Posted by Tom Hendrickson on Dec 10, 2018
Every farmer knows that the worst possible time to sell your crops is at harvest time since at this time the markets are flooded with crops for sale and the prices are low, but this is precisely when most farmers in rural Iringa, Tanzania sell their harvest.  So, if they know this is a bad time to sell why do the small farmers in Iringa do this?  They sell simply because their creditors know that at this time, they have a source of funds (crop sales) so all their bills come due and they have no choice!
The warehouse receipt program sponsored by our club helps solve this problem by allowing the small farmers to bring their crops into an approved warehouse and receive a receipt for them.  They can then take the receipt and get a loan for 60% of the value of the crops.  Alternatively, they can use the receipt as collateral for paying their bills.  In either case the receipt is backed by a fund that guarantees payment of up to 60% of the value of the crop. 
By providing this credit facility the farmers can now wait a few months to sell when the crop prices are typically 30-100% higher!  (In the US our farmers do this by making use of a variety of private and/or government programs.  In Iringa there has been no such option until now.)
The Warehouse receipt program that we are sponsoring will provide financing for farmers to store 18,000 bags of maize.  It will help 550 families increase their incomes – touching 3,500 people!  Based on a pilot program that was conducted, we are estimating that it will result in an average 40% price increase – providing almost $200,000 in additional income to these families. 
Finally, since the program has possession of the farmer’s crops, the funds guaranteeing the receipts can be replenished by crops sales if necessary.  Overall this means the funds that we send can be used year after year after year – providing an ongoing benefit to the families served!  What a Christmas gift for the poor people in Iringa!