ZIMBABWE’S largest seed producer Seed Co Ltd (Seed Co)’s planned disposal of a sizeable stake in the company to an international technical partner are at an advanced stage and expected to be concluded by year end, management has said.
Report by Taurai Mangudhla
Seed Co CEO Morgan Nzwere told shareholders at the company’s annual general meeting last week the group was talking to one of the largest seed companies in the world for equity partnership with a view to boosting the seed producer’s research at a time competition in the area was growing.
“Recently one of our major competitors locally, Pannar, got a big foreign partner,” he said, adding a huge technical partner would not only boost research, but result in equity injection.
Nzwere said international seed companies were currently looking to expand into Africa through various options, including mergers.
“It is important that we have a huge technical partner aboard as these companies are spending about a billion dollars on research annually while our group annual turnover is just a fraction of that,” he said.
Nzwere said the top seed companies were from Europe and America, but could not be drawn to give further detail owing to confidentiality clauses in the existing agreements.
“We have signed confidentiality agreements so I don’t want to be found foul of anything. These transactions are very sensitive, if you know what I mean. You don’t want someone to start accusing you of something that was maybe just a slip up,” Nzwere said without specifying the size of the stake to be acquired.
“What I can say is there are not going to get a majority. They can’t get a majority stake, they will be getting a minority stake but sizeable enough for them to make an impact,” he said.
Giving a trading update on Seed Co’s performance, Nzwere said the upcoming season was encouraging.
He said winter cereals increased by 57% in Zimbabwe on account of contract farming but remained far less than peak levels as government support to wheat farmers was lacking.
The company said it was on track to attain its budgeted break even performance in sales by year end with seed sales expected to reach 45, 000 tonnes.
“Post election, there are already some inquiries that are coming in. Whether they will translate to significant business is something else, but we are hopeful given the new dispensation that is more pro- agriculture compared to the inclusive government,” Nzwere said.
“In terms of stock in Zimbabwe we have about 24 000 tonnes, say between 22 and 25 000 tonnes in stock and then in the region you add another 15 000 tonnes or so and we expect to sell about 43 to 44 000 tonnes.”
Seedco is owed US$18 million by the Zimbabwe government and many of its departments, a figure which has remained unchanged since the group’s May financial year end as government was focusing on the July 31 harmonised elections.