The ewr computer record is stored only on a computer system operated by a Provider. A Provider is a private-sector organization which is licensed by the U.S. Department of Agriculture to operate the electronic receipt computer system for a specific commodity. EWR, Inc. is a Provider for peanuts as well as for cotton and grain.
Associated with every ewr computer record in the Provider’s computer is an essential piece of information which identifies the party to which the receipt belongs. This party is called the electronic receipt’s Holder. The Holder of an ewr would be equivalent to the person who physically possesses or bears a paper receipt.
Holders can be brokers, shellers, growers, banks, buyers, sellers, USDA, buying points, or warehouses. Only warehouses can issue an electronic receipt on the Provider system. Typically the Provider requires each Holder to sign a contract before being allowed to use the Provider’s system. The contract outlines requires of both parties and the cost of the services of the Provider.
A Straightforward Example
This example assumes that the warehouse, grower, and sheller are separate entities. This example is primarily for explanatory purposes. In actuality electronic receipts may be handled by an individual in an entirely different manner.
The depositor of 25 tons of peanuts in a warehouse requests that the warehouse issue a receipt for the commodity stored at that facility. The peanut warehouse has a Holder ID on the EWR, Inc. Provider system and begins the process of issuing an electronic warehouse receipt to represent the 25 tons of peanuts. The warehouse creates on its own computer a data file to be sent to EWR, Inc. This file contains all of the data required for a legal receipt. The file layout has been specified in advance by EWR, Inc. The file must be in the format required in order to be processed.
Upon creation of the issuance data file, the warehouse transmits the file to EWR, Inc. through the Internet to the EWR Inc. Peanut FTP Site. An FTP site is used rather than a “www” site because the FTP site, in most instances, permits computer operators to more fully automate their transmission of files. (Please note that the www.ewrinc.com\peanut site does allow users to perform all ewr functions with respect to their electronic peanut receipts.) EWR Inc. gives the warehouse in advance the security information it needs in order to access the FTP site.
It should be noted that a single transmission file may contain more than one issuance data file. In other words, a warehouse may send to EWR, Inc. numerous receipt issuance data files in a single transmission.
Immediately upon receiving the file, EWR Inc. begins processing it. The file is checked to ensure that it is from a legitimate Holder which is a warehouse trying to issue a receipt. The file is checked to make sure it passes certain security checks. Edit checks ensure that all required data is in the file.
If any problem at all is encountered then the issuing warehouse is sent via computer communications an acknowledgment message stating that the file cannot be processed and why.
The warehouse must correct the error and resend the issuance data file.
If no problem is encountered then the receipt data file is stored on the Provider’s computer system. At this point a legal warehouse receipt is issued. The warehouse is recorded on the Provider’s computer as the first Holder. The warehouse is always recorded as the initial Holder although in many instances another party is made the Holder in just a few seconds. An acknowledgment message is sent to the issuing warehouse via computer communications to inform the warehouse that the receipt has been successfully issued.
Typically a grower will not want to become a Holder himself. Instead, he will want the warehouse to hold his receipt(s) and to act as his agent with respect to his receipts. The warehouse may want to have a written agency agreement with the grower. In any case, if the warehouse (or any party) is holding receipts on behalf of the grower, then that party needs to inform the grower of the receipt numbers when the electronic receipts are issued. The grower will need this information if he decides to request a CCC loan.
Upon instruction from the depositor, the warehouse (which is the current Holder of the receipt) begins to take action to make another party the Holder. In this example, assume the depositor is a grower who has informed the warehouse (n.b., this is done outside of the EWR system) that he wants to place his peanuts in the government loan. The warehouse needs to transfer Holdership of his receipt to USDA/CCC in order to accomplish this. The warehouse creates a transfer data file using its own computer. The transfer data file layout conforms with the specific file format provided by EWR, Inc.
Upon creation of the transfer data file, the warehouse transmits this file as it did before via computer communications to EWR’s FTP site on the Internet. Upon receiving the file EWR Inc. performs various security and edit checks as it did before to ensure that the file is acceptable. Note that the transmission could have contained multiple transfer data files at the discretion of the sending Holder.
If the file has any problem then it is not processed by EWR and no change in Holder occurs. Instead an acknowledgment error message is sent from EWR by computer communications to the warehouse to inform it that the file did not process. A corrected file will have to be created by the warehouse and sent again.
If the file is correct then EWR Inc. processes the file. In this example, the warehouse is removed as the Holder and is replaced by USDA/CCC which becomes the new Holder. (Please note that this is not the way USDA normally becomes the holder, but is only an example. USDA typically uses the “loanable” feature described later in this document.) An acknowledgment message is sent by the Provider to the warehouse via computer communications to announce the successful change in Holders. A file may also be sent to USDA/CCC acknowledging that it is now the Holder of this receipt. Other data from the receipt is sent to USDA in accordance with the Department’s requirements.
At this point USDA/CCC is the Holder and has access to all data regarding the receipt. When the grower goes to the county office to initiate the loan then all of the receipt data will be immediately available. The county office staff will ask the grower for the specific receipt numbers which he wants to place in the loan. Special software has been developed by USDA to quickly process the electronic warehouse receipt data and associated loans.
Continuing with this example, assume that after a short time has passed a sheller becomes the owner of the equity in the peanuts. The sheller wishes to redeem the loan. The sheller initiates loan redemption in accordance with USDA requirements. Note that the transfer of the equity and the initiation of the redemption are both outside the scope of the Provider’s ewr system.
The sheller initiates loan redemption. This is followed by USDA/CCC creating an instruction file which it sends to EWR, Inc. The file tells EWR to make the sheller the new Holder. The instruction is carried out. An acknowledgment file is sent to USDA/CCC in the appropriate manner. The sheller also receives an acknowledgment file from EWR which indicates that the sheller is now the Holder of the receipt. A data file accompanies the acknowledgment and this file contains all of the information in the receipt record so that the sheller can download the data into its computer system. Both the acknowledgment and the data files are in formats mandated by EWR, Inc.
At some point the sheller will want to ship the peanuts out of the warehouse. The sheller creates in its computer a transfer data file instructing EWR Inc. to make the warehouse the new Holder of this receipt. The transfer data file contains data elements in a layout specified by EWR Inc. Once created, the file is transmitted to EWR Inc.’s FTP site on the Internet via computer communications. After receiving the file, EWR Inc. performs edit and security checks. If the file has a problem of any kind then EWR send an acknowledgment error message to the sender and does not process the file. If the file is correct then EWR Inc. processes it. The warehouse is made the Holder, replacing the sheller.
Shipping instructions are sent by the sheller to the warehouse. This can be done outside the electronic receipt system (e.g., fax).
After the physical commodity (peanuts) have left storage, the warehouse must cancel the receipt it issued. The warehouse creates on its own computer a data file to be sent to EWR, Inc. This file contains all of the data required to cancel a legal receipt. The file layout has been specified in advance by EWR, Inc. The file must be in the format required in order to be processed. The warehouse can only cancel a receipt which it has issued. Once created, the file is transmitted to EWR Inc.’s FTP site on the Internet via computer communications. After receiving the file, EWR Inc. performs edit and security checks. If the file has a problem of any kind then EWR send an acknowledgment error message to the sender and does not process the file. If the file is correct then EWR Inc. processes it. The receipt is cancelled. An acknowledgment of the cancellation is sent to the warehouse via computer communications.
In the preceding example simplifying assumptions have been made. In practical application some of the realities will differ from the example.
In many cases the warehouse and the sheller will be the same entity. This poses no particular problem. In the example, this would eliminate the need for the sheller to transfer holdership to the warehouse for receipt cancellation.
Also, the electronic receipt system will allow, in certain cases, several tasks to be handled by a single instruction or transaction. For example, a single instruction file can be sent to EWR Inc. which tells the Provider to issue a receipt and to make USDA/CCC the Holder so that the receipt can be placed in the government loan. In the simple example used earlier, two instruction files had to be sent to EWR to accomplish these two tasks.
One other special feature of the EWR system regarding loans is the “loanable” indicator. When a warehouse issues a receipt the receipt can be marked by the warehouse as “loanable.” In this case the warehouse remains the Holder. However, if CCC requests the receipt (after the grower comes into a county office seeking a loan) then the holdership is transferred so that CCC becomes the Holder. Rarely (if ever) will the grower want to transfer holdership directly to CCC. Instead, the grower will almost always want to have his receipts marked as “loanable.” This is the easiest procedure since it allows the grower to place the receipts in the peanut loan if he wants to do so but does not change holdership to CCC until the grower specifically requests a loan.
Information regarding the loan will be sent to the warehouse which they should find helpful. When the grower requests a loan, USDA will notify EWR of this request and EWR will send notification to the warehouse (so it will know when the grower has made the request). Also, when the loan is approved and a loan number is assigned, CCC will pass that information to EWR and EWR will forward it to the warehouse (so that it will know what receipts are associated with what loan number).
Finally, in addition to high-speed FTP communications, the peanut industry has access to the www.ewrpeanut.com web site. From this site a Holder can transact any transfer or cancellation of a receipt that the Holder could do via FTP. The site also offers a variety of reports and other information to the Holder.
The basic functions of the electronic peanut warehouse receipt system include: issue receipts; maintain (edit) receipts (warehouse only); transfer holdership; transfer to CCC for the loan; and cancel receipt.