PAN-African seed company, Seed Co, anticipates increased demand for seed products under the broadened Command Agriculture programme to steer its growth in Zimbabwe this year with projections of comparable rebound in other regional markets as well.
The giant seed producer’s revenue dropped by 5% to $128,5mln in the year ended 31 March 2018 compared to the prior year, attributed to product shortages and mid-season drought that was experienced across Southern Africa in January, which resulted in a 15% overall reduction in volumes for the regional business.
Profit, however, surged to $21,4 million compared to $20,4 million in the prior period with total assets value spiking $249 million from $233 million, the group’s latest abridged audited financial results show. Disease pressure, poor pollination due to high temperatures experienced during the dry spell experienced early this year as well as excessive moisture, as crops were reaching maturity, compounded the situation.
Despite these setbacks Seed Co says it is geared for positive times with projection of increased earnings in the next season riding on expected demand for seed across the region.
“The group is optimistic that the available inventory will be able to meet anticipated demand. We expect earnings to be maintained backed by increased demand due to the following factors; continuation of the Command Agriculture programme in Zimbabwe incorporating maize seed, wheat seed, soya bean and cotton seed,” said the board in commentary accompanying the financial report.
“The regional business is expected to rebound due to increased demand in Zambia and Malawi after depletion of last year’s surplus grain harvest, market share growth in Tanzania and Kenya as our products in that region continue to make inroads, and adoption of vegetable seed hybrids across the markets we serve.”
The Command Agriculture programme is a specialised Zimbabwe Government and private sector initiative aimed at boosting food production in the country.
The model has already proved to be successful in its first phase in the 2016/17 season and is on its second phase this year. Through the scheme, the country not only seeks to achieve food security but to substitute food imports, which drain millions of scarce foreign currency from the economy, but to also replenish domestic raw material supply for processing industries.
The seed group also reported that it has made significant inroads in research and technology, which has seen it list its products on the Comesa catalogue, which enables free trade of seed without the need for further trials once the product has been released in a particular market.
“So far we have registered the following on the catalogue; 11 maize varieties, four soybean varieties and three ground nut varieties. The genotyping laboratory is working well with all testing now being done in-house,” said Seed Co.
During the period under review the company made a decision to unbundle its regional businesses under the Seed Co International in order to among other objectives; enhance capacity to raise capital to finance growth and expansion opportunities in the seed business in Africa and beyond.
The move is also meant to strengthen and enhance the visibility of the company’s brands and regional operations to the investing community as well as unlocking growing and preserving shareholder value by creating liquidity for the trading and valuation of the company’s shares.
The board has since declared a dividend of 2.95 cents per share and an additional once off special dividend of 1,48 US cents, payable to the shareholders in the register of the company this month.