Seed Co Limited is owed a substantial US$13.31 million by the Zimbabwean government for seed supplied during the previous farming season.
The government procures maize seed for its Pfumvudza and Presidential Input Scheme programmes, which provide subsistence farmers with free agricultural inputs.
These government-backed initiatives aim to support smallholder farmers by supplying them with essential inputs, including seed, fertilizers, and other resources.
The programmes play a crucial role in enhancing food security and supporting the livelihoods of vulnerable farming communities.
Speaking to <a href="https://www.newsday.co.zw/thestandard/business/article/200029289/govt-owes-seedco-staggering-us13m">The Standard</a> on the sidelines of the company’s annual general meeting (AGM) held in Harare last week, SeedCo chief executive officer Morgan Nzwere said:
<blockquote>
Well, the main amount is about US$13 million which is still owed by the central government.
However, the government is an important customer so every year they buy a lot of seeds.
There have been some liquidity challenges that have arisen as a result of that debt not being cleared.
However, it does not worry us that much as we have never written off government debt.
We know that there will be some payment challenges but eventually, they do clear their debt.
</blockquote>
Nzwere said that the US$13.31 million debt owed by the Zimbabwean government has plunged the company into a severe liquidity crisis.
To cover the funding gap, Seed Co has been forced to borrow extensively from banks, incurring significant bank charges that eat into the company’s profits. He said:
<blockquote>
The big challenge that it creates for us is we then have to go to the banks to borrow to cover that gap and that results in finance charges which then eat into the profit.
I do not know why the government would delay payments. But we engaged them, and we have been receiving some payments.
It is just that we would like the payments to be cleared a lot quicker to save on interest so that we do not go to the banks to borrow. But, you know, the government has got many priorities.
</blockquote>
In a presentation delivered during Seed Co’s annual general meeting (AGM), revealed that the Zimbabwean government had cleared around 43% of the initial US$23.4 million debt owed to the company.
This reduced the outstanding balance to approximately US$13.31 million.
Nzwere expressed optimism that the remaining debt would be fully settled before the commencement of the next farming season. He said:
<blockquote>
We have been seeing payments coming through. What they (government) can do is give you a definite plan to say we will pay you so much by such and such a date, but we have been seeing payments coming through.
</blockquote>
 Nzwere said local demand for seed in Zimbabwe was severely affected by the El Niño-induced drought.
In response, the company is planning to increase its focus on foreign markets to generate foreign currency (forex) through export revenues.
Nzwere revealed that Seed Co is currently exporting seed to various East African countries, including Kenya, Tanzania, Uganda, Sudan, Burundi, and Rwanda.
Seed Co operates in a total of 35 African countries, with direct operations in Angola, Botswana, the Democratic Republic of Congo, Ethiopia, Kenya, Malawi, Mozambique, Nigeria, Tanzania, Rwanda, Uganda, Zambia, and Zimbabwe.
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Government Owes Seed Co US$13.31 Million

SeedCo Limited says maize seed sales volumes declined by nearly one-third in the year ending March 2024 due to the El Niño-induced drought, as reported by the <a href="https://www.chronicle.co.zw/drought-affects-seedco-sales-volumes/">Chronicle</a>.
On the positive side, export sales saw a substantial increase, effectively mitigating the impact of decreased local seed demand.
In the financial statement for the year ending March 31, 2024, SeedCo’s group company secretary, Tineyi Chatiza, attributed the decline in sales volumes to the El Niño-induced drought, which adversely affected both maize and soya seed sales. He said:
<blockquote>
Sales volume of the flagship crop, maize seed, was below prior year by nearly a third. On the other hand, export sales increased notably earning the business with much-needed foreign currency while at the same time reducing the impact of lower local demand for seed.
</blockquote>
Regarding wheat seed sales, Chatiza reported that volumes remained steady compared to the previous year, despite challenges faced by farmers, including power cuts, high input prices (such as fertiliser), and exchange rate volatility.
Nevertheless, Chatiza expressed cautious optimism about Zimbabwe’s economic outlook, even in the face of ongoing challenges. He said:
<blockquote>
The agricultural sector, a vital economic driver, is expected to improve with anticipated favourable weather conditions as El Niño transitions to La Niña in the upcoming season.
Moving forward, the focus will be on increasing the contribution of exports and USD-denominated sales while ensuring competitive pricing and effective cost management.
</blockquote>
The firm said it remains committed to leveraging its intellectual property by providing an optimal mix of seed varieties suitable for diverse conditions, including both drought-prone and favourable rainfall environments.
Chatiza said due to low sales volume performance, revenue dropped by 10 per cent. However, other income increased due to exchange gains from US dollar-denominated receivables and higher non-seed sales.
He reported that finance costs accounted for 16 per cent of turnover, a decrease from the previous year’s 26 per cent.
Despite the lower sales volumes, SeedCo achieved an eight per cent improvement in profitability compared to the previous year, primarily due to exchange gains resulting from the revaluation of US dollar-denominated receivables.
SeedCo said that research and development continue to be the cornerstone of its competitive advantage. The company is actively pursuing various climate-responsive product initiatives across different pipeline stages.
SeedCo has expanded its maize seed portfolio by introducing SC661 and SC657, both medium-maturing hybrid varieties.
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