daniel chigunwe
Enacy Mapakame
Listed seed processor, SeedCo Limited, says research and development remains at the centre of its business as the group leverages on it to churn out new varieties and boost food security across the region.
This also comes as the company looks at offsetting the adverse impacts of climate change with early maturing varieties. Chief executive officer, Morgan Nzwere, said the group will continue to renew the pipeline in line with climate change as unfavourable weather forecasts have already been made.
“There is talk about El Nino weather phenomenon coming, and we have to structure ourselves properly and come up with early maturity varieties in the face of the projected limited rainfall,” Nzwere told an analyst briefing recently.
During the year to March 31, 2023, the group released three maize hybrid varieties, one white sorghum hybrid, two cowpea varieties and three pearl millet hybrid varieties.
The group also listed new varieties onto regional catalogues to consolidate its market. During the year under review, nine maize and soyabean varieties were listed on the SADC catalogue while five maize and three soyabean varieties were added onto the COMESA catalogue, which also had one wheat variety added to it.
Nzwere said the group will continue to carry out research on new crops like rice and potato in order to widen the product basket.
Apart from climate change challenges, there are other concerns such as diseases and pests, calling for more research into varieties that are resistant.
“Efforts are underway to find a solution to fall army worm and cob rot tolerant maize germplasm,” said Nzwere.
Meanwhile the group indicated product availability for the 2022/23 planting season adequate, although uptake was affected by pricing challenges and late rains.
“Late rains and pricing confusion at the start of the season resulted in some stock being carried over to FY23 v2022/23 season production now at intake stage, challenged by higher costs of inputs but expected to be higher than prior year. Regional seed production is also expected to be higher than last year despite rainfall challenges (irrigation helped),” said Nzwere.
In terms of seed processing, the group is going ahead with plans to replicate the Artificial Seed Drying Plant in Zimbabwe to other markets. The plant is now in its second operational year, and is continuing to make it possible to start processing seed early with the quality and early market readiness advantages.
During the year under review, maize remained the flagship seed crop accounting for 52 percent of total volumes after increasing by 12 percent on the back of better stock position and increased demand as a result of better rains.
Wheat sales dropped by 6 percent due to power constraints while barley rose 61 percent. Soyabeans volume grew 50 percent as demand increased driven by import substitution drive. Other crops include beans and sorghum and the combined volume increased by 37 percent again on the back of good rains.
As for financial performance, the group recorded a 56 percent increase in revenue to $42,7 billion supported by selling price adjustments in response to inflation-induced increases in operating costs as well as the general effects of exchange rate fluctuations.
Other income increased due to exchange gains on debtors and non-seed sales. However, operating expenses rose steeply due to the prevailing hyperinflationary conditions.
Profit after tax came in at $15,8 billion, which was a significant improvement from the $2,2 billion loss recorded in the prior year.
According to group finance director John Matorofa, profitability was driven by a 14 percent volume and 56 percent revenue growth. The period under review, also witnessed an increase in US dollar denominated sales which contributed to group profitability.
Going forward, the group is restructuring both its business model and balance sheet to respond to the rising cost of doing business and to hedge against weakening currencies.
Zimbabwe’s business environment remains uncertain with elections coming up next month.
However, buoyant demand is expected. The group has also been granted a non-conditional licence in Ethiopia and efforts are underway to establish presence.
“Overall, the Group continues to show resilience backed by climate-smart seeds and robust IP,” said IH Securities, who project revenue for the current year (FY24) to jump 7 percent while EBITDA margin to remain flat at 27,4 percent.
Bongani Ndlovu