Seed Co sweats over farmers demands

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Tinashe Makichi

Seed Co Limited is sweating over farmers’ demands for an increase in price for their
product, a situation likely to hit the seed producer at a time when government recently blocked moves by companies to hike their selling prices.

Seed Co chief executive Morgan Nzwere said seed houses heeded government’s call to reduce prices, but on the other side, seed farmers have been demanding an increase in the producer price.

“As you are aware, we had dialogue with government after seed houses increased prices in line with conditions obtaining on the market.  This, therefore, saw us getting back to our prices of the past but the same has not been the case with our seed producers. They have actually been demanding an increase in what we are offering for their seed.

“This is a challenge that needs to be addressed.  he farmers are of the argument that the cost of living has also gone up,” said Nzwere.

He said the obtaining inflationary pressures and lack of foreign currency had a knock-on effect on the company and its margins. As such, costs were escalating at a time the group had no control over the final pricing of the commodity due to its strategic role to the agriculture sector, which oils the economy.

Seed Co, which unbundled its regional operations and subsequently listed on the Botswana Stock Exchange reported a revenue increase of 82 percent for the half year to September 30, 2018 at $29 million from $15 million during the same period in the prior year driven by a 115 percent jump in maize sales.

The increase in revenue during the period was also driven by wheat seed despite low volume sold as more certified seed was sold compared to more standard grade seed sold last year.

The company’s overall gross margins for the period remained steady due to better production mix, and more certified wheat seed sales compared to standard grade.

During the period under review, profit from continuing operations amounted to $5,9 million from a loss position of $35 million mainly driven by earlier than normal timing of maize seed sales as well as growth in finance income.

On the financial position, the $1,1 million decrease in property, plant and equipment from prior year end was caused by the de-recognition of previously consolidated Prime Seed Co’s assets after the entity was reclassified from a subsidiary to a joint venture.

Seed Co International narrowed its loss for the period benefitting from exchange gains on foreign denominated receivables in Zambia driven by the Kwacha depreciation.

Quton maintained its prior year profit after being contracted to supply cotton seed on the government’s input programme for the second year running and Prime Seed slightly reduced the previous period loss for the year to date as increasing sales and margins were largely offset by staff retrenchment costs.