Improving Smallholder Farmers Access to Finance Through Warehouse Receipt System in Tanzania

Marketing of crops in Tanzania has been undergoing change. Direct sales from farmers to traders and delivery to the Primary Cooperative Societies (PCS) were in practice at different points of time. Since 2007, the warehouse receipt system was introduced in Tanzania. The warehouse operators accept the deposit of crops in the warehouses and provide a receipt to the farmers through PCS and the farmers receive a part of the payments through bank financing based on these receipts. This study was conducted to assess whether Warehouse Receipt System has made any contribution in improving smallholder farmers ‘access to financial services. The study used cross sectional design where 100 smallholder farmers in Singida Rural district in Singida region were covered. Quantitative and qualitative techniques were used to analyze the data. The results showed that the motives that were used to influence smallholder farmers to join WRS included price, access to credit and access to market, although, most of the farmers participate into WRS to access credit for agricultural activities. Moreover, level of farming technologies adopted found to have increased significantly after joining the WRS. Based on these findings, it is recommended to increase sensitization efforts among the smallholder farmers in order to enable the larger spectrum of the community members becoming aware of the WRS practice. Also, policy maker should deliberately intervene to strengthen the capacity of WRS.