers Provides platform where farmers get better commodity

prices Provides market information

2. Finance Provide receipt for accessing credit with banks More sales income leads to more savings by farmers

3. Farm Inputs More sales means farmers more able to acquire farm inputs

Concern’s experience – linking farmers to AHCX

Group name: Umodzi Revolving Fund Members: 250 poor and very poor

smallholder farmers 162 (99 female) of 250 members

participated in selling through AHCX

Ltd – WRS Group formed through Mwansambo

Youth Organization, Nkhotakota

District Crop sold: Groundnuts Year of participation: 2013

Process – linking farmers

Planning meetings with AHXC

Introduction of AHXC marketing team to farmers

Informing farmers and giving time to make decision

Farmers’ group experiences

18,220 kg harvested

and stored in local

warehouse

15,220 kg transported to Lilongwe

Group notified of

grading/sale price after two weeks

Receipt used to leverage loan from local bank

Loan used to purchase inputs for growing season

Member checked

prices, and sale done

when target was close

Results

ACHX Service Charges Unit Unit Cost (MK) # Units Total Cost (MK) Per Person costs (n=162)

Storage Per day 450 111 49,950 Storage Per day 7 122 805 AHCX Commission 2.00% 99,018 1 99,018 Member Fee 1.00% 49,509 1 49,509 Handling Fee Lump sum 4,000 1 4,000 Grading by ARET Per MT 500 15 7,610 Total Deducted by AHCX 210,892 1,302Other Costs Packaging 50kg sacks 133 300 39,990 Truck hire 15 MT truck 130,000 1 130,000 Interest on loan Lump sum 122,000 1 62,000 Total Other Costs 231,990 1,432Total Associated Costs 442,882 2,734 Gross Income (sale of gnuts) 4,950,900 30,561Net Income (less costs) 4,508,018 27,827 Est. income if sold at harvest locally 3,348,400 20,669Value Added (Amount) 1,159,618 7,158Value Added (%) 35% 35%

Net income: MK 4,508,018

Estimated income if sold at harvest locally: MK 3,348,400

VALUE ADDED: MK 1,159,618 (35%)

What Worked

1. Unit Selling Prices increased at AHCX from time of crop deposit to sale 11th July, MK325/kg 31st Oct, MK345/kg 11th Nov 2013)

2. Accessed MK650,000 credit with Malawi Savings Bank (MSB) using Warehouse Receipt

3. Accessed market information through mobile phone4. Avoided post – harvest losses5. Got certified grading of G/Nuts by ARET

Understanding the needs and concerns of local farmers

Despite a positive return on investment, with 35%

value added, farmers chose not to repeat their

engagement with AHXC again this year

Why?

Results from follow-up discussions

1. Four months waiting for sale seemed long time for the very

poor Produce was assembled by end June at Mwansambo The very poor wanted to cash in sooner than the poor Farmers counted on having influx of cash in order to be able

to carry out other small enterprises during the pre-planting

season; the delay represented a missed opportunity to them

2. Inconsistencies in quality of G/Nuts of members leading to

lower grade Group thought they would get higher grade

Recommendations

1. Continue with the system because of the benefits gained

2. AHCX can use district farm forums for more SHFs outreach in rural

areas; important to be very clear about costs and timelines

3. Target existing SHFs cooperatives and associations

4. Build capacity in good agriculture practices and agribusiness

management skills for Cooperatives and Associations

5. Several interested SHF groups can join together to meet minimum

requirements

6. Careful recording of each individual’s consignment to avoid mixed

grading

7. Access to credit to continue to cater for immediate financial needs of

very poor

A presentation to Karina Howley, KPMG — 4th April 2011

Thank You