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Govt Owes Seed Companies US$62 Million

6 months agoTue, 26 Dec 2023 06:29:28 GMT
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Govt Owes Seed Companies US$62 Million

The Government owes seed companies more than US$60 million, the Zimbabwe Seed Association (ZSA), a grouping of seed companies, has said.

ZSA said that its members are owed almost half of the payments for seed supplied to the Government last season, while “nearly all” of the seed supplied this year has not been paid for.

A ZSA memo, dated 18 December 2023, seen by newZWire reads in part:

As an illustration, a total of US$61,778,000 is owed to eleven members of the association (Arda, Easiseeds, Farmbiz Genetics, Intaba trading, Klein Karoo Seed Marketing, Prime Seeds/Seed Co vegetables, Quton, Reapers, Seed Co, Tocek, Zimbabwe Technology Solutions).

The Government is the biggest buyer of seed, which it distributes to hundreds of thousands of smallholder farmers across the country under programmes such as Pfumvudza/Intwasa.

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But with no payment from their biggest customer, seed companies are defaulting on bank loans, laying off staff, and planning to scale back on production.

As a result, experienced growers are refusing to sign new contracts with seed companies because they have not been paid for 2023 deliveries. Said ZSA said:

Relationships with banks are now at their lowest level; seed companies cannot be trusted and hence are failing to access favourable credit facilities including the productive sector facility.

Seed producers are unable to secure the foreign currency they need for imports such as hybrid seed of sunflower and sorghums and parental seed, which they say helps localised certified seed production.

ZSA said that a request to the government for US$15.5 million from six seed producers “so far got no response”. It added:

Such financial distress is unsustainable and results in the scaling down of operations, and closing of seed companies and Zimbabwe will soon lose its status of a well-developed seed sector which has over the years ensured national seed security.

The hectarage put under maize in the current 2023/24 season is far less than last season due to the El Nino-induced drought.

According to Government data, by 10 December, farmers had planted just 95 156 hectares of crops, a steep fall from 465 707 hectares on the same day last year.

Meanwhile, Seed Co, the country’s largest producer and the main supplier of government seed, has reported a 22% drop in maize seed sales in the half-year to September.

Zimbabwe experienced a prolonged drought from late October into early December and this is expected to negatively impact farm output as the majority of farmers are into rain-fed agriculture.

More: Pindula News

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