1 June 2014

Zimbabwe: Seed Co to Spend More On Research

Listed seed manufacturing company, Seed Co will this year increase capital expenditure towards research and processing systems as it seeks to gain a footprint on both local and regional markets, a company official has said.

This follows a recent acquisition of a 25% stake in the company by UK-based foreign firm Limagrain, one of the largest plant breeding and seed development companies in Europe.

Seed Co is a strategic entity for the business as it already has established operations in Tanzania, Malawi and Zambia.

Seed Co finance director, Felistus Ndawi said capital expenditure for the group going forward would be dedicated towards seed research and processing.

"Under the Limagrain deal we foresee more capital expenditure being directed towards research and processing. The idea is to use single pass processing so as to reduce handling and consequently cut costs. It will be realigning single pass processing and equipping our laboratories to do more research," she said.

Limagrain has extensive portfolios of varieties and seeds in cereals, oilseeds, beans and peas (including vining peas), sugar beet, seed potatoes and maize among others.

Under the deal, it is envisaged that Seed Co would benefit from joint research board and activities as well as technology transfer while Limagrain will draw from its expertise to provide field trials and bursaries.

Ndawi said the Zimbabwe government debt was still a challenging one as the figure brought forward towards payment was only a portion.

It was widely reported late last year that government had cleared part of its debt to the company with the balance owing from quasi-government parties such as the President's Well-Wishers Input Scheme.

The group received US$6 million from the US$18 million owed.

Ndawi said there would be no write off on the debt owed by government.

"Last year government through other quasi-government institutions owed us money but fortunately government has consolidated it into one debt and has expressed commitment to paying when they get the money," she said, adding that the group had no idea when this money would be repaid.

She also said cost management has been a key area of focus for the company.

"We had to retrench in order to realign the cost structure to reduced turnover. This helped us to streamline costs and remain profitable," said Ndawi.

She pointed that seed companies continued to face major challenges ranging from low adoption of technology, insufficient investment in agriculture and adverse climatic conditions with inconsistent rainy seasons.

Many farmers face challenges in the form of unviable produce markets and she suggested that the solution would be to introduce forward buying contracts and contract farming with agro-processors.

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