SeedCo contends with production shortfall

SeedCo contends with production shortfall
Published: 12 June 2018
SeedCo says it is occupied with dealing with product shortfalls which have negatively impacted on the seed company.

The Zimbabwe Stock Exchange-listed pan-African company's chief executive officer Morgan Nzwere said the company is working hard to fix its product shortfall issues which dragged its volumes down five percent during the year ended March 2018.

"On the production side, with the production issues that we have had it is a key strategic question for us to say how do we increase production," Nzwere told analysts a fortnight ago.

"This year we could actually have made a lot of money had we had enough product, the biggest challenge we ended up facing was all the markets ran out of the key product, maize and we actually did leave money on the table because of that. If you look at our regional businesses, there is not even a single business that still has stocks going into the new season and it is something that we are aggressively working on trying to address," he said.

The company reported a five percent increase in profit after tax for the period under review despite its revenues taking a five percent knock from $134,6 million in 2016 to $128,5.

The company's production was affected by disease pressure, late rains, poor pollination because of the high temperatures that were prevailing during the pollination stage, and a high incidence of the fall armyworm. As a result, its production fell by 23 percent.

"We are therefore doing quite a number of activities to try and make sure that we have got enough product to meet demand. We are financing out-growers in terms of irrigation facilities, on-farm drying units, seed graders, on-farm weather stations so that the farmers are prepared and they don't lose products in the field. We are trying to make sure that 90 percent of our seed is under irrigation, the growers could not find the funding so we have had to find the funding and avail it them," said Nzwere.

SeedCo says it is also putting up additional processing facilities in east Africa to try and increase capacity. It says servicing that market with exports from southern Africa has proved to be a challenge.

"When southern Africa has shortages, we cannot supply those important markets," Nzwere said.

Most of the company's products during the period under review was committed. In Zimbabwe the company had a large share of the government input programme, "Command Agriculture". As a result, the company ended up not being able to distribute products into the retail network.

"By October we did not have any product to send out to the market, in some instances we actually had to in-source products from other players to try and meet the demand. Winter cereals and soya beans also went up significantly after their inclusion in the input programme and again supply was a big issue there," said Nzwere.

- The Financial Gazette
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