Conrad Mwanawashe Business Reporter
SEED Co is planning to venture into the vegetable seed business leveraging on its partner Limagrain’s extensive knowledge of the sector. Limagrain, which acquired about 36 percent in Seed Co through its unit Vilmorin & Cie, rakes in about $50 million in profit every year from the vegetable seed business.
Seed Co chief executive officer Mr Morgan Nzwere said in an interview that the company will set up a Strategic Business Unit for the veggie seed business which will, however, be guided by the principles of the grain business. t
“The vegetable seed business is a growing market in Africa. When you look at some of the small companies that are in that business you will find one small company in Kenya is turning over $17 million from vegetables,” said Mr Nzwere.
“The profit on vegetables is huge from an investment of $17 million you can make a profit of up to $8 million-$9 million. Limagrain are very strong on that so we want to leverage on them in terms of going into the vegetable seed business,” he said.
The vegetable seed business will be managed under a new SBU with its own management structure because Seed Co wants greater focus on the business.
“We want to come up with a separate SBU which is in charge of vegetable but it will follow the same (Seed Co) footpath so it will utilise the same distribution network but not necessarily the same management structure because we want it to be a dedicated thing. We want a lot more focus,” said Mr Nzwere.
Seed Co this year celebrates its 75th birthday with Limagrain top executives expected to attend the celebrations. On his company’s strategic arrangement with Limagrain, Mr Nzwere said the deal helped to bring down finance charges.
Regional interest rates hover around 4-5 percent per annum but are much higher in Zimbabwe.
In terms of the region, Seed Co views Ethiopia as a potential big business with a population of more than 80 million but the group has faced challenges around the acquisition of a business licence.
“Ethiopia could also be another big market but, again I don’t want to call it bureaucratic but because of the land tenure system getting a business license is difficult. They say for you to get a business license you must have land registered in your name. Now you can’t buy the land but it has to be allocated to you by the state. You have to apply and be on a waiting list. We have been on the waiting list for the last 4-5 years,” said Mr Nzwere.
In Uganda, Seed Co is conducting due diligence on a possible acquisition but “it’s still very far”.
“If we can make an acquisition it could be a quick way to enter the market but if we don’t succeed we will have to establish our own operation,” he said.
Seed Co is putting in place a management structure in the Democratic Republic of Congo this year.
At the moment we are just scratching the surface. We are playing in Katanga supplying seed from Zambia. From the beginning of this year we are putting in place a management structure on the ground, people to represent us and try and push some business growth in that market,” said Mr Nzwere.
In Nigeria, Seed Co has applied for land to set up operations and a local partner is pursuing the land issue. The local partner controls 30 percent of the business in the West African country.