Seed sector collapses from foreign acquisitions

THE acquisition of major stakes in local seed companies by foreign firms is threatening the country’s control of the seed industry, with fears it could result in unfair competition or even the demise of seed manufacturing in the country, the Agricultural Marketing Authority (Ama) has warned.

Kudzai Kuwaza

In a report titled Consolidation of the Zimbabwe Seed Industry 2015 Scenario, the authority said the acquisition of local seed companies by foreign players has a negative impact on the country’s agricultural sector which suffered an 8,2% decline in the 2014/15 season.

“The industry is fast shifting from a competitive sector of agribusiness comprising locally-owned firms, to an industry dominated by Pioneer DuPont, Mansanto, Syngeta, Limagrain, Bayer and KWS (all foreign-owned companies),” the report revealed.

“The corporations are penetrating the Zimbabwe seed industry by acquiring stakes in smaller seed companies and merging with large competitors.”

Local companies that have sold equity stakes to international seed corporations are SeedCo, which sold a stake to French company Vilmorin & Cie (Limagrain), Panner and Pioneer who sold stakes to American company DuPont Pioneer, Agriseeds and Progene which sold stakes to South African company Klein Karoo, Tocek to American company Monsato, and Quton to Indian company Muyrak, according to Ama.

“The ongoing consolidation is associated with a number of adverse impacts namely declining rates of savings and replanting peculiar to hybrid seeds due to legal or biological protections by way of patens or terminator technology.

“As a result, farmers’ ability to produce food free from heavy reliance upon off-farm inputs is greatly eroded,” the report warned. “(Another adverse impact will be a) Shift in both public and private research toward the most profitable proprietary crops, very few are focusing on pulses and tuber crops.”

Other adverse impacts noted in the Ama report include firms seeking to make profits by ceasing to compete on the basis of prices but by restricting seed output as exemplified by major companies stopping local production and relying on imported seed, as well as reduction of competition in terms of price and quantities when four firms attain a threshold control of 40% market share.

“Of major concern to the Zimbabwe seed industry is the loss of effective control of decades of research including germ plasm, which was once the preserve of our local seed industry,” the report noted.

“Zimbabwe is now mostly a marketing destination because of the multi-currency position. Production of seed is undertaken elsewhere, now mostly Zambia, Malawi, South Africa and Mozambique which retain weaker currencies, leading to a lower production base which is marketed in hard currency in this case, Zimbabwe.”

The authority said the domestic seed industry needs regulatory support so that it maintains a strong position underpinned by government policy.

Small Grain Producers’ Association chairman Basil Nyabadza said the country’s seed bank, particularly for small grains, is severely depleted.

“The seed bank of small grain is virtually empty due to lack of investment for the last five years,” Nyabadza told businessdigest on Wednesday.

“The sector has been relying on recycled material.”

He said 85% of local seed companies are now in foreign hands, meaning that years of research from the colonial era to the present have lost. Nyabadza said the nation had failed to invest in seed programmes since the advent of the multi-currency regime in 2009, giving rise to poor yields due to recycled seeds.

He revealed that as a result of poor yields, the groundnut crop in Zimbabwe is affected by the aflatioxin virus.
This, Nyabadza said, will result in the country failing to export groundnuts which would have helped inject much-needed foreign currency.