‘Local firms must forge synergies to stay afloat’

SeedCo has grown into Africa’s largest seed-producing company by volume and is taking a leading position in all the markets it has penetrated. This week, Zimbabwe Independent business reporter Melody Chikono (MC) interviewed SeedCo chief executive Morgan Nzwere (MN). See excerpts below:

MC: How much have you invested towards setting up seed manufacturing plants in Africa?

MN: Over the last five years we have spent over US$25 million setting up plants in Zambia, Malawi, Kenya, Tanzania and Nigeria, as well as refurbishing some existing plants elsewhere.

MC: How do you judge the performance of the company in the region?

MN: The company has done very well in the region, gaining market share and growing to number one in most markets within a very short space of time. We are now Africa’s number one seed company by far, in terms of total volumes sold.

MC: Zimbabwe is currently facing a debilitating liquidity crunch. How has SeedCo managed to stay competitive in such an environment?

MN: We have a very diverse product range to suit farmers in different ecological conditions and, working with government, we have ensured that high-performing hybrids are provided to farmers at affordable cost. We have also been very innovative in organising funding structures for seed purchase, which has enabled farmers to continue accessing high quality seed

MC: Are there any plans in the short term to introduce new products and which crops in particular?

MN: Yes, we have been looking at widening our product basket. As you know, we have recently entered the vegetable seed business through acquisition of Prime Seeds and we are in the process of replicating this business in other markets we operate in. We are also looking at other crops like rice, as well as enhancing our other small grains product basket, including sorghum, millet, cowpeas and other legumes. We are also looking at other tuber products like potatoes etc

MC: SeedCo has been a top performer on the Zimbabwe Stock Exchange for a while now. What has enabled you to perform consistently?

MN: Our products have spoken for themselves through the high yields being achieved by farmers. You will be aware some farmers have achieved over 22 tonnes per hectare from some of our varieties, and the market does realise how far ahead we are in relation to our competition.

SeedCo is a science business that is at the forefront of the food value chain. Our competitive advantage is research and development as well as production, processing and distribution of high quality seeds.
We have stuck to our core business, while trying to anticipate the changes in the industry. We have therefore been very proactive in introducing new products, seeking technical alliances with world-class leaders while increasing our footprint to diversify perceived country risk.

The African footprint that we have created ensures that we are adequately diversified in terms of risk and, should there be challenges in one area of the market, then the other markets will carry the group. We have invested heavily in our capabilities, putting up plants and research stations across Africa to position ourselves to the forefront of the food value chain.

MC: Give us an insight into the capex investments you have made in Zimbabwe so far. What is your outlook in terms of investing in Zimbabwe?

MN: Over the last few years we have spent US$5 million on building and equipping a new state-of-the-art technology lab at Rattray Arnold Research Station, Muzarabani Research Station, as well as modernising our plant and processes, as well as equipping the newly acquired Prime Seeds business

MC: There has been a number of foreign mergers and takeovers, especially with seed companies in Zimbabwe. What do you think is the main driver of this?

MN: All over the world there have been mergers and acquisitions in the seed industry, with DuPont acquiring Dow, Bayer acquiring Monsanto, Chemchina acquiring Syngenta, CITIC LPFH acquiring some big seed operations in South America. This has also happened in Africa, Pioneer acquiring Pannar, Syngenta acquiring MRI in Zambia, and so on.
It is a consolidation of the industry that we had anticipated for quite some time, hence our agreement with Limagrain over four years ago.

It is inevitable, and any company that is not seeking these alliances will be left isolated and, with the amounts needed to remain competitive on the research and development front, it really is critical to cooperate with other companies to take advantage of synergies.

MC: Do you think it is a healthy situation for local seed companies?

MN: Local seed companies cannot afford to remain isolated. They do not have the resources to invest in research. You will note that companies like Monsanto are spending well over US$1 billion per annum in research, and there is no way local companies can compete against this type of investment.

We therefore have to seek alliances with these world-class companies in order to access some of the cutting-edge technologies. This is the only way we can keep providing high-performing products to the market

MC: What is your comment on the Zimbabwe seed market as a whole?

MN: Do you think it offers a level playing ground? Yes, I think it offers a very level playing field. There is a very active Zimbabwe Seed Trade Association, where all players are members and this champions the cause of the industry as a whole. At the end of the day customers look at performance and the experience they have had with the brand, and this is where we have a massive advantage over the competition. We have been in existence in Zimbabwe for 78 years now and there is no other competitor with such history in the country.

MC: What improvements do you think need to be made to the seed industry in Zimbabwe?

MN: Regulation in terms of stiff penalties for distribution of fake seeds is very important. Our biggest competitor is fake seed, and when the culprits are caught the fines that they pay are a mere pittance compared to the money they get from selling this fake seed. So there is nothing to dissuade them from this practice.

Government and other players need to invest more in extension services to educate farmers on the benefits of growing improved seeds and better farming methods. Seed companies can’t do this on their own.

There are some charitable organisations that come encouraging farmers to grow cheap open-pollinated varieties, largely because they want their money to be spread over a large quantity of seed. This is not good for the farmers. If you look at the advanced markets like America and Europe, no one uses these open-pollinated varieties, they all use hybrids. Why then should Africa be encouraged to use the poorer seeds? I think this is an issue that needs to be addressed as these organisations end up driving Africa backwards and increasing the gap between us and the developed world

MC: Are there efforts to introduce an input support programme to boost the production of wheat in the country?

Yes, as you know this year wheat was included under the Command (Agriculture) Programme and we saw our volumes increase by over 250%.

This is critical as the money saved on importing wheat can now be used in other critical areas of the economy. We are very pleased with the efforts government is putting in this regard.

Fact File: Morgan Nzwere

  • Group chief executive officer and executive director at SeedCo Limited;
  • Chairman at Quton SeedCo (Pvt) Ltd, and chairman at Quton Tanzania Ltd;
  • On the board of directors at Initiative For Global Development, SeedCo Ltd, SeedCo International, SeedCo
  • Zambia International Ltd, SeedCo Malawi Ltd., SeedCo Tanzania Ltd, and SeedCo Zimbabwe (Pvt) Ltd;
  • Has been involved in the seed industry since 1998 when he joined SeedCo Limited as chief financial officer;
  • Chartered accountant who holds a Master’s degree in Business Leadership from the University of South Africa
  • Received first degree from the University of South Africa; and
  • Previously held senior positions in diversified regional corporates involved in mining, banking, agriculture, property development, retail, motor vehicle assembly and distribution.

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