El Niño hits Seed Co sales volumes
LISTED agricultural concern Seed Co Limited has reported a 28% decline in seed sales volumes for the third quarter ended December 31, 2023, a consequence of delayed rains and diminished enthusiasm for cropping due to the El-Niño phenomenon.
In a trading update for the quarter ended December 31, 2023, Seed Co group secretary Tineyi Chatiza said in the period under review, total volume sold amounted to 18 520 tonnes, compared to 25 814 tonnes recorded in the preceding year.
Revenue in inflation-adjusted terms, however, increased by 41% to ZWL$266,5 billion. Operating profit rose by 1 582% to ZWL$484,6 billion.
“In the third quarter, the total volume of Zimbabwe seed sales witnessed a 28% decline compared to the corresponding period in the preceding year, a consequence of delayed rains and diminished enthusiasm for cropping due to the El-Niño phenomenon,” Chatiza said.
“The increase in revenue, whether assessed historically or adjusted for inflation, aligns with the increasing proportion of US$ denominated sales against the pronounced depreciation of the exchange rate and the resulting inflationary impacts.”
The executive said the enhanced profitability outcome could be credited to the restoration of profit margins and the alignment of the exchange rate with open market forces experienced in the better part of the first half.
“It is imperative to emphasise that the comparability of financial performance is considerably affected by the volatility in exchange rates and the transition in the base of inflation statistics from the local currency to a combination of currencies,” Chatiza said.
Zimbabwe is working to establish consensus for the implementation of this year’s national budget while addressing the stabilisation of the foreign exchange market, curbing inflation and restoring business confidence.
Throughout the region, economies are also grappling with challenges such as shortages of foreign currency, inflationary trends and escalating interest rates.
From an operational perspective, Chatiza said the delayed rains this season led to increased demand for small grains and legumes, extending into the last quarter of the financial year in Zimbabwe and neighbouring countries.
“This demand for small grains holds significant potential to clawback annual sales volume performance not only in Zimbabwe but also in neighbouring countries,” he said.
Chatiza said regionally, record sales were registered in East Africa and certain parts of southern Africa, which is anticipated to mitigate the overall impact of decreased trading in some southern African markets that were adversely affected by El-Niño conditions.
Economic difficulties are persisting in Zimbabwe characterised by shortages of both foreign and local currencies, leading to exchange rate-induced inflation and a dominance of the informal economy.
Compounding these challenges, the current agricultural season is experiencing adverse weather conditions attributed to the El-Niño effect, further exacerbating economic strains.