CCF (Collateralized commodity Financing)
CCF is a short-term credit secured against stored commodity as a collateral. Collateralized Commodity Financing (CCF) is a proven instrument for allowing farmers, traders, processors, and exporters to obtain finance secured by agricultural commodities deposited in a warehouse/ storage. This product have two option to meet the needs of customers. The options are listed below.
1. The commodity can be stored in a warehouse operators’ store,
The customer will bring a warehouse receipt issued by the warehouse operator. This receipt will have all the necessary information about the commodity.
2. The commodity can stored in the borrower’s warehouse
In this case, the bank will hire a collateral manager that checks and follows up on the commodity in the borrower’s storage.
Type of CCF facility
• One time CCF loan facility: – Is a non-renewable loan agreement where the cash will be advanced against the Warehouse Receipt or collateral management agreement for single time only.
• Revolving CCF Loan Facility: Is a type CCF Loan facility where a limit is set and loan advancement will be made to that pre-set limit upon presentation of valid Warehouse Receipt or collateral management agreement
Benefit for stakeholders
• Provide information about the market,
• The attractive and affordable lending rate,
• Regulatory organs will be hired to monitor and follow up on the commodities in the warehouse,
• Advisory and training service will be offered
Benefits for farmers
• Creates access to credit for farmers
• Allow farmers to store their goods and avert distress sale of their surplus during the harvest season, when prices are typically lowest,
• Offers an opportunity to change prevailing warehouse and storage practices; especially for farmers with surplus production, thus minimize post-harvest loss
• Improve saving trend for farmers
• It allows farmers to carry out profitable investments
Benefit for processors
• Creates access to credit with commodities in hand
• Provides access to additional working capital for agro-processors, allowing them to procure higher volumes of produce from farmers over the course of the season,
• Efficient raw material supply for processors.
Benefit for Cooperatives
• Easy access to a loan ,
• Increased access to working capital and aggregation capacity of cooperatives
• Provides access to additional working capital for cooperatives allowing them to procure higher volumes of produce from farmers over the course of the season,
Benefit for traders
• Creates access to credit with commodities in hand
• Increased access to working capital and aggregation capacity of traders