ZIMBABWE’S agricultural sector entered 2025 on firmer footing after one of the harshest contractions in recent history.
In the 2026 proposed national budget, agriculture growth for 2025 was revised upwards to 24%, from an earlier 21,5%, marking a sharp turnaround from the -18,1% contraction in 2024 driven by El Niño–induced drought.
Looking ahead, the sector is projected to grow 5,4% in 2026, underpinned by expectations of normal to above-normal rainfall and expanded irrigated cropping.
The production numbers tell a story of recovery, but also of complexity. Maize output rebounded sharply in 2025, with official ministry of Agriculture figures estimating production at around 2,3 million tonnes, a 260% increase from the drought-stricken prior year.
This prompted an initial government ban on maize imports on the assumption of national self-sufficiency.
However, the Zimstat post-harvest survey placed output closer to 1,8 million tonnes — still a dramatic recovery, but potentially below the country’s annual requirement of 2–2,2 million tonnes.
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The disconnect between official estimates and survey data created uncertainty in the market and ultimately led to the lifting of the import ban in October 2025.
Wheat production delivered a clearer success story. Zimbabwe recorded a historic harvest of over 640 000 metric tonnes, materially exceeding national demand of around 360 000 tonnes, reinforcing the country’s growing capacity in irrigated winter crops.
It is within this evolving agricultural landscape that Seed Co Limited delivered its half-year results for the period ended September 30, 2025, revealing a seasonally weak but strategically important first half of FY2026.
A soft top line, by design
Seed Co reported revenue of US$11,6 million, a 39% year-on-year decline from US$18,9 million in the prior comparative period. This contraction was largely structural, driven by:
Timing differences in the agricultural cycle;
Reduced exports as regional grain supplies normalised after last year’s shortages; and
A smaller winter wheat season traditionally supports first-half revenue.
Unlike FY2025, where abnormal weather patterns and regional shortages created unusually strong early-season demand, HY26 represents a return to the more traditional seasonality of the seed business, where the bulk of maize seed sales fall in the second half.
Margin compression
Gross profit declined sharply to US$3,1 million from US$9,4 million, reflecting lower sales volumes and a less favourable product mix in the period under review.
While cost of sales was managed down to US$8,5 million from US$9,5 million, the reduction in revenue outpaced cost containment, resulting in thinner gross margins.
Operating expenses remained tightly controlled at US$10 million, broadly flat year-on-year, demonstrating management’s continued focus on cost discipline in a fully-dollarised cost environment.
However, with weaker topline performance, the business recorded an operating loss of US$5,2 million, compared to an operating profit of US$3,6 million in the prior period.
After finance costs of US$2,1 million and losses from associates, the company reported a loss before tax of US$7,5 million and a total comprehensive loss of US$6,65 million, widening from a loss of US$510 000 in the prior year period
This deterioration should be interpreted through the lens of seasonality. In seed businesses, the first half is typically dominated by wheat and barley sales, while maize — the main earnings driver — is sold and recognised in the second half as the summer planting season accelerates.
Balance sheet resilience
Despite the interim loss, Seed Co maintained a strong balance sheet. Total assets stood at US$161,6 million, while shareholders’ equity closed the period at US$120,9 million.
Trade and other receivables declined to US$58,7 million from US$69,1 million at the March year-end, reflecting tighter working capital discipline and improved collections.
Inventories rose modestly to US$26,8 million, positioning the business to meet expected demand in the second half.
Encouragingly, operating cash flows swung back into positive territory at US$3,5 million, compared to an outflow of US$2,3 million in the prior period, driven by improved working capital management.
Why the second half matters more
The apparent weakness in HY26 is largely optical. The core maize seed business, which drives the bulk of Seed Co’s profitability, is heavily weighted toward the second half of the financial year.
The 2025/26 summer cropping season is expected to benefit from:
Improved rainfall outlook;
Stronger farmer viability after a better 2025 harvest; and
Restored market stability following the lifting of import restrictions.
As maize seed sales are booked in the second half, revenue and profitability are expected to recover materially in H2, flowing into the full-year results ending March 31 2026.
A sharper second-half recovery
From an analytical perspective, the second half should reflect a strong rebound in both revenue and margins, assuming normal planting conditions.
The recovery in national maize output, improved farmer liquidity and stabilising regional demand point to a significantly stronger H2 performance.
While full-year revenue may not repeat the extraordinary highs of FY2025, the business is well positioned to deliver a materially improved second-half showing, potentially returning to profitability at the full-year level as maize volumes are recognised.
Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He holds a First Class Degree in Finance and Banking from the University of Zimbabwe. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.