Seed Co to defend leading position
THE African seed company, Seed Co Limited, says it will defend its leading market position in the African region through exploiting regional export opportunities and harnessing hard currency local sales.
This comes after the group registered 88% volume growth for the half year ended 30 September 2022, on the export front satisfying the shortage in the market caused by drought in the prior year, particularly in East Africa.
“The Group has optimal varietal mix of seed to match the mixed rainfall forecasts with most parts of Southern Africa expecting normal to above normal rains and East Africa anticipating normal to below normal rains,” said the company in a statement.
The business stocked 15 500 metric tonnes (mt) of maize seed across all varieties by the end of the first half, which will be available for this summer selling season.
“The business has adequate seed and is prepared for the main summer selling season which is now underway,” the group said.
Group secretary Tineyi Chatiza said the regional business was well-prepared for the season on the back of adequate stocks out of Zambia also serving the East African markets, improving economic environment in Zambia, stability in Tanzania and continued business growth in Mozambique.
On the local market, turnover was 5% higher than last year due to the regularly adjusted selling prices because of the inflationary pressures and exchange rate movements in the country. During the first half, local winter and barley sales achieved a growth of 30% to 6 320mt from prior year, and 2 000mt of wheat was exported to Nigeria last year.
However, overheads of the company significantly increased because of the inflation and exchange rate movements. Overall, winter sales were 8% lower in the absence of repeat export sales and maize sales volumes declined by 45% from same previous year period due to the delayed rollout of government programmes this year.
“On the other hand, maize seed sales began on a lower note as farmers did not pre-stock as they did in prior year given the liquidity crunch in the economy,” said Chatiza. Chatiza attributed the increased carrying value of debtors to credit sales of winter cereal and the revaluation of grower debts that were advanced denominated in USD.
“Nearly half of the debtors’ book related to grower advances whose balances are being recovered with the delivery of raw seed,” he said As a result, short-term borrowings increased in line with the borrowing cycle of the business, characterised with the intake of seed from growers as well as processing.
“The increase is also due to inflation-induced increase in working capital requirements as well as the need to fund delayed settlement of Government related debtors,” he said.
The group absorbed a loss from associates mainly contributed by Seed Co International whose first-half performance was subdued with notable early sales reduction in Malawi and drop in revenue in Nigeria due to product unavailability and in East Africa due to drought.
Meanwhile, the research and development department remained the key pillar of the competitive advantage for the business. The business progressed in crop diversification on rice and potato seeds.
“Various innovative research projects are underway to produce seed solutions in both existing product portfolio and new crops that are adaptable to the constantly evolving climate and disease regiment,” said the group secretary.