Pakistan’s current wholesale markets are ill-equipped to preserve quality. This negatively impacts farmer profitability. The quality of the product is not preserved as the traditional markets lack the appropriate infrastructure and expertise.
The electronic warehouse receipts-based financing regime (EWR) preserves crop quality, reduces post-harvest losses and increases Pakistan’s exportable surpluses. Under a warehouse receipts-based financing regime, any owner of an eligible commodity (paddy, rice, maize etc.) can get it tested, mechanically dried (wherever required), and stored into an accredited warehouse/silo facility. The warehouse operator will issue them a warehouse receipt which can be used as collateral to secure bank financing.
The eco-system to bring this option to farmers has been piloted at scale in Punjab over the past three years and is ready for roll-out during the current season. Under the Electronic Warehouse Receipts (EWR) regime developed by SECP, State Bank of Pakistan, IFC (part of the World Bank Group) and Pakistan Agricultural Coalition, agri-warehouses that meet quality standards are accredited and made available for farmers (and others) to place their crop as collateral for bank loans and get a loan equal to 70% of the crop’s value within a few hours. Naymat Collateral, established by Pakistan Agricultural Coalition, is the enabling entity for the electronic warehouse receipt regime which accredits warehouses and serves as a repository of the electronic warehouse receipts issued by these warehouses.
