CHAPTER 224
AGRICULTURAL CREDITS ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

PART II
THE WAREHOUSE LICENSING AUTHORITY

   3.   Establishment of Authority

   4.   Seal of Authority

   5.   Functions of Authority

   6.   Authorised agencies

   7.   Board of Authority

   8.   Functions of Board

   9.   Director and other staff

   10.   Inspectors

PART III
AGRICULTURAL CHARGES

   11.   Agricultural charges on farming stock and assets

   12.   Effect of fixed charge

   13.   Effect of floating charge

   14.   Notice of agricultural charge

   15.   Supplementary provisions as to agricultural charges

   16.   Registration of agricultural charges

   17.   Restriction on publication of agricultural charges

   18.   Fraud

PART IV
CONTRACTS FOR ADVANCES ON INPUTS AND OTHER ITEMS

   19.   Validity of contracts

   20.   Failure to make full disclosure of inputs, items, etc

PART V
REGISTRATION OF WAREHOUSE

   21.   Application for registration of warehouse

   22.   Bond

   23.   Designation as certified and bonded warehouse

   24.   Insurance

   25.   Issue of certificate

   26.   Validity of certificate

   27.   Display of certificate

   28.   Variation of certificate

   29.   Surrender of certificate

   30.   Transfer of certificate

   31.   Renewal of certificate

   32.   Suspension or cancellation of certificate

   33.   Re-registration

   34.   Appeals

   35.   Register

   36.   Closure of warehouse

PART VI
WAREHOUSE RECEIPTS

   37.   Issuance of warehouse receipt

   38.   Rights conferred by warehouse receipt

   39.   Disclosure by depositor

   40.   Deposit of agricultural commodities

   41.   Agricultural commodities deposited for purposes other than storage

   42.   Form of warehouse receipt

   43.   Negotiable warehouse receipt

   44.   Non-negotiable warehouse receipt

   45.   Altered warehouse receipts

   46.   Rights of purchaser of altered receipt against warehouse operator

   47.   Lost or missing warehouse receipt book

   48.   Duplicate warehouse receipt

PART VII
RIGHTS AND OBLIGATIONS OF WAREHOUSE OPERATORS

   49.   Right of warehouse operator to sell or pledge warehouse receipt

   50.   Obligations not affected by irregularities in warehouse receipt

   51.   Obligation of warehouse operator to deliver agricultural commodities

   52.   Obligation to deliver in accordance with demand of depositor

   53.   Justification for delivery of agricultural commodities

   54.   Liability for mis-delivery

   55.   Exception to obligation to deliver

   56.   Liability for failure to cancel warehouse receipt after full delivery

   57.   Liability for failure to cancel or mark warehouse receipt after partial delivery

   58.   Liability after loss, theft or destruction of warehouse receipt

   59.   Delivery to persons with valid titles or right

   60.   Ascertaining valid titles to agricultural commodities

   61.   Liability for mis-described agricultural commodities

   62.   Warehouse operator’s duty of care

   63.   Duty to keep agricultural commodities separately

   64.   Commingling of fungibles

   65.   Warehouse operator’s right to lien

   66.   Enforcement of lien

   67.   Loss of lien

   68.   Statement of charges under lien

   69.   Refusal to deliver agricultural commodities

   70.   Warehouse operator’s lien does not preclude other remedies

   71.   Methods of enforcing lien

   72.   Perishable and hazardous agricultural commodities

   73.   Termination of storage at warehouse operator’s option

PART VIII
NEGOTIATION AND TRANSFER OF WAREHOUSE RECEIPTS

   74.   Negotiating warehouse receipt

   75.   Negotiating by endorsement

   76.   Effect of endorsement to non-negotiable receipt

   77.   Persons capable of negotiating warehouse receipt

   78.   Rights acquired after negotiation of warehouse receipt

   79.   Rights acquired in absence of negotiation

   80.   Rights of transfer of warehouse receipt

   81.   Rights and obligations of transferor and transferees of negotiable warehouse receipts

   82.   Warranties on negotiation of warehouse receipt

PART IX
OFFENCES AND PENALTIES

   83.   Issues of receipt for agricultural commodities not received

   84.   Issue of warehouse receipt containing false statement

   85.   Issue of unmarked duplicate receipt

   86.   Issue of receipt for warehouse operators commodities

   87.   Delivery of goods without obtaining negotiable warehouse receipt

   88.   Negotiation of receipt for mortgaged agricultural commodities

   89.   General penalty

PART X
GENERAL PROVISIONS

   90.   Arbitration Act 19 of 2000

   91.   Offences by body corporate or unincorporate body

   92.   Regulations

   93.   Repeal of Act 23 of 1995

   94.   Savings

      SCHEDULE

AN ACT

to establish the Warehouse Licensing Authority and provide for its functions and powers; facilitate the borrowing of money on the security of charges created on farming stock and other agricultural assets; provide for the registration of charges; provide for the certification of warehouses; provide for the issuance and negotiation of warehouse receipts and the rights conferred by warehouse receipts; provide for the rights and obligations of warehouse operators; repeal and replace the Agricultural Credits Act, 1995; and provide for matters connected with, or incidental to, the foregoing.

[19th November, 2010]

Act 35 of 2010.

PART I
PRELIMINARY

1.   Short title

This Act may be cited as the Agricultural Credits.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

“additional assets” means any tangible assets, excluding land and warehouse receipts, whether negotiable or non-negotiable, that belong to a farmer, trader or related business, relating directly or indirectly to agricultural production, processing or trade, all accounts receivable, chattel paper and promissory notes, and includes savings accounts on deposit with any bank, credit union, savings institution or other similar organisation;

“agricultural charge” means a charge, lien or assignment created under section 11;

“agricultural commodity” means anything derived directly or indirectly from cultivation;

“approved agency” means any credit reference agency approved by the Board to supply information on the credit risk profile of any person for the purposes of this Act, and includes the authorised agency or any other agency approved under any written law to provide such information;

“authorised agency” means any person or institution designated by the Minister to carry out the functions of the Authority;

“Authority” means the Warehouse Licensing Authority established under section 3;

“bailor” means the owner of the agricultural commodities who, directly or through their nominee, delivers goods to a warehouse operator for the purpose of storage in their name or the nominee’s name;

“Board” means the Board of the Authority established under section 7;

“Chairperson” means the person appointed as Chairperson of the Board under section 7;

“commingle” means the binning and storage of agricultural commodities by class, under circumstances other than identity preserved;

“conditioning” means the drying or cleaning of agricultural commodities;

“cultivation” means crop production, animal husbandry, game ranching, aquaculture, horticulture or forestry;

“delivery” means the voluntary physical transfer of agricultural commodities from one person to another;

“depositor” means a person who deposits agricultural commodities in a warehouse for storage, handling, shipment or processing, or who is the owner or holder of a warehouse receipt, or is otherwise entitled to possession of the agricultural commodities;

“document of title” includes a negotiable and non-negotiable warehouse receipt or any other document which is issued in the regular course of a warehouse operators business, and which proves that the possessor is entitled to receive, hold and dispose of the agricultural commodities that it covers;

“electronic warehouse receipt” means a warehouse receipt stored in electronic form;

“farmer” means any person who, as owner or tenant of land, uses such land for cultivation, whether for profit or subsistence;

“farming stock” means all agricultural commodities, excluding agricultural commodities which are the subject of a negotiable or non-negotiable warehouse receipt, whether future growing or severed from the land, and after severance whether subjected to any treatment or manufacture, and includes—

      (a)   livestock, poultry and bees, and the produce and progeny thereof;

      (b)   wild animals in captivity;

      (c)   fish stock;

      (d)   timber, both standing or cut;

      (e)   seed and manure;

      (f)   fertiliser, insecticide, oil and fuel;

      (g)   agricultural vehicles, trucks and truck spares, machinery and other plant; and

      (h)   any agricultural fixture that a tenant, or any person legally occupying land may, by law, be authorised to remove;

“fungible agricultural commodities” means agricultural commodities of which any unit is, from its nature or by mercantile custom, treated as equivalent of any other unit;

“holder” means a person in whose favour an agricultural charge is created, and includes an executor or administrator and an assignee of that person;

“identity preserved” means the handling of an agricultural commodity in such a manner that guarantees the return of the actual quantity and quality of the agricultural commodity to the depositor;

"inspector" means a person appointed as such under section 10;

“insolvent” means—

      (a)   an excess of liabilities over assets; or

      (b)   the inability of a warehouse operator to meet the

warehouse operator’s financial obligations as they are due, and “insolvency” shall be construed accordingly;

“negotiable receipt” means a warehouse receipt which states that the agricultural commodities received will be delivered to the bearer or to the order of a named person;

“non-negotiable receipt” means a warehouse receipt issued to the bearer or to the order of a specified person;

“other agricultural assets” means any right of a tenant, including any right to compensation for improvements;

“producer” means an owner, tenant or operator of land who has an interest in and receives all, or any part of, the proceeds from the sale of agricultural commodities or farming stock produced on the land;

“register” means—

      (a)   in relation to Part III, the register of agricultural charges; and

      (b)   in relation to Part V, the register of registered warehouses;

“Registrar” means the person appointed as Registrar under the Lands and Deeds Registry Act;

“related business” means an individual, a company, a cooperative, a partnership, an association and any group of persons acting in concert, whether or not incorporated, who or which, as the case may be, gives loans to farmers for the purchase of inputs or other items required for cultivation;

“trader” means any person who, as a broker, dealer or otherwise, acquires any agricultural commodity from a farmer or any other person, through purchase or otherwise, for the purpose of re-sale or processing;

“Vice-Chairperson” means the person appointed as Vice-Chairperson of the Board under section 7;

"warehouse” means any building, structure or enclosure in which agricultural commodities are or may be stored and through which agricultural commodities are or may be handled or shipped, and includes all facilities used in connection with the operation of the warehouse;

“warehouse operator” means any person who owns, controls, operates or manages a warehouse; and

“warehouse receipt” means a receipt relating to agricultural commodities, whether negotiable or non-negotiable, issued under this Act.

   (2) In this Act, a person shall be taken to give value for any right if the person acquires it—

      (a)   in return for a binding commitment to extend credit for the extension of immediately available credit, whether or not drawn;

      (b)   as security for, or in total or partial satisfaction of, a pre-existing claim;

      (c)   by accepting delivery under a pre-existing contract for purchase; or

      (d)   generally, in return for any consideration sufficient to support a simple contract.

PART II
THE WAREHOUSE LICENSING AUTHORITY

3.   Establishment of Authority

   (1) There is hereby established the Warehouse Licensing Authority which shall be a body corporate with perpetual succession and a common seal, capable of suing and being sued in its corporate name, and with power, subject to the provisions of this Act, to do all such things as a body corporate may, by law, do or perform.

   (2) The provisions of the State Proceedings Act shall apply to civil proceedings by, or against, the Authority as if, for a reference to the State there were substituted a reference to the Authority.

   (3) The provisions of the Schedule apply to the Authority.

4.   Seal of Authority

   (1) The seal of the Authority shall be such device as may be determined by the Board and shall be kept by the Director.

   (2) The affixing of the seal shall be authenticated by the Director or any other person authorised in that behalf by a resolution of the Board.

   (3) Any contract or instrument which, if entered into or executed by a person not being a body corporate, would not require to be under seal, may be entered into or executed without seal on behalf of the Authority by the Director or any other person generally or specifically authorised in that behalf by the Authority.

   (4) Any document purporting to be under the seal of the Authority or issued on behalf of the Authority shall be received in evidence and shall be deemed to be so executed or issued, as the case may be, without further proof, unless the contrary is proved.

5.   Functions of Authority

   (1) The functions of the Authority are to—

      (a)   certify warehouses;

      (b)   approve negotiable warehouse receipt books; and

      (c)   perform any other function incidental or conducive to the carrying out of its functions under this Act or any other law.

   (2) The Authority may, for the purpose of carrying out its functions under this Act—

      (a)   investigate the storage, warehousing, classification, weighing and certification of agricultural commodities;

      (b)   inspect any warehouse or cause it to be inspected for purposes of this Act;

      (c)   determine whether warehouses for which certificates are applied for, or have been issued under this Act are suitable for the proper storage of any agricultural commodities;

      (d)   classify warehouses according to their ownership, location, surroundings, capacity, conditions and other qualities and according to the type of certificate issued or to be issued under this Act;

      (e)   determine the duties of the warehouse operators with respect to their care of, and responsibility for, the agricultural commodities stored;

      (f)   formulate guidelines and standards for the proper storage of the agricultural commodities;

      (g)   suspend or revoke any certificate for any contravention of, or failure to comply with, any provision of this Act or condition of the certificate;

      (h)   charge, assess and collect fees for the examination or inspection of a warehouse and for the issue of certificates;

      (i)   examine the books, records, documents and accounts relating to warehouses;

      (j)   close a warehouse which is operated without a valid certificate or contrary to the provisions of this Act; and

      (k)   carry out any other function incidental or conducive to the carrying out of its functions under this Act.

6.    Authorised agencies

   (1) The Minister may, by statutory instrument, appoint an authorised agency to perform such functions of the Authority as the Minister may specify.

   (2) The Minister may, where an authorised agency fails to comply with the terms and conditions of its appointment, suspend or revoke the appointment of that authorised agency, after giving that authorised agency twenty-one days’ notice to that effect and an opportunity to be heard.

   (3) The suspension or revocation of the appointment of an authorised agency may be in addition to any other penalty to which the authorised agency may be liable under this Act.

7.   Board of Authority

      (l)   There is hereby constituted a Board of the Authority which shall consist of the following part-time members appointed by the Minister—

      (a)   a representative of the Ministry responsible for agriculture;

      (b)   a representative of the Ministry responsible for trade;

      (c)   a representative of the Ministry responsible for livestock;

      (d)   a representative of the Attorney General;

      (e)   one representative of the clearing and forwarding agencies;

      (f)   one representative of the Bankers Association of Zambia;

      (g)   one representative of a small scale farmers organisation;

      (h)    one representative from the Zambia National Farmers’ Union; and;

      (i)   one representative of the insurance industry;

      (j)   one representative of the Zambia Association of Chambers of Commerce and Industry; and

      (k)   two other persons appointed by the Minister.

   (2) The Chairperson and the Vice-Chairperson of the Board shall be appointed by the Minister from amongst the members of the Board.

   (3) A person shall not be appointed as a member of the Board if that person—

      (a)   is not a citizen of Zambia;

      (b)   is a declared insolvent or bankrupt;

      (c)   is declared to be of unsound mind; or

      (d)   is convicted of an offence under this Act or any written law and been sentenced therefor to imprisonment for a period exceeding six months without the option of a fine.

   (4) A member shall hold office for a period of three years and may be appointed for one further period of three years.

   (5) A member may resign upon giving one month’s notice in writing to the Minister.

   (6) The office of a member shall become vacant—

      (a)   if the member is absent, without reasonable excuse from three consecutive meetings of the Board of which the member has had notice;

      (b)   if the member is adjudged bankrupt;

      (c)   if the member is convicted of an offence under this Act or any other written law and sentenced therefor to imprisonment for a period exceeding six months without the option of a fine;

      (d)   if the member is declared to be of unsound mind; or

      (e)   upon the member’s death.

   (7) The provisions of the Schedule apply to the Board.

8.   Functions of Board

Subject to the provisions of this Act, the functions of the Board are to—

      (a)   carry out the functions of the Authority;

      (b)   cause the operations of warehouse operators to be examined, including auditing the agricultural commodities, books, documents and records relating to the warehouse so as to determine whether the interests of the producers, shippers and receivers of agricultural commodities and the holders of warehouse receipts are adequately protected and safeguarded;

      (c)   formulate standards for agricultural commodities stored in warehouses certified under this Act;

      (d)   determine the rules relating to the certification, weighing, classification and grading of agricultural commodities stored in warehouses certified under this Act;

      (e)   take such action, or issue such orders, as are necessary to prevent any fraud by, or discrimination against, depositors of agricultural commodities in warehouses; and

      (f)   perform such other functions as may be conferred or imposed on the Board under this Act or any other law.

9.   Director and other staff

   (1) The Board shall appoint a Director on such terms and conditions as the Board may determine.

   (2) The Director shall be the chief executive officer of the Authority and shall be responsible, under the direction of the Board, for the day-to-day administration of the Authority.

   (3)The Director shall be an ex-officio member of the Board.

   (4) The Board may appoint, on such terms and conditions as it may determine, such other staff as it considers necessary for the performance of the Authority’s functions under this Act.

10.   Inspectors

   (1) The Board may appoint any suitable person to be an inspector for the purposes of ensuring compliance with this Act, on such terms and conditions as the Board may determine.

   (2) The Board shall provide an inspector with an identity card, in the prescribed form, which shall be prima facie evidence of the inspector’s appointment as such.

   (3) An inspector shall, in performing any function under this Act.

      (a)   be in possession of the identity card referred to under sub-section (2); and

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