Zimbabwe govt pushes seed producers into a serious crisis

The government received seed valued at over US$62 million from seed companies without making the corresponding payments, plunging producers into crisis during an already challenging drought-hit season.

The Zimbabwe Seed Association, a coalition of seed companies, reveals that nearly half of the payments for seed provided to the government in the previous season remain outstanding. Additionally, almost all the seed supplied in the current year has yet to be compensated.

Illustratively, the association states in a memo dated December 18 that a total of US$61,778,000 is owed to eleven of its members, including Arda, Easiseeds, Farmbiz Genetics, Intaba Trading, Klein Karoo Seed Marketing, Prime Seeds/Seed Co Vegetables, Quton, Reapers, Seed Co, Tocek, and Zimbabwe Technology Solutions.

As the primary purchaser of seed, the government distributes it to smallholder farmers through initiatives like the presidential input scheme. However, the absence of payment from this major customer has led to seed companies defaulting on bank loans, workforce reductions, and plans to curtail production. Experienced growers are hesitant to enter new contracts with seed companies due to non-payment for 2023 deliveries.

The memo underscores the strained relationships between seed companies and banks, resulting in difficulties accessing favorable credit facilities, including the productive sector facility.

Seed producers find themselves unable to secure the necessary foreign exchange for imports such as hybrid sunflower and sorghum seeds, as well as parental seeds crucial for localized certified seed production. A request for US$15.5 million from six seed producers to the government has received no response, according to the memo.

The seed firms caution that the current financial distress is unsustainable and could lead to operational downsizing, closure of seed companies, and a jeopardized status for Zimbabwe's well-developed seed sector, which has historically ensured national seed security.

Farmers have significantly reduced planting this year due to the drought. Government data reveals that by December 10, only 95,156 hectares of crops had been planted, a sharp decline from the 465,707 hectares planted on the same day the previous year.

Seed Co, the country's largest producer and the primary government seed supplier, reported a 22% decline in maize seed sales in the half-year leading to September. This decrease is attributed to farmers cutting back on seed purchases because of the drought and delays in government input schemes.