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Business Reporter
SeedCo International, which is listed on the Victoria Falls Stock Exchange (VFEX), anticipates maize seed production volumes to increase by six percent to 34 000 metric tonnes this year compared to last season and sees the growth enough to meet demand across the markets where it operates.
Apart from Zimbabwe, the Group has subsidiaries, associates and joint ventures located in Botswana, Democratic Republic of Congo (DRC), Ghana, Kenya, Malawi, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, and Zambia. Operations in Angola, Ethiopia and parts of West Africa are at different stages of development.
Group chief executive officer Morgan Nzwere told shareholders at the firm’s annual general meeting that most markets were currently off-season, except for Zambia, where the group is selling some winter cereals and a bit of maize seed sales in Nigeria because of the different seeds that they require.
“We are now starting to see some sales momentum in terms of the rest of the summer crops. Our maize season will effectively start in October when the rains come in most of these markets and we should start seeing some volumes going up significantly,” he said.
He said that in the year to date, regional business increased volume by 11 percent, with all of this coming from Zambia.
Mr Nzwere said that in Nigeria, maize seed sales were 13 percent lower than the prior year.
“We had some stock shortages. We actually ran out of stocks, which are a result of the big government order that we got in the prior year, which wiped out carryover stocks and the production that we had planned had not taken into account this wiped out by the government order.
“So we ended up producing stocks that were not adequate to meet market demand,” he said.
In Kenya and Tanzania, Mr Nzwere said the group recorded a second-season drought and that put a damper on the sales.
With a new market, Mozambique, coming on board, Mr Nzwere said margins are also improving as the contribution of hybrid sales continues to increase.
“It shows some good signs of growth, not as much as we would want to see, but definitely showing the right projector,” he said.
In terms of research and development, Mr Nzwere said the group continues to produce exciting products that compete well with the products coming from other seed houses.
He said that potato trials are currently underway, with plans to commercialize in three years.
Mr Nzwere noted that seed intake from growers is going very well, more or less at about 35 percent in terms of intake for maize and 55 percent for soya beans.
He said that on the working capital side, the group had about US$47 million in trade and receivables and had collected about 50 percent of this. “Efforts to collect the balance are continuing,” he said.
Total stocks, he added, including the carryover quantities, will be about 52 000 MT, which will be 13 percent higher than they had in the prior year.
“It should be more than adequate to meet anticipated demand as well as any opportunistic sales.”
In the outlook, Mr Nzwere said the group has adequate stocks to meet anticipated demand this year, unlike last year.
“The Russia-Ukraine war does create opportunities for import substitution in terms of grain, and we are seeing many countries engaging in activities to try and make sure they are self-sufficient in terms of those products that they used to import, particularly from this volatile region,” he said.
“We are also expecting increased business in West Africa, Angola and DRC. The volumes in the last couple of years were affected by funds being diverted to the COVID-19 initiative and as it stabilizes, we think those funds should also start gravitating to our business,” noted Mr Nzwere.
SeedCo International listed on the Botswana Stock Exchange in 2018 and in 2020 became the first to list on the United States dollar-denominated Exchange VFEX.
In the full year to March 31, 2022, revenue was flat at US$88,5 million, albeit on reduced sales volume, helped mainly by the strengthening of the Zambian kwacha against the USD and business growth in Mozambique.
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