SEED producer, Seed Co Limited, will prioritise export sales and foreign currency transactions to generate more forex to offset market shortages, it has been revealed.
Over the past few years, there has been a significant decline in foreign currency availability in the local market due to currency volatility, stringent exchange controls and a drop in investments.
In its financial results for the year ended March 31, 2024, Seed Co said the firm maintained cautious optimism regarding Zimbabwe’s economic outlook despite prevailing challenges.
“... the focus will be on increasing the contribution of exports and US$-denominated sales while ensuring competitive pricing and effective cost management. The business will continue to leverage its intellectual property by continuing to offer an optimal mix of seed varieties suitable for both drought and favourable rainfall conditions,” the firm said.
Seed Co said foreign currency shortages persisted in the period under review as most economic players demanded settlement in US dollars.
The post-election season witnessed liquidity crunch of both the ZWL and the US$, slowing down activity in the market, it said.
“Government payments were delayed, resulting in operating difficulties and unavoidable funding gaps, forcing companies to borrow and incur huge finance costs.”
Overall 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, according to the firm.
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The company added that the extensively publicised drought dampened cropping plans as farmers cautiously tried to curb the risk of crop failure because of moisture stress.
“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 the much-need foreign currency while at the same time reducing the impact of lower local demand for seed,” Seed Co said.
“Wheat sales volumes remained constant in comparison to prior year despite challenges experienced by farmers which included power cuts, high prices of key inputs like fertiliser and exchange rate volatility.”
Revenue dropped by 10% on low sales volume performance to ZWL$813,67 billion from a prior year comparative of ZW$L1,01 trillion.
Despite the drop in the top line, a near 43% increase in other income led to the group recording a profit after tax for the period of ZWL$463,34 billion, from a prior year comparative of ZWL$374,58 billion.
Operating expenses surged to ZWL$494,35 billion during the period under review, from a prior year comparative of ZWL$435,63 billion.
This was due to US dollar-indexed pricing while the ZWL remained the trading currency.
In the outlook, Seed Co said it will focus on research and development of seeds.
