Potential for using the warehouse receipt system in financing maize marketing in Tanzania under market liberalization: case study of Mbozi and Babati districts

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Sokoine University of Agriculture


The general objective of the study was to assess the potential effect of using Public Grain Warehouse Receipt System (WHRS) in financing maize production and marketing under a liberalized market economy in Tanzania. Similar experiences in the cotton and coffee subsectors were used to assess this potential. Multistage and simple random sampling techniques were employed in selecting farmers, while systematic and simple random sampling techniques were used to select traders. Descriptive and quantitative techniques were employed to analyse collected data. The study found that smallholder maize, cotton and coffee farmers have household characteristics common to most rural household settings elsewhere in Tanzania. Only 5% of maize farmers had access to credit. In places where there is proper functioning of WHRS credit facilities (coffee and Cotton); relatively more farmers are able to access funds for input financing. The calculated buyers concentration ratio was 60.54 that suggest that the maize trading in the study area has a tendency towards monopolistic marketing behaviour. The results of regression analysis for coffee and cotton, reveals that the coefficients for age, education, household size, loan amount received, interest rates, and membership to the primary cooperative society were determinant variables to borrowers transaction costs. For loan demand, coefficient for age, household size, transaction costs, interest rates, distance to the lending institution, the disbursement and previous season crop harvest were important variables. The results of gross margin analysis revealed that, coffee had highest gross margin and returns to labour followed by cotton and maize. Basing on the results of this study it is suggested that Public Grain Warehouse Receipt System should be adopted because apart from credit facilities provision, it will assist traders to pool (financial) resources, and form networks for consolidating maize marketing. Also it will assist farmers to organise themselves for the purpose of bulking and marketing maize together, it will enforce quality standards, facilitate provision of timely and adequate market information, and facilitate linkage between large agricultural companies, millers, traders and small maize producers.




Warehouse receipt system, Maize marketing, Tanzania, Mbozi, Babati