Africa Case Study-WH

Scientific warehousing to transform African Post harvest landscape
Agriculture Warehousing plays a pivotal role in development of Agricultural Marketing, while

comprehensively strengthening Agriculture & Rural Banking. The development of the
Agriculture Warehouse sector also gives an impetus to Commodity Collateralised Finance,
complementing financial inclusion and strengthening of commodity value chains. The overall
impact of Commodity Collateral Financed coupled with efficient warehousing standards makes
the whole ecosystem vibrant and facilitates an equitable opportunity to all market participants
to flourish.
IFC had contracted Agri-commodity inventory management experts from India. Mr. Anand
Chandra and Mr. Shenoy Mathew, as consultants to draw up the National Warehousing
Standards for some African Nations. ( For east purpose students can take Ethiopia as an
example and prepare for the case study.)
Background
Most African nations are predominantly an agrarian economy where agriculture lies at the heart of
government development strategy. Many had in the past has also had to face challenging circumstances
with regards to quality of exports in commodities. Also, the vital food processing industry in the country
has reported challenges with respect to availability of quality raw material when required. The resulting
imports would certainly create a large dent in the country’s already stressed foreign currency reserves.
Mr. Anand Chandra and Mr. Shenoy Mathew, consultants from India, have been identified by the IFC to
help find solution to improve situation. The consultants have a deep understanding of the post-harvest
commodity ecosystems and bring with them core expertise in agricultural warehousing and CCF. IN his
professional capacity, Mr. Anand Chandra is the promoter director of Arya Collateral Warehousing
Services Pvt Limited (Arya) with more than 14 years of experience of Warehousing, Collateral
Management and Commodity Collateralized Finance. Mr. Shenoy Mathew is a General Manager at Arya
with an experience of more than 15 years in the agriculture and warehousing sector. Arya is first
collateral management company to be set up in India and it current stores and manages agriculture
commodities worth USD 350 million. Their detailed resumes are enclosed in Annexure I.
Observations and learnings
The consultants studied warehousing standards across Africa and Asia. Other relevant globally
acceptable standards were also referred to derive at a comprehensive understanding of a benchmark
most suitable for most African situations.
The research included study of the Standards of commodity warehousing in Uganda (Uganda
Warehousing Receipts Systems Authority guidelines), the Tanzania Warehouse Licensing Board
standards and the draft Warehouse Receipt Bill in discussion in the National Assembly in Kenya.
Warehousing standards and their operationalisation under the Warehousing Development Regulatory
Authority (WDRA) in India were referred to. ISO reference on warehousing of Pulses and Cereals and the
EAGC model were studied in depth for the purpose of arriving at a benchmarking for warehousing
standards.
While the secondary research gave specific pointers on appropriate benchmarks to be deployed, it also
pointed to limited field implementation of many of these standards. This detailed study coupled with
the on-ground experience of the consultants led to the learning that any developed standard would
require itself to be embedded to the ground realities of the concerned constituency. Its success would
hinge as much on its ability to optimise and leverage the existing infrastructure as providing a roadmap
for development of world-class future infrastructure.
Information from primary surveys and field visits

The field visits included detailed interactions with key stakeholders as below.
 Traders’
 Farmer Co-operatives
 Consumer Co-operatives.
 Processors owned warehouses
The observations and conclusions from these visits have had a significant influence on the strategy
adopted by consultants in recommending the National Standards. The following sections document the
key observations and learnings from each of these visits.
Whole sale market observations:
1. Produce reached this market from far flung areas with an average distance of 100 kilometres
and in some cases from as far as 400 kilometres.
2. The market structure was typical of any developing country. Produce moved from primary
producing locations to such tertiary market centers.
3. Market constituents concurred that absence of risk free storage mechanisms resulted in gross
loss of producers value realisation.
4. Absence of assurance mechanisms in existing storage infrastructure was a key disincentive for
storage.
5. Opacity around price discovery remained a grave challenge. Producers were at the mercy of
intermediaries for price discovery.
Observations at New markets developed in many countries with development actor’s
assistance. ( Many African nations have these so called new markets developed at commodity hubs to
improve value chain activities.
1. Most of them houses about 100 traders

2. Originally designed as a wholesale market, most acts as a local retail market.
3. Produce normally arrives at this market after taking a circuitous route through whole sale
market.
4. This results in higher costs and large wastage during transportation.
5. Most have a dozen reasonably large storage structures of with approximate capacity of 500 -
600 MT each, but lying mostly unutilised.
6. None of the traders interviewed had access to formal finance
7. There was keen interest among traders to avail collateralised commodity finance
Processors
Observations
1. There are many factories which were initially set up to run on fuel oil. Is currently defunct due
to increase in fuel prices.
2. It had mid-size godowns of relatively good quality and could support safe storage of
commodities.
Farmers' Cooperative Unions
1. They reported a loss to the tune of 5% in commodity value due to improper storage.
2. Improper stacking, moisture loss and increased infestation resulted in such loss.
Consumer cooperative unions

1. Demand estimates by CCUs and production estimates by FCU are two of the most critical data
points
2. Reliability of information on stock availability at FCUs is a key concern
3. Rudimentary and unreliable scientific storage mechanisms at FCUs lead to suboptimal quality of
commodities
Processors
1. Many business are profitable
2. There was a paucity of quality raw material adversely impacting production and long term
sustainability
3. Imports were strained due to shortage of foreign exchange
4. Even though there was enough production of the raw material locally, aggregation of the
desired quality and variety did not happen.
Existing storage structures
Many countries lack scientific warheouses. But have large number of structures across the country
where commodity can be kept safe. But these many not have global standards now or pass any of the
new national standards developed in these countries. 1
1
Excahange officers’ opinions
Observations
1. The role of commodity exchanges as a platform for facilitation and discovery was widely
recognised
2. There existed severe limitations for these exchanges in reaching smallholders in rural areas.
3. Spot exchanges could resolve this challenge by leveraging locally available structures for storage
and delivery.
Expectation from the case study
There are three deliverables from the case study.

1.How scientific warehousing can help the stakeholders mentioned. Such as traders, producers,
processors etc.
2.What is a practical solution for the several problems mentioned above keeping in view of our
discussions regarding agricultural commodity warehousing.

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Africa Case Study-WH

Uploaded by

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Scientific warehousing to transform African Post harvest landscape

Agriculture Warehousing plays a pivotal role in development of Agricultural Marketing, while

Observations and learnings

Information from primary surveys and field visits

1. Most of them houses about 100 traders

Consumer cooperative unions

Expectation from the case study

There are three deliverables from the case study.

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