Seed demand to remain unchanged

Seed demand to remain unchanged
Published: 15 June 2018
Demand for seed in the 2018/2019 season will remain unchanged because the Command Agriculture programme will still likely be in place, financial analysts IH Securities have said.

In an analysis of SeedCo's performance, IH said the company's saving grace during the 2018 financial year was the extension of Command Agriculture to other crops like wheat and soya bean.

"This helped increase demand for these crops, thereby defending their margins. We believe that SeedCo will be better prepared for the next farming season and will ensure seed availability in all their markets to meet the growing demand.

"We expect demand in Zimbabwe to remain largely the same as Command Agriculture will most likely still be in place in the 2018/19 season," IH said.

SeedCo management has said it expects to continue to grow the East African market as its brand continues to grow in that region.

During the 2018 financial year, Nigeria managed to make a contribution to group numbers, though management did not disclose to what extent.

"It is in their hope that the market will grow in the next financial year. The group is still in the process of adopting its vegetable seed hybrids across all markets and we believe this growth trajectory will remain strong.

"We therefore anticipate an increase in volumes across all seed varieties as we have forecast total volume sales growth of 10,9 percent (year on year). We have forecast revenue for the year at $138,19 million, up from $128,48 million on the back of maize, wheat and soya beans," IH said.

"SeedCo experienced a slightly challenging year with supply failing to meet demand across the region, resulting in a sober performance by the group for the full year ended March 31, 2018, albeit in line with our expectations.

"The shortage of seed was a result of high disease pressure that occurred during the year, a mid-season drought that affected the crop at pollination stage, army worms that have been affecting the continent as well as no carryover stocks from the previous year due to high demand," IH added.

According to management, production cycles for the year did not take into account the Command Agriculture Programme in Zimbabwe introduced in the 2016/2017 farming season but further extended into the 2017/2018 season. SeedCo managed to grab the lion's share of the programme but this left the company with very little stock to sell on the retail side.

- fingaz
Tags: Seed,


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