Seed Co develops more varieties for regional markets

Enacy Mapakame-Business Reporter

Victoria Falls Stock Exchange (VFEX) listed seed producer, Seed Co International is developing more seed varieties for both grain and vegetables that suit conditions across its regional markets in an effort to boost agricultural yields and food security.

This comes as bad weather patterns due to climate change have affected production creating scope for more early maturing and cost effective seed varieties.

In an operations update for the year to March 30, 2022, group chief executive officer Morgan Nzwere highlighted several varieties that were released during the financial year while trials for others are also still ongoing.

The group released five new varieties in Zambia, four in Malawi and licensed early maturing yellow maize varieties in Nigeria as well as a top cross hybrid aimed at improving ease of production.

Mr Nzwere added the group also licensed a striga tolerant yellow sorghum variety for commercialisation in Nigeria as well as four rice varieties which were licensed for commercialisation as well in Zambia and Malawi while pilot productions are ongoing.

This is in addition to SC Signal and SC Saga soyabean varieties officially released in Malawi while the same were registered in Ethiopia.

According to the group, rice hybrid trials are continuing in Southern, East and West Africa while potato hybrid registration trials are on-going.

“Several vegetable hybrids are commercialised in our markets,” said Mr Nzwere.

In terms of production, Mr Nzwere indicated that product availability was generally good during the year though readiness to market was delayed by late dry down due to the excessive wet prior year (FY21) season.

“Stockouts were experienced in Nigeria and Kenya due to bad production in prior period seasons (flooding in Nigeria and drought in Kenya).

“2022/23 maize season production now at the intake stage is expected to be 5 percent higher than prior year’s 32 000 tonnes but  might be lower due to erratic rains which affected growth and pollination. Winter wheat production is also underway in Zambia,” he said.

Figures from the group show that total sales volumes were 11 percent below prior year with the main crop — maize down 19 percent due to the 50 percent cut of the government subsidy contribution in Malawi that also saw Seed Co Malawi volumes declining by 32 percent.

In Zambia, late rains and impact of price increases saw volumes drop by 14 percent while product unavailability dropped by 34 percent in Nigeria. Other factors such as drought in Kenya and product shortages resulted in a volume drop of 12 percent.

However, Tanzania’s volume performance was stable as the business consolidated while the more than doubling of volume in Mozambique helped to partly offset volume loss in most markets.

In terms of financial performance, the group registered a decline in profitability recording an after tax profit of US$7,1m down from US$11,1m in the prior year due to gross margin shrinkage mainly in Zambia as the kwacha appreciated and reduced economies of scale as volume declined 11 percent — with significant declines in Malawi, Zambia and Nigeria.

Group finance director John Matorofa  attributed the decline to increase in operating costs due to impact of the strong kwacha in Zambia as well as increased business activities in Mozambique. Revenue was flat at US$88,5 million albeit on reduced sales volume, helped mainly by the strengthening of the Zambian kwacha against the USD and business growth in Mozambique.

Gross margin was subdued on account of reduced economies of scale and the impact of a stronger Zambian kwacha on cost of sales.

Overheads went up linked to the marketing and selling efforts in anticipation of a normal season that regrettably turned out adverse.

Despite the uncertainties caused by conflicts in Ukraine as well as uncertainty from elections scheduled for August in Kenya and March next year for Nigeria, Seed Co International remains upbeat of its performance on the back of its strategic position in food production.