when coordination and informal mechanisms to enforce contracts are unaffordable by the companies providing such credit high rates of loan nonrepayment have been witnessed as farmers engage in sideselling of the concerned commodities to other highbidding buyers at harvest instead of the company that has prefinanced the agricultural inputs delpeuch and vandeplas as a result the sustainability of the contacts is reduced related risk premiums rise and contract farming loses ground reliable warehouse receipts are important trading instruments allowing the transfer of ownership without physical delivery encouraging the use of warehouses for storage thus reducing postharvest losses which can be quite high at the smallholder level due to theft and spoilage and providing a means for promoting quality control and assuring grain quality