Sales volumes at Seed Co, the country’s largest seed producer, fell 24% in the nine months to December, hit by drought, weak consumer spending and lower purchases from Government.
Volumes were 3% down in the last three months of 2019, compared to the same period in 2018, Seed Co said in a trading update released Monday.
The Seed Co report gives only the latest signal that Zimbabwe will produce even less grain in 2020 than it did in 2019, when maize output fell 54% to 776 635 tonnes, less than half the country’s requirements.
According to Seed Co, the late arrival of rainfall had “discouraged farmers from buying seed”. Fuel shortages disrupted planting, while the fall in consumer spending drove down demand. Power and water shortages also prevented farmers from growing irrigated wheat last winter.
Seed Co was also hurt by reduced purchases of seed by the Government, traditionally the biggest buyer of the company’s seed. Government uses the seed for the Presidential Input Scheme, a subsidy programme for rural communities, and also for Command Agriculture, both of which have been scaled back over the past year.
Seed Co’s latest report contrasts sharply with trends in early 2018, when the company reported that demand was outstripping supply.
However, Seed Co says it is going ahead with constructing of the flagship Artificial Maize Seed Drying Plant at the company’s Stapleford Complex near Harare. Last year, the company announced it planned to commission the US$10 million plant in February 2020, but now says completion will be delayed.
“The construction project is progressing with all equipment having been received from the supplier in Denmark. Construction progress is however at a slower pace than originally anticipated due to funding challenges,” Seed Co said.
The company says it managed to pay seed producers, despite funding problems.
“Amidst the challenges, the company managed to secure funding to pay for all seed deliveries from growers and funded the processing of the seed in readiness of the selling season. Striking a balance between cost containment and continuing in business profitably is now part of the company’s challenging daily routine.”
Sales volumes are expected to close the current financial year lower than prior year due to drought and the economic crisis, Seed Co said in its outlook.
According to the United Nations, Zimbabwe is facing its worst drought in 40 years, which has left over seven million people in need of urgent food aid.