Pfumvudza chokes Seed Co
LIVINGSTONE MARUFU
Government’s failure to timeously pay Seed Co Limited for seed purchased on credit intended for the Presidential Input Scheme also known as Pfumvudza, is threatening the viability of the country’s largest seed company.
The administration, which buys the bulk of Seed Co’s seed on credit, now gives out free inputs directly to the communal farmers, limiting the seed producer’s ability to sell directly to the farmers.
According to CEO Morgan Nzwere, the Pfumvudza programme gives away seeds to communal farmers, who make up the majority of seed buyers in the nation.
“The problem we are facing in Zimbabwe is that as soon as the farmer hears there is free seed, as a result they certainly don’t buy from us. As you know, 90% of the maize is grown by communal farmers, that is the main economic activity that they do and most of them are incorporated into government programmes.
“If the free seed mantra ends from the government, we will see a much bigger uptake in terms of the direct sales from the communal farmers, which is what it used to be as a lot of seed used to go directly to farmers,” Nzwere said.
He added: “That is actually we would prefer as your cash cycles improve. We will be directly dealing with the market rather than the current system which doesn’t give us direct access to the farmer.”
In a statement accompanying financial results for the 12 months to March 31 2023, Seed Co company secretary Tineyi Chatiza bemoaned delayed payments by the government.
“The appetite to borrow was worsened by delayed payments from the government schemes and a sharp increase in prices for both operating expenses and seed deliveries.
“Finance costs were at 26% of turnover with an interest cover ratio of 4.4,” Chatiza said.
He added: “The increase in receivables at the year end date was attributable to the growing sales and the outstanding debt from growers and government programmes.”
Despite limited direct sales, Seed Co maize and soyabean seed sales volumes increased by 12% and 49% from prior year respectively driven by the heightened seed demand due to improved rainfall received and government programmes aimed towards ensuring food security supplemented by export opportunities across the region.
However, winter wheat sales were subdued when compared to prior year, dropping by 7%driven mainly by high prices of inputs, unreliable power supply and uncertainty around commodity producer prices.
The reported revenue growth was driven by 14% increase in sales volumes and selling price adjustments in response to inflation-induced increases in operating costs, as well as the general effects of exchange rate fluctuations.
