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NSE: Agric Sector Market Capitalisation Hits N103bn



Agriculture sector on the Nigerian Stock Exchange market capitalization stood at N103.017 billion as at the end of the nine month ended September 30, 2019.

The sector represents 0.39 per cent of the total NSE market capitalization, which is N26.288 trillion as at the period under review. There are five companies listed on the Agriculture sector on the official list of NSE, they are; FTN Cocoa Processors, Okomu Oil, Presco, Ellah Lakes and Livestocks.

Okomu Oil Palm and Presco Plc are the two dominant stocks in the agriculture sector. With market capitalisation of about N94.767 billion, the two stocks account for 91.99 per cent of total market capitalisation of the five stocks listed under the agriculture sector. This is due to their proven track record of delivering revenue growth and rewarding shareholders.

The capital market performs many roles that are critical for the growth and development of an economy and with Agriculture being the main point of national transformation agenda, few companies in the sector are listed on the NSE.  Analysts are of the view that agriculture is an important sector of the economy and one of the real sectors whose growth has multiplier effects on the economy, saying that the sector needs long term funding and can be gotten from the market. They noted that a vibrant Commodity Exchange will help in boosting listed agricultural companies revenue.

Speaking to LEADERSHIP, head, Securities Dealing Desk, Golden Securities Limited, Azeez Bello said that listed companies in the Agricultural sector will benefit from patronizing an organized commodities through improved market access for their outputs as the Commodity exchange trading platforms will facilitate increase in demand and supply.

He stated that the exchanges will also address and significantly mitigate the impact of a couple of production, financial and operational risk that may face the companies.

Bello said that “Also, companies in the consumer as well as food and beverages sub-sector will also benefit from accessing the commodity as their needs for production inputs (Agric raw materials) can be easily accessed from demands on the exchanges with assurance that quality and quantity will be accessible on a just in time basis for their production lines.

“İn addition, the commodity exchanges will be providing hedging tools to help the company avoid the negative impact price risk on their production inputs.” Recently, at a Roundtable on Nigerian Commodity Trading Ecosystem held by the Securities and Exchange Commission (SEC), in Lagos, the Vice President, Yemi Osinbajo said the Commodity Trading Ecosystem is of paramount interest because Nigeria has an abundance of natural resources and accordingly a comparative advantage in agriculture, solid minerals and oil and gas, hence emphasis in the immediate term is the agricultural sector.

Represented by Special Adviser to the President on Economic Matters, Dr. Yemi Dipeolu said the federal government attached great importance to an active and vibrant capital market which will contribute to national growth and development.

He said in order to achieve this objective, the capital market had to operate at an optimum level, which is why the implementation of the 10-year Capital Market Master Plan remains a key priority.

According to the vice president, agriculture occupies a pride of place in federal government policy, as stated on numerous occasions by the president and as articulated in the Economic Recovery and Growth Plan.

The importance of agriculture was underscored during the last recession as its growth then of about three to four percent prevented a steeper decline. Agriculture is also important for food security and as a means of generating a quick production response.

“The agricultural sector is also important for job creation and employment and for producing the raw materials that go into agro-processing. Indeed, the subsisting Agriculture Promotion Policy specifically aims to ‘integrate agricultural commodity value chains into the broader supply chain of Nigerian and global industry,” he said.

Osinbajo added that a vibrant commodity trading ecosystem is, therefore, essential to underpin agricultural transformation in Nigeria as organising production in the agricultural sector would ensure that every part of the value chain contributes to its growth.

Analysts at United Capital Plc in their report on Nigeria’s Agricultural sector said that “Going by the recently published first quarter, 2019 GDP report, Agriculture sector recorded its highest growth rate in the last four quarters, increasing by 3.17 per cent year-on-year as against the average growth rate of 2.14 per cent over the last four quarters.

The sustained improvement in the sector can be tied to the resultant effect of several support facilities as well as other efforts by the current administration to resolve the crisis between herders and farmers.”

However, they said that the major challenges facing the sector relates to protracted failure to harness the potential inherent in the sector even after the recent issues have been fully resolved, saying that a major impediment to growth in the sector is the huge infrastructure gap and logistics issues, which makes local production less competitive.