Exploring warehouse receipts financing for farmers through a case study

Abstract

PurposeWarehouse receipt-based financing (WRF), an innovative instrument with its structure embedded in the agricultural value chain can potentially address farmers' concerns about timely credit access and accessible remunerative markets. However, studies indicate farmers' exclusion from currently practiced WRF mechanisms across developing countries. Transaction cost and lack of assured remunerative markets post storage are the challenges thwarting farmers' participation. The study explores how these challenges can be addressed by analyzing a case study. The finding will help in coming up with a farmer-inclusive WRF mechanism.Design/methodology/approachThe study uses a case study as an analysis tool. Primary data is gathered through farmers. Descriptive statistics and partial least squares (PLS) approach to structural equation modeling methodology has been adopted for empirical testing of the hypothesis of the study. The study uses SMART PLS 3.0 for analysis of data.FindingsSingle window offering of multiple value chain operations and technological intervention in physical handling substantially reduces transaction costs for farmers. Sustained farmers' participation in the case supports this finding. The presence of an assured market (PAM) is found to have a positive and significant relationship with WRF in the case of beneficiary farmers. The PAM is found to have a negative yet significant relationship with WRF in the case of nonbeneficiary farmers. Critical success factors of the entity KisanMitra stated in the case substantiates a farmer-inclusive WRF mechanism.Research limitations/implicationsThe study analyzes a case study of specific geography. However, similarities enlisted across developing countries in the introduction section provide a scope of generalization of findings across developing countries. The identified factors for a farmer-inclusive WRF mechanism will enable the governments, policymakers and development institutions to ascertain and align their WRF implementation measures to inculcate and upgrade these factors to the prospective WRF agents. Future studies can explore the replication of farmer-inclusive WRF mechanisms across other geographies. The studies also explores the role of technological interventions in further reducing the transaction cost and suitable policy modifications to encourage replication of the study in other geopgraphical context.Originality/valueThe study on WRF and the methodology adopted is first of its kind to identify factors for a farmer-inclusive WRF mechanism.