HomeBusinessLiquidity constraints hit Seed Co

Liquidity constraints hit Seed Co


SEED CO Limited says its artificial maize seed drier plant is nearing completion, but the project is being dragged by liquidity challenges bedevilling the country.

The company has set February next year as the target for completing the US$10 million project.

The group’s CEO Morgan Nzwere told Standardbusiness on the sidelines of the company’s annual general meeting that project funding would come from both bank
borrowings and internal sources.

The artificial maize drier is expected to reduce seed post maturity losses and expedite processed seed preparedness.

Nzwere said the project was at about 20% completion but not much work had been done because of the liquidity challenges.

“It’s probably, say, about 20% maybe at this stage,” Nzwere said.

“If you go to the site you will not see much because a lot of the work has been concentrating on civils in terms of excavation and compacting the ground before
we can start installing the driers.

“We have partly paid for the equipment that is going to the driers, but again it’s a project that is being affected by the current liquidity challenges because
in terms of the local payments we are not able to do them as quickly as we would want because the banks that fund us are also having liquidity challenges.
“They do not get the cash available as quickly as we would want it to be available.”

He said the project was, however, still going to be commissioned in February 2020 and the company was talking to funders who were trying to put in place
measures to ensure that they meet the deadline.

The Seed Co CEO said because of drought, the company was putting up irrigation facilities to come up with climate-resistant varieties.

“In terms of production, we use growers with irrigation; in terms of varieties, we are trying to come up with varieties that are climate- smart and can quickly mature so that farmers can get something even if the rainy period is brief. “Our research programmes focus on those challenges that the farmers have,” Nzwere

He said the company was trying to help their contract growers to ensure that they produced adequate seed.

“The growers do contract farming on our behalf; they produce seed on our behalf. They deliver it to our factories and we then sell to our market,” he said.

“Everyone is affected by the current environment, but we try to help our growers to make sure that we have adequate seeds.”

Seed Co expects continued demand for seeds owing to the governments input programmes, but cannot predict what is going to happen in the rest of the markets
during the upcoming 2019/2020 season.

“We have got adequate stocks in the warehouse and we are ready to sell,” Nwere said.

“In terms of demand, we cannot predict anything because we all know what is happening in the economy at the moment.

“We, however, expect continued demand in terms of the government input programmes, but as for the rest of the market it’s very difficult to foretell or to
predict what is going to happen.”

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