Seed Co cautiously bullish about future

Tapiwanashe Mangwiro-Senior Business Reporter

Seed Co is cautiously optimistic about its prospects, with group chief executive officer (CEO) Morgan Nzwere highlighting a mix of opportunities and potential challenges for the domestic and regional markets.

Mr Nzwere emphasised agriculture’s pivotal role in many African economies and noted the uncertain impact of La Niña on the region’s rainfall patterns this season.

“We acknowledge persistent challenges across several markets, but we also see potential benefits from recent fiscal and monetary policy measures aimed at fostering economic stability and growth,” said Mr Nzwere.

To navigate the uncertainties, Seed Co has bolstered its product portfolio with seeds designed to thrive in both drought-prone and high-rainfall conditions.

“We are well-positioned to meet the diverse needs of farmers by offering a resilient seed mix, ensuring dependable options irrespective of climatic fluctuations,” Mr Nzwere added.

The company is also intensifying its focus on growing regional exports, leveraging synergies with its affiliate, SeedCo International Limited.

“Farmers and development partners have shown strong demand for increased seed orders this coming season, driven by a commitment to food security after the El Niño-induced drought,” he noted, underlining the company’s readiness to support agricultural recovery efforts across Southern Africa.

Seed Co’s financial performance for the half-year reflects both resilience and challenges, according to group chief financial officer Mr Tinei Chatiza.

“Revenue increased by 73 percent to US$18,9 million, primarily driven by growth in winter cereal sales and exports,” Mr Chatiza revealed.

Wheat seed sales rose by 9 percent, overcoming drought-related water shortages and high input costs, while total volumes grew by 24 percent to 10 625 tonnes.

Operating expenses surged due to hyperinflationary pressures, yet finance costs dropped to 8 percent of turnover from 16 percent the previous year.

“We remain reliant on borrowings to fund the cash flow gap created by delayed settlement of Government-related receivables and rising operating costs,” Mr Chatiza explained.

Meanwhile, Seed Co saw gains from exchange rates on borrowings but reported losses from joint ventures, which Mr Chatiza attributed to subdued trading during the off-season.

The company’s financial position reflects strategic adjustments.

“Inventories include higher maize seed stocks carried over due to last year’s drought,” Mr Chatiza noted, adding that the increase in borrowings aligns with the seasonal cycle of paying growers and commencing seed processing activities.

Seed Co continues to innovate in its regional operations despite inflationary pressures and currency devaluations across markets.

“We are introducing new varieties to close critical gaps,” Mr Nzwere said, pointing to hybrids like the SC673, which boasts cobalt and drought tolerance, achieving yields of 15 metric tonnes per hectare in trials.

New soybean and wheat varieties, SCZ08 and SCW9104, are tailored for drought-prone regions and have high yields, while the migratory and adaptable Shungu maize variety has been performing well with average yields of 12 metric tonnes. 

Additionally, the company has added LG30741, a hybrid sunflower, which is showing promising results in East Africa.

“These innovations strengthen our product basket and enhance farmers’ productivity in diverse climates,” Mr Nzwere emphasised.

SeedCo’s export strategy has gained momentum, supported by improved production conditions. “Last year, production was reduced by 40 percent due to drought, but this year the situation is better,” Mr Nzwere noted. Strong stock levels from the prior year have enabled the company to meet regional deficits. 

“We have been able to export quite a bit out of Zimbabwe to cover regional shortfalls,” he said, highlighting a robust December sales performance of 10 000 metric tonnes from Zimbabwe alone.

Seed Co’s exports are addressing critical seed shortages across Southern Africa, solidifying its position as a key player in regional agricultural recovery efforts.

“Healthy stocks and improved production have placed us in a strong position to support the region,” Mr Nzwere added.

SeedCo’s strategic focus on resilience, innovation, and regional collaboration underscores its readiness to thrive amid economic and climatic uncertainties.

Through leveraging advanced seed technologies and a robust export strategy, the company aims to sustain its growth trajectory while contributing to agricultural stability and food security across Africa.