Drought affects SeedCo sales volumes
SEEDCo Limited says maize seed sales volumes were negatively affected by a third in the year ending March 2024 due to the El Nino-induced drought as farmers adopted a cautious approach to mitigate the risk of crop failure from moisture stress.
However, export sales experienced a significant increase, bringing in much-needed foreign currency and offsetting the impact of reduced local seed demand.
El Nino, characterised by ocean warming, typically leads to dry weather in southern Africa, resulting in decreased crop yields and elevated temperatures. In contrast, La Nina, which often follows El Nino events, brings about opposite effects
In a financial statement for the year ended 31 March 2024, SeedCo group company secretary, Mr Tineyi Chatiza said sales volumes were nearly a third lower than prior year because of El Nino-induced drought, which negatively impacted maize and soya seed sales volumes.
“Sales volume of the flagship crop, maize seed, was below prior year by nearly a third. On the other hand, export sales increased notably earning the business with much needed foreign currency while at the same time reducing the impact of lower local demand for seed,” said Mr Chatiza.
On wheat, he noted that sales volumes remained constant in comparison to prior year despite challenges experienced by farmers, which included power cuts, high prices of key inputs such as fertiliser and exchange rate volatility.
However, Mr Chatiza said the business maintains cautious optimism regarding Zimbabwe’s economic outlook despite prevailing challenges.
“The agricultural sector, a vital economic driver, is expected to improve with anticipated favourable weather conditions as El Niño transitions to La Niña in the upcoming season. Moving forward, the focus will be on increasing the contribution of exports and USD-denominated sales while ensuring competitive pricing and effective cost management.”
Added to that, the firm said it will continue to leverage its intellectual property by continuing to offer an optimal mix of seed varieties suitable for both drought and favourable rainfall conditions.
Mr Chatiza said due low sales volume performance, revenue dropped by 10 percent.
Other income increased due to exchange gains on US dollar-denominated receivables and increase in non-seed sales.
Finance costs were for 16 percent of turnover, down from 26 percent the previous year.
Despite the subdued volumes, the Company’s profitability improved eight percent from prior year mainly driven by exchange gains from revaluing US dollar-denominated receivables.
The firm noted that research and development remain the primary driver of competitive advantage for the business, with multiple initiatives at various pipeline stages aimed at producing climate-responsive products.
The maize seed portfolio has been expanded with the release of SC661 and SC657, both medium-maturing hybrids.chroncile
