Agriculture constitutes the backbone of the Ethiopian economy; not only it attracts 90% of thernCounu-y's export earnings but it also employs 85% of the Counu-y's labor force. In spite of itsrnpromising potential, the agricultural marketing system is underdeveloped and it is still in itsrnu-aditional rudimentary order. Lack of rural access to finance is the fundamental problemrnhampering production, productivity and income of rural farm household. Financialrninstitutions consider lending to small farmers risky (due to farmers' lack of adequaterncollaterals) and costly (due to high u-ansaction costs). In this Thesis, WHR system isrnsuggested as an innovative mechanism that can rectify the marketing and finan cial problemsrnof the agricultural sector by facilitating the conversion of inventories of agriculture into arnreadily u-adable Device, commonly known as WHRs. The receipts ca n be used either asrncollateral to access credit or as channel for dealing with the underlying conunodities.rnGenerally, a well functioning system of WHRs provides higher prices, accurate weights andrnmeasures and credit to agricultural producers including smallholder farmers. I t is alsornadvantageous for lending institutions as it provides them secure & easily liquidated form ofrncollateral.rnDespite its half a century old legal rules governing the sys tem, Ethiopia has never been ablernto establish an effective WHR system and reap its benefit s. Among the various legal andrninstitutional bottlenecks capping the implementation of the system in E thiopia, lack of activernsupervisory/regulatory body, absence of secondary legislation supplementing the WHRrnSystem Proclamation and the National Bank of Ethiopia'S Bills Market Directives (which hasrninfluenced banks to divert to long term loans) are the major ones. There are also challengesrnassociated with the legal framework of the ECX warehousing business. In this Thesis, it isrnargued that besides creating conducive policy environment to the expansion of thernwarehousing indusu-y, building a uniform legal framework of WHRs system that is en forcedrnby a national regulatory body is crucial to tackle the existing challenges. Moreover, the corernactivities that should be performed by the government, lending institutions and otherrnstakeholders towards realizing the implementation of effective WHR system are outlined.rnFinally to highlight on the SU-ucture of the Thesis: the first chapter focuses on methodologyrnand the second chapter provides general background of WHR system in the world and inrnEthiopia. In the third Chapter the legal framework of Ethiopian WHR system is closelyrnanalyzed. The forth chapter is devoted to legal and practical aspects of collateralization ofrnWHRs. Finally, concluding remarks of the writer are presented together with somernrecommendations.