Seed Co International is enjoying some relief after the Government of Malawi finally renewed the seed producer’s supply contract, a move which could decisively influence the fortunes of the company in the region, it has emerged.
It is understood the administration in Malawi was dragging its feet on contract renewal, resulting in delays in distributing in the southern African country.
But, Seed Co International company secretary, Tineyi Chatiza, told Business Times that the seed supply contract for the Malawi market was finally signed, paving the way for the distribution of seeds in the market.
“We have experienced some challenges in Malawi during the half year reporting period as the government there took a long to secure seed but all is in place to ensure there will be an uninterrupted supply of seed,” Chatiza recently told Business Times.
He added: “We have also done the same with our regional markets as we move to ensure there are no delays. By this we are expecting a good performance in the immediate future and long term period.”
Seed Co International Limited reported a US$4.3m loss in the six months to September 30, 2022 from a profit of US$1.5m achieved in the prior comparative period.
The situation was also worsened by drought experienced in Nigeria and Kenya.
“A US$4.3m first half loss outturn mainly attributable to normalisation of seasonal revenue performance because of delayed government programme in Malawi unlike prior year when sales were registered early, stockouts in Nigeria [due to production challenges], stockouts in Kenya due to drought and production challenges, inflationary increase in overheads and increase in finance costs as interest rates increase globally and in regional markets,” Seed Co group finance director John Matorofa said.
Revenue for the group dropped to US$25.5m in the reviewed period from US$35.5m reported in the prior comparative period.
Product shortages in Nigeria hit volumes, which declined by 41% to 617metric tonnes from 1,720metric tonnes prior year.
Overheads decreased by about 36% in line with the reduced business activity during the first half.
Chatiza is confident Seed Co International will bounce back to profitability after sealing the Malawi deal.
He, however, said government’s budget constraints, inflation, power shortages and sustained currency devaluation pressure are the key risks to watch in Malawi.
In the outlook, the company said it would leverage its multi-geography footprint to make seed available in markets (East Africa and Nigeria) facing product shortages.