LEADING seed producer, SeedCo International Limited (Seed Co), has recorded an increase in United States dollar sales, a top company executive has said, giving the firm leeway to partially settle its foreign currency obligations.

SeedCo owes growers in excess of US$4,8 million.

According to the group’s financial results for the year ended March 31, 2023, about 40% of its total revenue was in United States dollars (USD).

“It means we can meet our US dollar obligations. We are also seeing that some of our suppliers are insisting on US dollars only,” Seed Co International chief executive officer Morgan Nzwere told Standardbusiness on the sidelines of the company’s analyst briefing last week.

“Our growers are also saying ‘look, the Grain Marketing Board is paying US$200 and the balance in US dollars, we also need to be paid in US dollars’.

“So, with that much revenue we are able to partially settle our growers who produce seed for us.

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“We obviously owe the growers, if you look at 21 000 metric tonnes of seed at an average of 600 per tonne and 40% of that we are paying them in US dollars that would be US$4,8 million dollars for the year.”

Nzwere said foreign currency incomes would also mean raising more capital as there have been always working capital challenges

Government is one of the biggest customers for SeedCo, but it usually uses local currency to pay for goods.

During the period, Nzwere said the government’s debt sitting on their books was US$16 million convertible to the Zimbabwe dollar.

“At the end of the financial year, it was US$16 million dollars. But they have been paying until about four weeks ago when they stopped paying contractors. But I would want to believe it is a monetary policy issue and they will resume soon,” he said.

During the period under review, profitability was driven by 14% volume and 156% revenue growth, increased USD denominated sales, among others.

Nzwere said the reason for the increase in other income was better margins in inflation adjusted terms, 41% against 33%, anchored by carryover stock.

Finance costs went up nearly five times due exorbitant interest rates and growth in working capital funding needs.

Associates & JV contribution was higher mainly because of the increased contribution from Quton (US$1,3 billion 40% profit share) which helped to offset reduced profit from Seed Co International.

In a trading update, the company said maize remained the flagship seed crop contributing 52% of the volume having increased by 12%.

This was driven by better stock position and increased demand buoyed by better rains.

Wheat sales during the period dropped by 6% due to power constraints while barley increased by 61%.

Soyabeans volume grew 50% as demand increased driven by import substitution drive.

Other crops include beans and sorghum and the combined volume increased by 37% again on the back of good rains.