Inventory Credit: Approach to Developing Agricultural Markets

After the liberalization of agricultural marketing systems, private traders have taken over the marketing functions of government bodies, but frequently do not have ready access to finance for purchasing and storing the produce. Inventory credit offers one way of overcoming this problem. This paper examines requirements for successful inventory credit, drawing extensively on case studies from Ghana, India, Mali and the Philippines. Legal issues are discussed in detail. The report cautions against targeting particular uses and stresses that transactions should be profitable to both the lender and borrower.