Oliver Kazunga, Senior Business Reporter
LISTED seed producer, SeedCo Limited says its planned US$12,5 million Artificial Seed Drying facility in Harare will be launched at the end of the year.

In a trading update for the first quarter ended June 30, 2020, SeedCo said:

“The group is soldiering on amidst severe funding constraints to commission the game changing US$12,5 million artificial seed drying facility at Stapleford (Harare) before the end of the year.”

Recently, SeedCo announced that it had secured the equipment for an Artificial Maize Seed Drier from a supplier in Denmark.

The setting up of the drier has been necessitated by the company’s determination to curb seed post-maturity losses and further advancing processed seed market readiness.

During the period under review, SeedCo noted that the country was under Covid-19 lockdown as the Government reviewed its movement restriction measures fortnightly.

It said this resulted in reduced economic activity locally compounded by the negative impact on commodity exports due to declining global demand.

“However, the impact on the group’s activities was negligible since seed supply was designated as an essential service.

“The economy was further weighed down by hyperinflationary conditions and the sharp Z$ depreciation.

“Total sales volumes for the first quarter increased by 45,4 percent from the corresponding period last year with wheat seed and barley seed respectively making up 91,6 percent and 8,1 percent of the total sales volumes during the period under review,” said SeedCo.

It said wheat seed sales volumes during the period under review were 56,5 percent higher than prior year on the back of improved irrigation capacity, which benefited from rising water levels and better electricity supply.

“In addition, Government’s commitment to reducing imports by supporting local production of the crop contributed to the positive sales performance.

“On the other hand, barley seed sales volumes decreased by 20,3 percent compared to the previous year as the major customer cut back its seed uptake for malt production in response to reduced beer consumption arising from constrained customers’ disposable income and the Covid-19 lockdown,” said the firm.

In terms of financial performance, SeedCo said the first quarter was mainly a cost-accumulation phase in preparation for the main maize seed selling season in the second half of the financial year.

Historical cost revenue for the quarter grew by 1,097 percent from the same period last year which is indicative of the aforementioned inflationary selling price increases and volume growth.

“However, the turnover increase in inflation-adjusted terms was a relatively modest 80 percent.

“Compared to prior year, operating profit rose by 577 percent in historical cost terms and by only 28 percent.

“The share of loss from the foreign associate widened as its US$ denominated loss was translated at a weaker exchange rate. The average

ZWL$/US$ exchange rate depreciated from 5,05 for the quarter ended 30 June 2019 to 35 79 for the quarter ended 30 June 2020.”

In addition, SeedCo’s strategic position at the base of the food value chain, and the concerted effort by Government, regional governments and other key stakeholders to ensure food security is expected to help the group’s performance remain resilient in the circumstances. — @okazunga