Command Agric boosts SeedCo winter growth

Command Agric boosts SeedCo winter growth
Published: 29 September 2017
SEED Co Group, Africa's biggest seed producer, says the Government's 2017 Command Agriculture Programme boosted demand for winter cereals, which saw the group registering a 257 percent growth in overall sales volumes.

Group chief executive Mr Morgan Nzwere, said in an update after the company's annual general meeting that demand for winter cereals exhausted all the stocks and they had to supplement with standard grade seed.

"Overall volumes went up by 257 percent compared to prior year. In Zimbabwe volumes went by 358 percent, although overall margins came down because of sale of standard grade seed, for which we were only charging a toll-processing fee," Mr Nzwere told the AGM in Harare yesterday.

The national hectarage under wheat is estimated at 60 000 hectares from the 14 000 hectares in previous years. In Zambia, improved water supplies and stable electricity supplies drove winter cereal sales with volumes sold going up by 97 percent.

"This year we have had to increase our winter cereal seed production to take advantage of the pent-up demand," Mr Nzwere said.

Commenting on the outlook Mr Nzwere said in Zimbabwe, the Command Agriculture programme was continuing, with indications that volumes may be increased, and payments made through a combination of TBs and advance payments. The promising weather and favourable prices being quoted for grain may draw more farmers towards maize planting. Soya beans may also be included in the programme.

Mr Nzwere said Tanzania has been growing exponentially. In Kenya, the new factory and production in the highlands is helping Seed Co to capture market share. The subsidy programme in Malawi is also continuing, Mr Nzwere said, but on a reduced scale while open market sales are growing. Volumes produced in Nigeria are improving, but more work is still needed. Mr Nzwere said CCU markets are expected to remain profitable, and quantities to grow. Prime Seeds is continuing and should start contributing positively. In Angola early tenders have been quite encouraging, the CEO said.

The business development team has been strengthened with a particular focus on Franco-phone Africa. The group is focusing on working capital efficiencies through optimal stocks management and reduced debtor impairments. A total of $24 million was collected from debtors since January this year and the process is continuing. In terms of business development, Mr Nzwere said they had successfully produced 300 tonnes in Nigeria this year and were targeting 800 tonnes from the crop in the ground. Parent seed sales continue in Ethiopia, while pursuing the license. In Pakistan one of Seed Co's varieties, SC539 is said to be doing very well and Seed Co is now looking at the logistics of producing it in Asia.

All Seed Co borrowings, with the exception of the kwacha denominated borrowings in Malawi and Zambia, are between 3,5 percent and 5,5 percent respectively. In Malawi, the kwacha borrowings are at 27 percent and being converted to dollars while in Zambia the kwacha borrowings are for between 20 percent and 24 percent.

Mr Nzwere said work was ongoing on the proposed unbundling of the group with the intention of raising further capital to ward off market competition.
- the herald
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