Constraints on The Integration and Adoption of Licensed Warehousing System in Türkiye’s Agricultural Markets

Abstract

The aim of this study is to identify the reasons why the licensed warehousing system, promising the convergence of agricultural markets with financial markets and expediting the transition to commodity exchanges and derivative markets, has not achieved the expected success in Türkiye. To achieve this goal, the study focuses on the constraints hindering the integration of the licensed warehousing system into agricultural markets and its adoption by producers. Numerous studies in the literature highlight the significant advantages of the licensed warehousing system for producers, industrialists, traders, and both agricultural and financial markets. It is deemed important to identify factors hindering the adoption of such an advantageous system. The research reveals that the insufficient response from producers to the licensed warehousing system in Türkiye is attributed to similar reasons found in other developing countries. According to the research findings, the most significant constraint in the adoption of the system is insufficient licensed warehouse capacity, structural problems of agriculture and the lack of sufficient incentives to attract small-scale producers. Given that agricultural production in Türkiye and many other developing countries is predominantly carried out on small family farms, without developing policies and motivational tools to encourage the participation of these small-scale family farms, it seems unlikely for the system to serve its purpose.