Design, simulation and feasibility of the innovative agricultural warehouse receipt system through dynamic...

Area of Science:

• Agricultural Economics
• Financial Systems Innovation
• Supply Chain Management

Background:

• Agricultural marketing faces challenges including price volatility and limited financial access for small-scale farmers.
• Existing systems often fail to align with diverse legal, institutional, and economic conditions.
• Enhancing agricultural mercantile exchanges requires efficient financial and marketing tools.

Purpose of the Study:

• To design, simulate, and assess the feasibility of an innovative warehouse receipt system (WRS) for the agricultural sector.
• To address marketing challenges and provide financial support to farmers.
• To improve price risk management and the functioning of agricultural markets.

Main Methods:

• A warehouse receipt system (WRS) was designed for maize in Iran, incorporating FAO guidelines and local regulations.
• A dynamic programming model was used for system simulation.
• An agent-based model assessed the system's feasibility and farmer adoption.

Main Results:

• An innovative WRS can be effectively designed with five key actors: farmers, buyers, banks, mercantile exchanges, and warehouses.
• Farmer adoption of the WRS is significantly influenced by loan interest rates, collateral valuation, price volatility, and warehouse costs.
• Simulation results indicated that specific parameter settings can achieve near-universal farmer participation.

Conclusions:

• The proposed WRS is a viable solution for enhancing agricultural marketing and financial inclusion.
• Optimizing key financial and operational parameters is crucial for successful WRS implementation and farmer adoption.
• The study provides a replicable model for designing and evaluating WRS in different agricultural contexts.