Price controls, which kept the price of seed maize at pre-June 2001 levels, saw the net profit of SeedCo, one of the country’s biggest seed producers, plummet by 63 percent from $385.2 million to $142.9 million.
And while the country has been hit by a severe seed shortage, the company says, despite the drought, it has adequate seed for both the local and export markets and a significant carryover for next season.
In its report for the first half ending August, SeedCo says its turnover rose by 76 percent from $1.2 billion last year to $2.1 billion.
The sales were largely boosted by exports, which went up by 209 percent though volumes were down by 19 percent. Export sales increased from $284.4 million to $877.4 million.
Local sales only increased by 33 percent from $883.8 million to $1.2 billion.
The company says export sales were hampered by difficulties in obtaining export permits. This resulted in some orders being cancelled. The company was also adversely affected by a 220 percent increase in overhead costs which were due to the prevailing hyperinflationary conditions, costs of the Syngenta-SeedCo joint venture in South Africa which amounted to $46 million, a bad debt of $45 million incurred in Malawi where a major retail distributor went into receivership as well as the cost of translation of operating expenses for foreign subsidiaries.
Though the company’s traditional grower base was literally destroyed by the current agrarian reform programme, it says adequate seed production will be achieved by traditional growers and a large number of new indigenous producers. Its main wish is that it be granted timeous permits to allow it to export seed and exploit the regional markets.
It also says because of the escalating inflation it is imperative that it must sell its product at selling prices that are adequate to ensure the future supply of seed.