We have enough supplies' says Seed Co

Date:12-06-2018

By Enacy Mapakame and Princess Ncube

The Zimbabwe’s largest seed producer, Seed Co Limited, says it has enough capacity to meet local market’s seed requirements for the 2018 /19 agriculture season.

Seed Co Limited group finance director John Matorofa (left), group chairman David Long and group CEO Morgan Nzwere at the group’s financial results presentation yesterday

In an interview on the sidelines of the group’s financial results presentation yesterday, group chief executive Morgan Nzwere, said despite the economic turbulence and uncertainties that came with it, the market was guaranteed of enough supplies of seed in this season at affordable prices.

He said seed was a basic commodity such that its availability and affordability was a priority for the seed producer.

“Our capacity to meet demand is not compromised. The seed will be available and has to remain affordable for the customers. On the other hand, the company has to evaluate capacity to pay growers due to inflationary prices that are affecting the economy as a whole.

“It is a very challenging issue when the price has to be regulated by the Government and the supplier’s demands cannot be compensated by the low prices for the seed,” he said.

Mr Nzwere, however, said the obtaining inflationary pressures and lack of foreign currency had a knock-on effect on the company and its margins.

As such, costs were escalating at a time the group had no control over the final pricing of the commodity due to its strategic role to the agriculture sector, which oils the economy.

In October, seed prices skyrocketed with other commodities on the local market, following a sharp increase in parallel market exchange rates. But the prices were later reduced following Government intervention.

“The economic turbulence is affecting the company especially with pricing because the company has no control over pricing. This is a mass product and the Government is bound to regulate the price despite the fact that costs of keeping afloat are increasing due to the inflationary pressures affecting everyone.

“If suppliers of fertilisers, chemicals and various material for the factory are increasing prices, its implications to the performance of the company is grave. Price increases greatly affect the performance of the company as a whole even in the delivery of service,” he said.

Seed Co, which unbundled its regional operations and subsequently listed on the Botswana Stock Exchange reported a fair set of earnings for the half-year to September 30, 2018.

Revenue for the period rose 82 percent to $29 million from $15 million during the same period in the prior year driven by a 115 percent jump in maize sales.

Group financial director John Matorofa said early maize seed sales under public support initiatives for agriculture were being sold at prior year prices.

During the period under review, profit from continuing operations amounted to $5,9 million from a loss position of $35 million mainly driven by earlier than normal timing of maize seed sales as well as growth in finance income.

Net finance income doubled due to income earned on TBs held.

Other income came in 24 percent lower on account of lower commodity sales. Operating costs largely remained flat due to cost containment measures prior to the inflation run that ensued from October.

Margins remained steady due to better product mix. Assets declined to $191 million from $248 million during the prior year comparable period due to the unbundling of regional operations under Seed Co International that listed on the Botswana Stock Exchange.

Despite the economic challenges in Zimbabwe, sales volumes went up 37 percent while winter cereals were lower but of higher margin compared to same period last year.

By close of trade yesterday on the Zimbabwe Stock Exchange, Seed Co was unchanged at $1,99.