The Role of a Warehouse Receipt System in an Agricultural Commodity Exchange. A Case Study of the Malawian Agricultural Commodity Exchange

In many Western countries and elsewhere, agriculture commodity exchanges have been in existence for centuries. However, Africa did not follow the same route for various reasons. It was only in the mid-1990’s that farmers and stakeholders again started to ask, how should we go about to market our products, what are the alternatives? Western models, with commodity exchanges as a possible solution, were revisited. Malawi, had a history of government controlled marketing followed by (partial) deregulation in 2006. The Agricultural Commodity Exchange for Africa (ACE) was established in 2005, survived with the help of donor funds and continued to grow slowly. It has now reached a point where it is on the verge of commercially implementing and rolling out a Warehouse Receipt System (WRS). This has brought forward questions such as what, is exactly is meant by a WRS, why is it important, what are the components of a successful WRS, and how does a WRS fit into the bigger picture of a commodity exchange? The study concludes that through the WRS, ACE will now be able to guarantee its trades since the product is already deposited in a warehouse and backed by an ACE WR. This will greatly enhance its image. The components that make up a WRS are discussed. ACE would struggle to grow and function properly without a successful WRS. If ACE could succeed, it will serve as a case study for other countries and exchanges in the region to learn from.