Credit instruments to alleviate global food insecurity: focus on crop receipts

Abstract

Global institutions have been looking for tools to alleviate food insecurity for years. COVID-19 and the conflict in Ukraine have exacerbated the situation, necessitating the mobilization of additional financial resources. This article focuses on financing instruments that can alleviate food insecurity by promoting financing in the pre-harvest phase, particularly crop receipts. Crop receipts recently attracted attention from international financial institutions, responding to inquiries from domestic policymakers about tools to increase access to credit for farmers. Crop receipts legislation has been enacted in Brazil, Ukraine, and Serbia, and several States are considering the enactment of such legislation. This article analyses the interaction of crop receipts with secured transactions and warehouse receipts legislation as well as regulatory frameworks applicable to banking, commodity exchanges, and capital markets. Guidance for those States contemplating enactment of crop receipts legislation is necessary to produce coherent secured transactions and warehouse receipts regimes and to forestall any approaches that might thwart their modernization along the lines of existing and emerging international standards. This article sheds light on the aspects of crop receipts finance for which guidance should be provided. It proposes that such guidance be included in the Agricultural Legal Financing Guide, which has been approved by the Governing Council of the International Institute for Unification of Private Law for the 2023–5 Work Programme.