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Nelson Gahadza
Senior Business Reporter
Seed Co anticipates a rebound in seed demand during the 2024/25 agriculture season largely driven by favourable rainfall forecasts as people need to refill their granaries.
Last season, the seed breeder’s sales volume declined by 10 percent as a result of the El Nino-induced drought, which negatively impacted maize and soya seed sales volumes.
The company believes that the extensively publicised drought dampened cropping plans as farmers cautiously tried to curb the risk of crop failure because of moisture stress.
Group chief executive Mr Morgan Nzwere said the anticipated favourable weather conditions, as El Nino transitions to La Nina in the upcoming season, would drive the group’s performance to recover lost volumes.
“People will need to refill their granaries which have been decimated because of the drought that we faced.
“herefore, we are expecting a huge demand as they try to refill their granaries and on the supply side we have adequate seed to supply the market,” he said during a presentation of the group’s financials for the year ended March 31, 2024.
Mr Nzwere said the group was adequately stocked, with 28 000 tonnes at the close of the year under review, including estimated deliveries that were more than adequate for the local market and to satisfy the 8 100 metric tonnes of confirmed export orders.
He said 6 100 tonnes of wheat and 852 tonnes of barley had already been sold this winter and delivery of export orders is already underway.
“Seed deliveries and processing are ongoing in Zimbabwe and the region. Drought impacted production adversely, and yields were expected to be a third lower than planned, but we have significant carryover stocks, mainly in Zimbabwe, to help plug shortages in the region.
“Overall, group stocks are adequate, and the immediate task is ensuring timely movement of seed from surplus markets to deficit markets,” said Mr Nzwere.
He said the group had a successful debut in commercial production of seed in Ethiopia, and going forward, the focus was on equipping growers with irrigation infrastructure to secure production amidst global warming. Mr Nzwere noted that in Zimbabwe, the dryer plant operated at full capacity this year, and the benefits were beginning to be realised.
“We are also assisting growers with small on-farm driers to help get product ready for early delivery,” he said.
He noted that the group is also working on a new processing plant in Tanzania set to be commissioned before the end of this financial year, and a medium-size processing plant is also planned for Ethiopia, which has proved to be a very promising market.
“Overall, processing capacity is adequate in production hubs in Zambia, Zimbabwe, and Malawi.”
Mr Nzwere said during the year under review, the group recorded reduced sales in Zimbabwe, Mozambique and Botswana because of the El Nino, while record sales were in East Africa (Tanzania and Kenya), with exciting export opportunities closed in Uganda and Burundi.
“We are witnessing notable open market sales growth in most markets, including Zimbabwe, Zambia, and Malawi. In Tanzania and Kenya, sales are 100 percent open-market, sustainable, and either cash or near-cash,” he said.
For the year under review, group revenue dropped by 10 percent to $813,66 billion from $1,011 trillion in the previous season as a result of low sales volume performance. The group’s profit share from the joint venture and associates was $25,78 billion, benefiting from Seed Co International’s notable profitability recovery as well as the exchange gain-anchored profitability of the local joint venture, Prime Seed Co and associate, Quton.
“Despite the subdued volumes, the company’s profitability improved 8 percent from the prior year, mainly driven by exchange gains from revaluing USD denominated receivables,” said Mr John Matorofa, the company’s finance director.
He said the indicative US dollar financials show that revenue decreased by 30 percent to US$45 million and operating profit by 19 percent to US$13,8 million from US$17 million in the prior year, while profit after tax was down 31 percent to US$10,4 million from US$15 million in the prior year.
Peter Tanyanyiwa
Online Reporter