Warehouse Receipts


Warehouse receipt financing is a form of asset-based lending where the stored (“warehoused”) products are used as collateral for credit. This lending mechanism is a useful way to improve access to credit in the agricultural sector. Producers receive needed cash against the warehouse receipt, which is issued upon delivery of the goods to the warehouse; as a consequence, producers no longer need to sell immediately upon harvest, when prices are typically low, and can delay sale until prices are more favorable. Improved performance of the agricultural sector has been shown to be essential in many countries as a way to stimulate economic growth and development.

An effective warehouse receipt system requires both a reliable network of the physical infrastructure – (i.e., modern warehouses) - and a supportive legal framework. Accordingly, out of concern over the lack of access to credit in agricultural sector, in 2012 the Inter-American Juridical Committee included the topic on its agenda and in 2016 it approved draft principles that would: a) promote a reliable system of warehouse receipt financing; b) compliment and strengthen other reform initiatives in secured lending; c) apply equally to both paper-based and electronic receipts; d) straddle differences between common law and civil law systems of warehouse receipts; and d) contribute towards ongoing efforts in the development of related international norms. The Committee has held in abeyance any further work on the topic, pending a decision on a joint project to develop a Model Law on Warehouse Receipts by the United Nations Commission on International Trade Law (UNCITRAL) and the International Institute for the Unification of Private Law (UNIDROIT). For details, see Inter-organizational Collaboration.