Waikato agricultural companies attended an NZX Agrifax day in Hamilton on Wednesday, where Jenkins outlined the future listed opportunities for the agricultural sector.
Commodity trades under the Dairy Futures market were growing swiftly, but farmers had yet to start using it directly to hedge volatility, he said.
Fonterra had started to fill the void in the market by providing an opportunity for farmers to lock in a milk price, while feed companies were offering fixed prices on feed contracts, he said.
However, farmers would start to be more sophisticated in that space to secure milk and feed prices and water was likely to come into the equation too.
The sector was under-represented on the NZX and investors didn’t have a lot of choices to invest in agriculture, he said.
Only 10 agriculture companies were listed on the NZX, despite the sector contributing 13% of NZ’s gross domestic product GDP and 70% of merchandise export earnings.
The new growth market NZX was trying to launch this year was suited to small to mid-sized agricultural companies, Jenkins said.
Listing would allow those companies to fund further innovation and growth.
The market, aimed at companies with an expected capital between $10 million and $100m, would have reduced costs and complexity, he said.
NZX has released a consultation memorandum and exposure drafts of rules that will regulate the new market and is seeking submissions and input from interested parties.
