How commodity exports add dynamism to agriculture in Africa

In 2021 the global economy was marked by an exacerbation of market supply difficulties, in line with the persistent impact of the Covid-19 pandemic. In this context, crude oil prices on international markets jumped by 49.8% in one year in US dollar terms. Over the same period, agricultural producer prices increased by 17.6% compared to 2020. For the main commodities exported by UEMOA countries, prices also rose over the whole of 2021, by 60.6% for coffee, 41.8% for cotton and 31.6% for rubber.

New Groupings

The agriculture sector of the Bourse Régionale des Valeurs Mobilières (BRVM) consists of five companies grouped under Ivorian law. These companies include palm oil producer Palmci, rubber producer Société Africaine de Plantations d’Hévéas (SAPH) and cane sugar producer Sucrivoire, which are subsidiaries of Sifca Group; palm oil and rubber producer SOGB, which is a subsidiary of the Bolloré Group; and shredded coconut producer Société Ivoirienne de Coco Râpé (SICOR). The main products marketed by the issuers of securities in the agriculture sector were positively impacted throughout 2021 by a relative increase in the prices of agricultural raw materials at the international level. The top performer, rubber, witnessed a robust rise of 31.6%, while palm oil saw an increase of 12%.

By capitalising on favourable economic and price conditions over the first nine months of 2021, SAPH, Palmci and SOGB recorded improved profitability. More precisely, SOGB saw its profits double, while SAPH saw them quadruple and Palmci’s increased by a factor of five compared to the third quarter of 2020. Confronted with land issues concerning village populations in its areas of operation, SICOR saw its 2019 profits fall by 99% compared to 2018. As of mid-2022 the company had yet to publish any additional figures. A similar situation exists for Sucrivoire, which saw its net profit fall by 98% in the third quarter of 2021 on a year-on-year basis, due to the low sugar content of the harvested cane in addition to a lack of rainfall that has negatively impacted the water resources needed for irrigation.

At the end of 2021 the sector index more than tripled to 216.41 points, strongly driven by the favourable annual performances recorded by the shares of these five companies. Shares of Sucrivoire doubled in value compared to 2020 prices, shares of SICOR quadrupled, shares of Palmci tripled, shares of SOGB doubled and shares of SAPH quadrupled.

In terms of agriculture sector-related trade in 2021, more than 2m securities were traded at a value of CFA7bn ($12m), equivalent to 40% of the transactions conducted on the BRVM. The capitalisation of the agriculture sector on the BRVM more than doubled in 2021 to exceed CFA288bn ($495m), in line with the increase in prices.

Medium-term Prospects

With the exception of the shares of SICOR, which have limited visibility in terms of fundamentals, the performance of the BRVM’s agriculture subsector will continue to be guided in the medium term by the international economic environment and planned investments by companies to secure existing plantations. The returns of the sector’s stocks will therefore remain sensitive to both fluctuations in the commodity market on a regional and global level, and the value of the US dollar internationally.

Regardless of global risk factors, Palmci, SAPH and SOGB – all of which have shown resilience during cycles of falling prices – have proven capable of making the necessary investments to maintain their margins in case of a worsening economic situation. As for the sugar industry, the Ivorian government has decided to dedicate CFA151bn ($260m) in support of the investments of sugar-producing companies over the period 2021-25 through plan contracts. Thanks to high-performing shares and government support, the medium-term outlook remains positive.