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.
- 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.
- 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