Agricultural capital market. Agriculture is a crucial sector in most economies, and it requires capital to keep it running smoothly. Capital markets have played an essential role in providing capital for the agricultural sector. An agricultural capital market refers to a platform or a system where farmers and agribusinesses can access various sources of funding to finance their operations.
Types of Agricultural Capital Market
There are several types of the agricultural capital market, and they include:
- Debt Capital Markets: This is the most common type of agricultural capital market. It involves farmers and agribusinesses borrowing funds from lenders such as banks, credit unions, and other financial institutions. The borrowed funds can be used to finance working capital, expansion projects, and other agricultural-related activities.
- Equity Capital Markets: This type of agricultural capital market involves farmers and agribusinesses selling ownership shares to investors in exchange for capital. The investors become partial owners of the agricultural enterprise and are entitled to a share of the profits.
- Commodity Markets: Commodity markets are platforms where agricultural producers can trade and sell their agricultural products. These markets provide farmers with an opportunity to secure a fair price for their products and reduce the risks associated with volatile market prices.
Major Players in the Agricultural Sector
- Farmers: Farmers are the backbone of the agricultural sector. They are responsible for producing crops and raising livestock that is sold to consumers.
- Agribusinesses: Agribusinesses are companies that operate in the agricultural sector. They include seed and fertilizer companies, food processing and packaging companies, and other agricultural-related industries.
- Government: Governments play a significant role in the agricultural sector. They provide subsidies and other forms of financial assistance to farmers and agribusinesses. They also regulate the sector to ensure that it operates in an ethical and sustainable manner.
Trends in the Agricultural Capital Market
- Technology: Technology is transforming the agricultural sector, and it is also impacting the agricultural capital market. There is increasing use of technology such as precision farming, drones, and artificial intelligence, which is improving agricultural production and reducing costs.
- Sustainability: Sustainability is becoming a significant concern in the agricultural sector. Consumers are demanding more sustainable and environmentally friendly agricultural practices, and investors are also looking for investments in sustainable agriculture.
- Impact Investing: Impact investing is becoming more popular in the agricultural sector. Investors are looking for opportunities to invest in projects that have a positive social and environmental impact, and agricultural investments are a perfect fit.
Agricultural capital markets are crucial in providing the necessary capital for the agricultural sector. The different types of capital markets available provide farmers and agribusinesses with a range of financing options. As the agricultural sector continues to evolve, so will the agricultural capital market. The trends in technology, sustainability, and impact investing are shaping the future of the agricultural capital market.
Definition: A capital market is a market for raising medium-term and long-term loans for Agric-business. In this market, medium and long-term loans are made available for investment.
They are institutions, structures and mechanisms whereby medium-term and long-term loans are pooled and made available to investors in Agric-business.
INSTITUTIONS INVOLVED IN THE CAPITAL MARKET
THE INSTITUTIONS INVOLVED IN THE CAPITAL MARKET ARE:
(i) Commercial banks
(ii) Mortgage banks
(iii) Nigerian Agricultural, Cooperative and Rural Development bank (NACRDB)
(iv) Insurance companies
(v) National Economic Reconstruction fund (NERFUND)
(vi) NIGERIAN Social Insurance Trust (NSITF)
(vii) Stock exchange
(viii) Quoted companies on the stock exchange
(ix) Merchants Banks
SOURCES OF FUNDS FOR THE CAPITAL MARKET
(i) Bonds: A bond is an amount of money which has to be given at a certain date or dates in future. The issue of bonds is a method of borrowing by most commercial farmers.
(ii) Issue of preference stock: The company choose this to raise capital. If a company have financial trouble, the buyers of share get special status. If profits are limited then owners will be paid the dividend after bondholders.
(iii) Shares: The capital of a limited company is divided into shares, which may be in units.
(iv) Debentures: These are loans of a long-term nature. They carry a fixed rate of interest.
(v) Selling of common stock: If the financial condition of the farming business is good then it can raise capital by issuing common stock. Banks assist companies in to do investments and issuing stock. Investors get interested if the company pays large dividends and offers a steady income. The value of shares increases if investors expect corporate earnings to rise.
(vi) Borrowing: Companies used to raise short-term capital by getting loans from banks or other sources.
ROLES OF CAPITAL MARKET
: Capital markets do play an important role in Agric-business. These roles or functions are as follows.
(i) Mobilisation of long-term funds for on-lending: It enables the long-term funds to be mobilized for the development of agric-business.
(ii) Reduction of over-reliance on money market: The capital market makes it possible for investors in agric-business not to over-relied on the money market for their funds.
(iii) Avenue for lending and borrowing: The capital market provides local opportunities for borrowing and lending for long-term purposes.
(iv) General running of the economy: The existence of the Capital market encourages the general public to participate in the running of the economy of the country.
(v) Challenging of funds to productive investment: The capital market ensures that funds can be mobilized and channelled to productive investment.
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WEED AND THEIR BOTANICAL NAMES
1. ENVIRONMENTAL FACTORS AFFECTING AGRICULTURAL PRODUCTION
3. 52. SOIL MICRO-ORGANISMS
4. ORGANIC MANURING
5. FARM YARD MANURE
6. HUMUGRAZING AND OVERGRAZING10. IRRIGATION AND DRAINAGES
8. CROP ROTATION
11. IRRIGATION SYSTEMS
12. ORGANIC MANURING
13. FARM YARD MANURE
16. CROP ROTATION