LCFE to trade on N5b forward contracts
Eko Rice, produced from the Lagos State-owned 32-metric tonnes per hour Imota Rice Mill in Ikorodu, is now available in the markets at N33,000 per 50kg bag.
The Eko Rice also made history as the first of such commodity to be listed and traded on a commodity exchange with its listing on the Lagos Commodities and Futures Exchange (LCFE).
The formal launch of N5 billion Eko Rice Forward Contract Programme by Governor Babajide Sanwo-Olu on the floor of the LCFE in Lagos marked a significant step in the state government’s efforts to promote agriculture and enhance food security in Lagos.
The forward contract, a joint initiative of the government-owned Lagos State Rice Company (LASRICO) and Commodities Tradenet Limited, is the first series of N30 billion Private Commodity Notes Issuance Programme facilitated by Lagos State Government to ensure undisrupted paddy supply, enhance quality management, transaction efficiency and transparency.
The forward contract for Eko Rice became the first to be listed and traded in Nigeria’s commodities exchange ecosystem. The private listing of the Lagos rice excited commodity brokers, farmers and investors in the commodities market, as first 5,000 contracts issued on the exchange floor were traded at the value of N195 million.
The offer for 50kg of Eko Rice had opened on June 13 at the rate of N33,000 per Note, with the commodity expected to be traded till Monday, June 26, 2023. Tenor of the Note is 60 days.
Sanwo-Olu said the Eko Rice Contract Programme was a game-changer aimed at making Lagos a hub for agricultural production and processing in the country.
He said rice is a regular staple consumed by over 80 per cent of Lagos population, noting that the forward contract was key part of the government’s food security plan to guarantee availability of the commodity at affordable price.
“The N5 billion Series of N30 billion Eko Rice Contracts Programme being launched today is part of our efforts to ensure a sustainable supply of rice paddy for the smooth running of Lagos Rice Mill in Imota. The exchange market is a public-private partnership programme that will provide a platform for farmers, processors, and traders to buy and sell rice contracts at a fair price.
“The programme will also provide a guarantee for the quality and quantity of rice produced, which will enhance the confidence of buyers and sellers in the market. Leveraging the Lagos Commodities and Futures Exchange is a critical component of our plan to create a transparent and efficient market for the trading of agricultural commodities and derivatives. The Exchange has the potential to transform the agriculture sector by providing a reliable and efficient market for farmers, processors, and traders,” Sanwo-Olu said.
He pointed out that in order to ensure that the supply chain is not disrupted, Sanwo-Olu said the state government embarked on the development of rice value chain through capacity building for farmers, and provision of inputs and infrastructure in rice production centres across Lagos.
He said that the government has scaled up local paddy production by 63.5 per cent, while creating over 2,620 direct and indirect jobs.
Sanwo-Olu added that the intervention had also stimulated economic activities and facilitated improved livelihood in rice producing communities.
He said the Lagos-owned Imota Rice Mill required 200,000 tonnes of paddy yearly, stressing that the commodities exchange would create a steady market for the 2.5 million bags of 50kg rice that would be turned out from the mill annually.
“Today’s bell ringing is to herald the listing of rice paddy contracts for the Lagos Rice Mill, Imota for open transactions. This highlights the opportunities available in rice processing and other value chains of the Lagos Agricultural sector. It will draw attention of local and foreign investors to the Lagos Rice Mill forwards contract, and project the role of the Capital Market in driving development in Lagos commodities ecosystem. We are committed to expanding the programme to cover other commodities, such as cassava, maize, and vegetables,” Sanwo-Olu said.
Managing Director, Lagos Commodities and Futures Exchange (LCFE), Mr. Akin Akeredolu-Ale, said rice was among the 13 crops approved by Securities and Exchange Commission (SEC) for trading at the commodities exchange market, stressing that the listing of Eko Rice was a watershed moment in the capital market.
Akeredolu-Ale said collaboration with the Lagos State Government would drive paddy supply to the Imota Rice Mill, integrate stakeholders in rice value chain across the country and standardise of head rice and paddy rice in Lagos.
“LCFE will provide an opportunity for investment in the rice value chain through the creation, onboarding and listing of commodities instruments for paddy aggregation and trading, while also providing opportunities for rice distributors and stakeholders to trade on the Exchange through capital market operators. There is no credit risk associated with the issuer of the Notes, as the underlying commodity assures return on investment,” Akeredolu-Ale said.
Chairman, Lagos Commodity and Futures Exchange (LCFE), Chief Onyenwechukwu Ezeagu, said the partnership with the Lagos government complemented the objectives of the Exchange in transforming the commodities market by redefining practice norms and catalysing economic growth in the country.
Commodity brokers said the encouraging performance recorded by Eko Rice at first trading in the commodities exchange was due to its well-cleaned grains and high-grade texture, which positioned the crop for fair competition with imported rice in the market.
Eko Rice is laboratory-tested to have less than 2 per cent impurity and 14 per cent moisture content.
The Governor was joined by his deputy, Dr. Obafemi Hamzat, and other top government functionaries at the opening bell ringing ceremony.
Johnvents Industries Limited, an agro-processing firm, became the first investor to procure 5,000 forward contracts worth N195 million at the Exchange.
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