Where Western banks would use land to guarantee such loans, the Romanian system has so far excluded farmers from posting land as collateral. The result is a problem shared by farmers from Russia to the Balkans and the Baltics. Farmers must either find a source for a scarce subsidized loan or else barter away large parts of future harvests. Barter deals are almost always disadvantageous for farmers, and their lost profits keep them from investing in new equipment to improve future harvests. Davis says governments can help in the short term by offering subsidized loans to small farmers or at least loans at reasonable market rates.
Warehouse receipts are one of the most effective tools Western farmers have to market their grain.
They allow farmers to transform their harvests into legal tender by placing their grain in a bonded warehouse. In return, the farmer gets a certificate showing the amount and quality of their grain. Western banks recognize the receipts as collateral for loans. That allows farmers to continue work toward their next crop while waiting for the best market price for their last harvest. The Romanian government is working on plans to introduce farm loans based on grain receipts.