Seed Co, which posted a full-year profit after tax of $19 million for the year ended March 31 2012, says its entrance into the Nigerian market will be a game changer due to the huge potential presented by that market.
The variety seed producing firm plans to sell its first pack of seed in the Nigerian market during the 2013 — 2014 season.
Its revenues for the year went up 20% to $117 million, while sales volumes rose 22% to 67 240 metric tonnes.
“Entrance into the Nigerian market will be a game changer in terms of the population size of that country.
“Its market is bigger than all the markets we operate in, combined,” Seed Co group chief executive officer Morgan Nzwere told an analyst briefing in Harare on Tuesday. He said the company was ramping up production in the East African markets of Ethiopia and Tanzania in order to minimise transportation costs of moving seeds from other countries.
Nzwere disclosed the company was owed $15 million and $7 million by the government of Zimbabwe and Zambia respectively.
“There are prospects of recovering the money from Zambia anytime soon.
“In Zimbabwe, there is a payment plan and we expect the money between June and July,” he said.
“The challenge is that payments are coming in slowly. Liquidity is not only affecting companies, but governments as well,” he said.
“The government is an important player in the seed market that you can’t always walk away from.”
Nzwere said during the year under review, an over-supply of seed on the market forced the company to reduce prices by about 10% in Zimbabwe, while devaluation of the kwacha in Malawi also affected its pricing in that market. The new political dispensation in Malawi, according to Nzwere, had brightened business prospects as the new government had promised to continue with the subsidy programme.
Seed Co’s bank borrowings doubled to $44 million with interest rates averaging 12% locally compared to regional dollar borrowings of between 5% and 6%.
The company released eight new varieties in 2012 and was in the process of building a new technology laboratory at Rattray Arnold.