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Budd, Nicholas --- "Untying the Gordian knot: Farmers, banks, insurers, warehouse receipts, commodity exchanges, collateral managers and access to credit" [2015] ELECD 621; in Dahan, Frederique (ed), "Research Handbook on Secured Financing in Commercial Transactions" (Edward Elgar Publishing, 2015) 167

Book Title: Research Handbook on Secured Financing in Commercial Transactions

Editor(s): Dahan, Frederique

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781001837

Section: Chapter 6

Section Title: Untying the Gordian knot: Farmers, banks, insurers, warehouse receipts, commodity exchanges, collateral managers and access to credit

Author(s): Budd, Nicholas

Number of pages: 26

Abstract/Description:

During the past 25 years there have been many initiatives to encourage banks in emerging markets to extend finance to the agricultural sector, but few have achieved a satisfactory outcome. The chapter argues that isolated actions do not work and recommends a multi-tiered, targeted approach which would encompass working at all levels of the ecosystem – central bank; commodity exchanges, warehouses; using also a diversity of tools (such as financing leasing, security over growing crops, collateral management service); providing a government-subsidized multi-peril crop insurance programme. If bank liquidity and access to refinancing, price risk management, legal security, collateral management and minimal transaction cost are not addressed convincingly and if any element is missing or dealt with by half-measures, experience shows that the effort will either be fruitless or unsustainable over time.