The Role of the Warehouse Receipt System in Enhancing Small-Scale Farmer Livelihoods in Developing Countries: A Case Study of Indonesia’s Warehouse Receipt System

Abstract

The objective of this thesis was to studythe role of the WRS in the agricultural sector and smallholder livelihoods. A further aim was to discuss the importance of improving the agricultural performanceand rural farmer livelihoods through developing WRS that is accessible to farmers in Indonesia. The study analysed whether this policy scheme could overcome the problems faced by farmers and improve the performance of the agricultural marketing system, and has identified several conditions required to develop a more advanced WRS practice in Indonesia. The findings show thata developing countrywith considerable agricultural potential in which the majority of agricultural actors are small-scale farmers,Indonesia should maintain the development of the agricultural industry, focusing more on the smallholder farmers. However, it has been recognised that in many rural areas, farmers face various challenges during the post-harvest period, especially in the market value chain. Initiation of the WRS will deliver advantages such as increasing farmers’ incomes, improving agricultural productivity and enhancing the agricultural marketing system in rural areas. This mechanism will help farmers to avoid losses during the harvest season through extending the sales period of the crops and to gain profits from price variations. Additionally,it can provide access to short-term financing from financial institutions by collateralising warehouse receipts. The system also providesa mechanism that facilitates smallholders’ participation further down in the markets. Clearly, the policy is a sustainable scheme in the agricultural sector that could increase agricultural productivity, ensure the availability of goods with good quality and provide financial access for smallholders.