11.06.2013

The warehouse operator is legally liable to make good any loss of value of the deposited commodity other than that resulting from price changes. The operator’s liability includes loss arising from deterioration in the quality of the commodity (e.g. maize grains growing mouldy and therefore losing value). Theft or damage by fire etc. may also cause losses. In paying the depositor for the loss of value, the warehouse operator is entitled to and can deduct any outstanding storage costs owed by the depositor.

Under the WRS it is possible not only to trade by transferring the receipt but also for the depositor to pledge the stored commodity as collateral for a loan. Usually, smallholder farmers and small-scale traders do not own assets which banks and other formal lenders accept as collateral. Hence, a warehouse receipt can be an important means of borrowing. Large-scale enterprises, such as processors and exporters, can similarly benefit when they need to stockpile sizeable volumes of produce (e.g.