Seed Co losses at P15.8 million

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Gazette Reporter

Losses of seed manufacturer, Seed Co (Pty) Ltd which recently listed on Botswana Stock Exchange Limited (BSEL) piled up to $1.5 million, an equivalent of P15.8 million for the six month ending 30 September 2018.

According to the company, the losses were due to the exchange rate gains in its Zambia operation, one of its biggest markets and interest cost savings in Botswana. In the prior year, Seed Co registered a loss of $3.3million (P34.7 million). Fortunate for the company, the losses were reduced by half.

Seed Co said its business is highly seasonal with the bulk of the sales taking place in the second half when summer rains come and planting takes place. As a result, the board added that the business traditionally makes a loss in the first half as it will mainly be incurring production, processing and administrative costs in preparation for the main selling season.

Seed Co is one of the leading certified seed companies authorized to market seed varieties developed by itself, government and other associated seed breeders in its markets.  The core business of Seed Co is the development, production and marketing of high performing certified hybrid seeds for maize, wheat, soya beans, sugar beans, cowpeas, sorghum and groundnuts. The Company has registered operations in nine countries and also distributes its products to an additional five.

Seed Co has the largest seed market share in Botswana. Comparatively, the seed market size in Botswana is however relatively smaller than Seed Co’s other markets which are bigger in terms of population and agriculture sector economic contribution.

Seed Co Zambia is the leading operation of Seed Co International, contributing approximately 40 percent of consolidated annual revenue to Seed Co International, according to the company’s estimates.  The subsidiary is one of Zambia’s leading players in the agricultural sector and it is involved in crop seed research, production, processing, distribution and marketing. Seed Co Zambia’s flagship seed products include hybrid seed maize, wheat and soya bean. The business unit also markets sorghum, sugar beans, groundnuts and vegetables seeds.

Agri–Seed Co Kenya is also one of the key business units of Seed Co International, which contributes approximately 17 percent of consolidated annual revenue of Seed Co International. The business unit is involved in crop seed research, production, processing, distribution and marketing. Its flagship seed products include hybrid seed maize, sorghum and vegetable seeds. Elsewhere, Seed Co Malawi currently commands 19 percent of the formal market share in Malawi. Seed Co Tanzania is of one of Tanzania’s prominent players in the seed industry.

In spite of the growth in turnover in Zambia and Malawi driven by improved wheat seed sales and early maize seed exports to Mozambique respectively; Seed Co said revenue decreased by 7 percent to $17.7m due to late availability of maize seed in Tanzania and Kenya as last year’s seed production from growers was negatively affected by high moisture content.

The group said its stock levels are higher than the previous year end value due to deliveries of current year’s production by growers in preparation of the selling season in the second half of the year. “Earnings are forecast to grow driven by the improved seed supplies in Tanzania and Kenya. The partial return of the Farmers Input Support Programme (FISP) to tender in Zambia after the challenges encountered in the e-voucher programme introduced last year is also expected to boost the Group profit.”