Seedco Imara Conference presentation 2014

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Iv'e published the SeedCo presentation made at the recent Imara Investment Conference in Zimbabwe. Interesting insights into the Pan Afrrican seed industry. Check it out.

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Seedco Imara Conference presentation 2014

  1. 1. Seed Co Limited Business Perspective Presentation Felistus Ndawi Finance Director Seed Co Zimbabwe felistus@seedco.co.zw A Presentation to Imara Investor’s conference - Zimbabwe 29 May 2014
  2. 2. Company History • 1940 Established as Seed Maize Association • 1949 1st Hybrid by Ratray & Arnold • 1960 SR52-1st commercial Hybrid • 1977 Ratray Arnold Research Station • 1991 Stapleford processing facility opened • 1991 Kadoma Research Centre acquired • 1996 Floated on ZSE • 1997 Acquisition of Semoc Mozambique
  3. 3. Company History • 1998 Seed Co Zambia formed • 2000 Seed Co Botswana formed • 2001 Seed Co Malawi formed • 2002 Joint venture with Syngenta in SA • 2003 Forays in Angola, Swaziland, Kenya • 2006 Quton Acquired • 2010 Tanzania SBU established • 2013 New technical partner Limagrain
  4. 4. Seed Co Limited • Headquartered in Harare, Zimbabwe • Workforce 1,000 employees across Africa • Locations Operations in more than 15 countries 5 Research centres in Zim, Zam & Kenya 6 seed production locations across Africa
  5. 5. Shareholders as 31 March 2014 • Rank Name Shares % • 1 VILMORIN ET CIE- NNR 30,819,144 14.93% • 2 OMLAC ZIM LTD 27,601,875 13.37% • 3 STANBIC NOMINEES (PVT) LTD-NNR 23,247,768 11.26% • 4 NSSA 20,798,328 10.07% • 5 STANDARD CHARTERED NOMINEES 19,801,280 9.59% • 6 AICO AFRICA LIMITED 7,163,233 3.47% • 7 MINING INDUSTRY PENSION FUND 6,612,927 3.20% • 8 OLD MUTUAL ZIMBABWE LIMITED 5,568,632 2.70% • 9 FED NOMINEES (PRIVATE) LIMITED 4,548,342 2.20% • 10 BURKET ASSOCIATES LIMITED NNR 4,529,583 2.19% • Shares Selected 150,691,112 72.99% • Shares Not Selected 55,754,614 27.01% • Shares Issued 206,445,726 100%
  6. 6. Limagrain partnership • Acquired 15% shareholding in Seed Co Limited • Partnership to provide access to world class breeding technologies and methods • Secondment of a resident breeder to Seed Co • Widening of product basket- veg seed • Seed testing in various climatic conditions at Limagrain research stations
  7. 7. An international co-operative group Specialist in field seeds, vegetable seeds and cereal products Farmer shareholders • 2,000 members under contract with the Co-operative A specific kind of governance • Farmer-Chairman and salaried CEO Jean-Yves Foucault, Chairman Daniel Chéron, CEO A model also applied to the subsidiaries Daniel Chéron, CEO and Jean-Yves Foucault, Chairman
  8. 8. A co-operative group open to the world Nearly € 2 billion sales 12/13Nearly € 2 billion sales 12/13 Subsidiaries in 40 countriesSubsidiaries in 40 countries Sales in more than 140 countriesSales in more than 140 countries 8,400 employees8,400 employees Field Seeds Vegetable Seeds Garden Products Bakery Products Limagrain Agro-Productions Cereal Ingredients
  9. 9. Groupe Limagrain 8,400 employees worldwide (incl. 1,400 in Auvergne) 8,400 employees worldwide (incl. 1,400 in Auvergne) €1,939 mln sales in 2013€1,939 mln sales in 2013 1,750 employees in research (incl. 200 + in Auvergne) 1,750 employees in research (incl. 200 + in Auvergne)
  10. 10. Regional snapshot
  11. 11. Seed Co Products • Maize • Soyabean seeds • Wheat • Sorghum • Groundnuts • Cowpeas • Sugarbeans
  12. 12. Maize sales volume trend 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 Industry sales (t) Seed Co (t) Competition (t)
  13. 13. Seed Co’s Contribution to Agriculture Maize • Pioneer in Maize Streak & Mottle Virus resistance. • First to address Grey Leaf Spot. • Lead in drought stress tolerance SC533 & SC301
  14. 14. Seed Co’s Contribution in Maize Production • Released 51 varieties to date • First Organisation to introduce Hybrid culture in small Holder Agric Sector. • SC 727 is the Highest yielding variety in Zimbabwe
  15. 15. Seed Co Product Performance Independent Evaluation : Art Farm Results
  16. 16. Seed Co’s Contribution in Soyabean Production • Largest Soyabean Breeding Program in Central & East Africa • 21 varieties released to date • World leader in release of Rust resistant varieties • Lead in Red Leaf Blotch & Frogeye resistant varieties
  17. 17. Seed Co’s Contribution in Wheat Production • 90% market share • High yielding up to 11t Excellent dough strength White grain excellent for baking and milling High Protein number & grain density
  18. 18. Financial Performance
  19. 19. Sub-Saharan Crop Production
  20. 20. Agricultural Growth Rate in the SADC Region • Agriculture employs 61% of SADC population • Accounts for 8% of GDP • Agriculture growth rate is 2.6% pa • Reasons for low growth: o Insufficient investment in Agric o Inadequate development of markets o Limited credit and inputs(improved seed and fertilisers) o Low adoption rate of technology development o Adverse climatic condtions o HIV/AIDS effects on farming households
  21. 21. Farmers Issue Proposed Solutions Very low yields/ha •Contract farming with inputs provision. •Field extension by Gvt & input suppliers Unviable produce markets •Forward buying contracts. •Contract farming with agro-processors Farm equipment/implements •Design & manufacture of appropriate technology Lack of access to farming credit •Appropriate & suitable funding •Contract farming with inputs provision
  22. 22. Inputs Supply/Distribution Issue Proposed Solutions Price & Affordability •Gvt , NGOs/Donor interventions •Contract farming with inputs provision •Volume discounts through group purchases Very long distances to Agro‐ dealers (>20km) •Establish network of community traders (e.g Malawi – 3km) •Distribute through community leaders, schools,  churches etc •Group purchases Quality of inputs •Procurement through farmer unions •Strong Gvt regulatory services
  23. 23. Fertilizer use in Africa • Very low fertilizer usage in Africa (11kg/ha) • Affordability of inorganic fertilizers – big issue • Use of farm organic materials recommended where appropriate
  24. 24. Land & Water Issue Proposed Solutions Land degradation & soil loss •Minimum tillage practices •Soil reclamation •Sound rotations Dry land farming – risky •Irrigation schemes/facilities •Dam construction •Water harvesting techniques
  25. 25. Produce Markets Issue Proposed Solutions •Poor commodity prices  •Uneconomic payment terms •Farmer unions lobbying & negotiation •Forward contracts •Seek export markets •Value addition – sell processed products •Long distance to market •Unethical middlemen/broker •Satellite buying points •Group deliveries •Market linkages
  26. 26. 15000 17500 20000 22500 25000 27500 30000 32500 35000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Area of Maize ('000 ha) Year 0 20 40 60 80 100 Angola Ethiopia Tanzania Mozambique Malawi Uganda Kenya Zambia Zimbabwe Adoption Rate of Improved Seed (%) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Zimbabwe Angola Tanzania Mozambique Benin Kenya Mali Nigeria Uganda Ghana Malawi Ethiopia Zambia Average yield (t/ha) 0 2000 4000 6000 8000 10000 Benin Mali Angola Ghana Zambia Zimbabwe Mozambique Uganda Malawi Kenya Tanzania Ethiopia Nigeria Total Demand for Maize ('1000 t) 2030 2000 Maize Production Trends
  27. 27. Role of Agriculture 0% 10% 20% 30% 40% 50% 60% 70% Food Rural Livelihoods Stock feed Export Earnings Formal Employment GDP AxisTitle Role of Agriculture in Economy
  28. 28. Challenges for seed businesses in Africa • Inadequate funds to purchase inputs and infrastructure • Borrow at high cost to fund seed deliveries • Promotion of OPVs and GMOs globally • Viability challenges for non GMO Cotton business competing with BT cotton globally • Competition with cheap Chinese cotton seed imports • Farmers making use of retained soya seed
  29. 29. Challenges for seed businesses in Africa • Power shortages negatively affecting wheat production as production costs are higher than import parity • International seed companies have muscle to invest significantly into R&D • Sub economic maize productivity at farm level • Climate change • Farmers lacking liquidity to purchase certified seed
  30. 30. Field day at Musariri farm
  31. 31. Seed Co

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