A licensed grain storing system is helping Serbian farmers to obtain credit from local banks. The ERBD and the Food and Agriculture Organization (FAO) is supporting the efforts of the Serbian Ministry of Agriculture to complete the implementation of the warehouse system and strengthen the awareness about this financing tool among private sector stakeholders, local banks and relevant authorities.
For most farmers in the world, obtaining credit from banks is not an easy task. Serbian farmers however are backed by a system that gives them a better chance to finance their businesses. The grain warehouse receipts system allows grain producers and traders to use their grain as a security for loans after harvest.
Grain warehouse receipts
Harvests are stored in licensed warehouses and the receipts from the warehouse act as the security accepted by the banks to extend loans. This way, the farmer doesn’t need to sell his crop just after the harvest – when prices are lowest.
And in the unlikely event that the farmer cannot repay the loan, the bank can sell the grain stored in the licensed warehouse to recover the loan.
Supporting long term sustainability
Through technical cooperation programmes, supported by the EBRD Shareholder Special Fund, the EBRD and FAO helped develop the institutional capacity-building to provide for warehouse licensing and inspection and assisted in the creation of an indemnity fund to cover the fraud risk at the warehouse.
Thanks to study tours and target training, the involved personnel can ensure the integrity of the system and compliance with the legal, financial and technical requirements of public warehouses.
To improve transparency and monitoring of warehouses the project also financed an electronic register system. And, crucially, consultants have toured the country meeting bankers and farmers to raise their awareness about the benefits of using the warehouse receipt system.
The warehouse receipt system in Serbia is now fully functional and growing stronger from harvest to harvest.