SEEDCO Limited has found the operating environment in Zimbabwe increasingly difficult for the first half of the year due to constant policy interventions.
In a financial statement for the half-year ended September 30, 2022, group secretary Tineyi Chatiza, said liquidity crunch, foreign currency shortages and prohibitive borrowing costs were among the major obstacles encountered in that period.
“During the period under review, the cost of key agricultural inputs continued to rise thereby threatening achievement of food security,” he said.
He added that on the global scale, the unending geopolitical dispute in Eastern Europe had an adverse impact on international supply chains compounding the challenges faced by fragile regional economies.
The company posted a 30% growth for local winter barley sales from the prior year to 6 320 megatonnes (mt).
“Overall, winter sales were 8% lower in the absence of repeat export sales. Last year 2 000mt of wheat was exported to Nigeria” Chatiza revealed.
“On the other hand, maize seed sales began on a lower note as farmers did not prestock as they did in prior year given the liquidity crunch in the economy.”
Due to delayed rollout of government programmes the maize sales volume declined by 45% compared to the same period during the previous year.
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“On the export front, the business registered a notable 88% volume growth satisfying the shortage in the region caused by drought in the prior year particularly in East Africa,” Chatiza said.
The group noted that on the local market, selling prices were regularly adjusted in line with inflationary pressures and exchange rate movements resulting in inflation-adjusted turnover being 5% higher than prior year.
SeedCo absorbed a loss from its associates mainly contributed by SeedCo International whose first half performance was subdued with notable early sales reduction in Malawi and a drop in revenue in Nigeria due to product unavailability and in East Africa due to drought.
The group is still taking deliveries of raw seed and by the end of the first half 15 500mt of maize seed was in stock across all varieties.
“The business will have adequate seed available for this summer selling season,” Chatiza said.
The carrying value of debtors quadrupled from the closing position last year-end and this is attributable to winter cereal credit sales as well as the revaluation of grower debts that were advanced denominated in US dollars.
Seeing that research and development are key to the competitive advantage for the business, the group has various innovative research projects underway to produce seed solutions in both existing product portfolios and new crops that are adaptable to the constantly evolving climate and disease regiment.
“Despite the harsh and uncertain operating environment, the board and management will focus on defending the leading market position and stakeholder value enhancement by harnessing hard currency local sales as well as exploiting regional export opportunities,” Chatiza said on the company’s outlook.
He added that the business had adequate seed and was prepared for the main summer selling season which is underway.