eBusiness Weekly
Business Writer
Seed Co Limited says stockholding has been a good store of value in view of inflation and helps the company to exploit export opportunities.
The greater part of this year’s first half was characterised by an unstable operating environment driven by hyperinflation, high interest rates, local currency depreciation on both official and alternative markets.
Morgan Nzwere, the company’s chief executive during a virtual presentation of half year financials for the period to September 30, 2022, said maize seed stocks at 22,600 tonnes are nearly 60 percent higher than prior year.
“We have had stock challenges in the past but this year our production is higher and this will be adequate to meet demand for both local and export markets and this will give us health turnover going forward,” he said.
He said seed production in Zimbabwe defied the challenges associated with difficult grower pricing negotiations, high input costs and erratic rains.
“The pricing and reporting currency quagmire has been that the economy is largely dollarised, but the ZWL is still the official local currency.
“These currency issues have had a negative impact on the business,” he said.
During the half year period, sales volume was 20 percent lower due to the liquidity crunch in the economy and delayed launch of government programmes.
According to Nzwere, the first half period is traditionally a low volume period which will recover during the second half of the financial year.
He said sales volumes were also impacted by non-repeat of wheat exports to Nigeria.
However, Nzwere said year to date sales volume has since improved significantly with the onset of the rains and the start of government programmes.
He said bulk of sales are being concluded in USD.
For the half year period under review, revenue trebled in historical terms and grew 5 percent in inflation-adjusted terms despite volume dropping by 20 percent as prices moved in line with official exchange rate depreciation.
John Matorofa, the group’s finance director said financial performance was adversely impacted by funding constraints and hyperinflation
He said with volume dropping 20 percent overall, maize declined 45 percent to 2,088 tonnes, wheat decreased by 13 percent to 5,606 tonnes with no repeat 2,000 tonnes exports to Nigeria.
He said local wheat volume increased by 27 percent as the Government intensified import substitution while barley increased by 61 percent to 713 tones on the back of increased demand.
“Overheads tracking inflation were 34 percent up in inflation adjusted terms and more than 4 times jump in historical terms,” he said.
Matorofa said the group’s inventory for the period was higher as the business takes in raw seed from growers and starts adding value during this period.
However, Nzwere said the artificial seed conditioning plant commissioned in Zimbabwe last year is now fully operational.
He said plans are still underway to replicate this technology in key regional markets like Zambia after drawing lessons from the pilot Zimbabwe plant.
