tonnes
Presentation by John Matorofa Group FD
Structure of presentation 1. History and Structure 2. Business model 3. Impact of Seed Co in Africa’s smallholder farming 4. Group performance 5. Future prospects
THE STORY OF OUR LIFE…. •
1940 Born as Seed Maize Association
•
1949 Rattray and Arnold produced 1st hybrid for sale
•
1996 Floated on ZSE
•
1997 Acquisition of Semoc – Mocambique
•
1998 Seed Co Zambia
•
2000 Seed Co Botswana
• • • • • • • •
2001 Seed Co Malawi 2002 Syngenta – Seed Co JV in SA 2005 Business right sized 2006 Quton acquired 2010 Tanzania SBU established 2011 Kenya becomes SBU 2011 Pilot production in Ethiopia 2011 Research work intensifies in Ghana and Nigeria
SEED CO Group Structure HOLDING COMPANY SEED CO LIMITED
PROPERTY OWNING COMPANIES (ZIMBABWE)
REGIONAL OPERATIONS QUTON TANZANIA SEED CO (100 OWNED) INTERNATIONAL (BOTSWANA 100% OWNED)
SEED CO INTERNATIONAL TANZANIA (100% OWNED) The African Seed Company
AGRI SEED CO KENYA (100% OWNED)
ZIMBABWE OPERATIONS (100% OWNED)
QUTON TANZANIA (75% OWNED)
REGIONAL OPERATIONS SEED CO ZAMBIA (100% OWNED)
SEED CO MALAWI (100% OWNED)
MAJOR SHAREHOLDERS 1.
AICO AFRICA LIMITED
2.
OLD MUTUAL LIFE ASSURANCE COMPANY ZIMBABWE LTD
3.
FED NOMINEES (PVT) LTD
4.
BARCLAYS ZIMBABWE NOMINEES (P/L
5.
OLD MUTUAL ZIMBABWE LTD
6.
STANBIC NOMINEES (PVT) LTD NNR
7.
LOCAL AUTHORITIES PENSION FUND
8.
NATIONAL SOCIAL SECURITY AUTHORITY-WICF
9.
DATVEST NOMINEES (PVT) LTD
10. EDWARDS NOMINEES (PVT) LTD NNR
ORGANOGRAM
Group CEO
MDZambia
MDZimbabwe
MDMalawi
MD-Tanzania
MD-Kenya
MD-Quton
SCI- Business Development
CONTINENTAL FOOTPRINT
• Seed Co Zimbabwe • Seed Co Zambia • Seed Co Kenya • Seed Co International (Botswana) • Seed Co Malawi • National Seed Co of Zimbabwe • Seed Co Swaziland • Seed Co Uganda Substantive Presence
Agencies
Strategic priorities
Strategic priorities
OUR BUSINESS IDEA Research
High rate of product innovation
Seed Production
Strong Out‐ grower Network
Seed Processing
Use of world class processing and packaging technologies and facilities
Seed Marketing & Distribution
Strong Market Share New Markets Strong Distribution Unique core brand architecture
Exports Establish local office Conduct local production Establish support structure Fully fledged SBU
OUR BUSINESS MODEL • Building barriers to entry – 1. Product line up, germplasm, big lead times 2. Customer loyalty, deliver right products at right time 3. Facilities, capital intensive 4. People, strong team of breeders
OUR BUSINESS MODEL Growth opportunities Criteria • Build relationships in target markets • Size of market must be meaningful • Must be a commercial grain market • Language, Culture, Legal and Banking systems former Commonwealth countries good for this • Continuous wherever possible e.g. East Africa • West Africa will be a big step, caution!
Strong Financial balance sheet R&D capability Relevant
product and high adaptability
Brand equity & marketing capability
OUR BUSINESS MODEL Other issues – • Very strong boards of directors • Close to Govt. Seed agencies • Work closely with CIMMYT, ICRISAT etc. • Very strong germ plasm library • Technical cooperation (Syngenta)
Key Success Factors Strong balance sheet
R & D capability & Collaborations
Brand equity & marketing capability
Product range and adaptability
Management & HR capability
SIX RESEARCH CENTRES Station
Research focus area
GLS, MSV, Ht, RARS (Zimbabwe) Heat & drought KRC (Zimbabwe) GLS, MSV, Ht, PLS SRS (Zimbabwe) Mpongwe Research station Diplodia ear rots, NCLS, Ht, GLS,Rust, Septoria, soyabean rust (Zambia) Diplodia ear rots, NCLS, Ht, GLS,Rust, Lusaka Research Station Septoria, soyabean rust (Zambia) Highland rust, GLS, Ht, ear rots, EARC Cold tolerance (Kitale Kenya) The African Seed Company
RESEARCH • Currently 30 breeders (Scientists) • New breeding methods • Marker assisted breeding • Double haploid technology • Biotech licensing adoption
Germplasm adaptation :ecologicalclimatic zones
IMPACT OF SEED CO BREEDING IN SMALLHOLDER AGRICULTURE IN AFRICA • First organization to introduce productive hybrid maize culture in Smallholder Agric Sector in Africa. • SC maize hybrids substantially raised small holder maize yield in Zimbabwe over the past 40 years. • SC maize hybrids converted Zambia, Malawi, Botswana, Swaziland, South Africa, Kenya and Tanzania from OPVs to hybrids. • Malawi achieved a national bumper harvest of 3,6 million metric tones in 2010 and 3.8mt in 2011 i.e. twice their domestic requirements. • Pioneer in the release of Maize Streak and Mottle Virus resistant hybrids • First organization to address Grey Leaf Spot disease pandemic
• Pioneer and largest soyabean Breeding Programme in Central and East Africa with 21 varieties released so far. • World leader in breeding and release of pandemic soyabean rust resistant varieties. • Top programme in release of high yielding, high industrial quality irrigated wheat. • Seed Co’s subsidiary Quton is the only real cotton seed company in Africa. • Fast progress in incorporating genetically modified herbicide tolerance and insect pest resistance in the new competitive varieties is being made • New opportunity for cotton seed in Tanzania
Production trends (mt) 100000 94219 90000 80000 70000 60000 56984 50000 40000 36158
33658 30000 20000 10000 0 F09
F10
F11
F12
Stringent out grower selection designed to ensure integrity, identity and purity of the seeds we deliver
Production mix is determined by market requirements
Certification of minimum acceptable genetic purity and specified physical quality in terms of germination percentage, seed moisture and physical purity.
VERY HIGH QUALITY STANDARDS Germination (minimum) ‐
90%
• Physical purity (minimum) ‐
99%
• Insect damaged seed (maximum)
1.5%
• Damaged seed (maximum) ‐
0.75%
• Diseased seed (maximum) ‐
0.75%
• Total defects (maximum) ‐
2.0%
• Genetic purity (minimum) ‐
95%
•
Our Brands
• • • •
4 Series Early maturity Grey leaf spot Drought stress tolerance • Malawi, Zimbabwe, Zambia & East Africa
• 6 Series • Medium Maturity • Zimbabwe, Zambia, Malawi & East Africa
Tsoko Kanyani
Mbizi Punda Milia
Shumba Simba
Nzou Tembo
• 5 Series • Medium maturity • Grey Leaf spot tolerance • Heat drought stress tolerance trait (SC533 & SC529) • Zimbabwe, Zambia, Malawi and East Africa
• 7 Series • Late Maturity • Zimbabwe, Zambia, Malawi & East Africa
Market share .
10%
Kenya
40%
Tanzania
53%
Malawi
55%
Zambia
70%
Zimbabwe
0%
10%
20%
30%
40%
50%
60%
70%
80%
Sales performance 6% 4% 8% Maize Cotton Soya
14%
wheat Other 68%
Aggregate Demand Maize Seed (Tonnes)
Estimated Current Aggregate Estimated Demand Quton Demand Market size for Cotton Seed Supply Wheat Seed Hybrid Seed (tonnes) (Tonnes) (tonnes)
Zimbabwe
51,900.
30,000
12,000
Zambia
23,358
17,051
4,300
Malawi
35,000
11,383
1,600
1,338
200
Tanzania
62,000
11,160
6,500
400
9,200
Kenya South Africa
57,000
41,040
840
10,000
30,000
63,000
400
42,000
Botswana
840
500
Swaziland
1,896
1,250
DRC
59,355
12,000
5,000 3,000
24 500
544
Certified seed adoption rate (Maize) Angola Ethopia Mozambique Uganda Kenya Adoption rate %
Tanzania Malawi Zambia Zimbabwe -
50.0
100.0
C
E
E
H A
C
Nigeria
96,125
4,806
5
Ethiopia
44,203
8,399
19
Angola
31,081
2,500
5
Ghana
28,632
286
1
Mozambique
28,000
3080
11
Uganda
26,610
9,314
35
Cameroun
18,600
100
1
Mali
18,543
185
Benin
14,926
Country
Estimated Demand Cotton Seed (tonnes)
Zimbabwe
7,600
Malawi
2,200
Mozambique
3,920
Tanzania
6,500
Cotton Area Harvested (ha)
Estimated Demand Cotton Seed (tonnes)
196,000
3,920
215,000
4,300
Nigeria
405,000
8,100
Mali
260,000
5,200
Benin
180,000
3,600
1,000,000
20,000
Sudan
496,000
9,920
Cameroun
160,000
3,200
Country Mozambique Zambia
Uganda
Uganda, Sudan, Nigeria, Mali, Zambia and Mozambique country markets command a strong demand for Cotton seed that presents prospective opportunities for business growth.
Aggregate demand wheat seed (tonnes)
Current Seed Co supply (tonnes)
Aggregate demand Soya Bean (tonnes)
Zimbabwe
5,000
2,500
5,000
Zambia
3,000
1,255
2,000
Malawi
200
30
2,500
Country
Estimated demand Wheat seed (tonnes)
Ethiopia
101,767
124
1,600
17,640
Nigeria Egypt Uganda Sudan Tanzania
Estimated demand Soya bean seed (tonnes)
237,915 960
8,400
40,000 9,200
225
Kenya
10,000
2,200
South Africa
41,762
10,698
544
1,620
DRC
160 140 120 100 80 60 40 20 0
Seed Co Limited share price graph (USc)
Outlook • • • • • • • • • • •
Zim production going up from 23,000t to 32,000t Zambia now on centralised processing facilities New Tanzania SBU established to meet demand New SBU in Kenya Malawi production being ramped up Exclusive cotton seed opportunity in Tanzania New maize seed markets : – Ethiopia, Nigeria, Benin, Angola and Ghana Replicate the cotton seed model in other markets Vertical integration – own production Large scale agriculture Related diversification – chemicals etc
Strategic thrust going forward
We can.. We Will…!!!
Structure of presentation 1. History and Structure 2. Business model 3. Impact of Seed Co in Africa’s smallholder farming 4. Group performance 5. Future prospects
THE STORY OF OUR LIFE…. •
1940 Born as Seed Maize Association
•
1949 Rattray and Arnold produced 1st hybrid for sale
•
1996 Floated on ZSE
•
1997 Acquisition of Semoc – Mocambique
•
1998 Seed Co Zambia
•
2000 Seed Co Botswana
• • • • • • • •
2001 Seed Co Malawi 2002 Syngenta – Seed Co JV in SA 2005 Business right sized 2006 Quton acquired 2010 Tanzania SBU established 2011 Kenya becomes SBU 2011 Pilot production in Ethiopia 2011 Research work intensifies in Ghana and Nigeria
SEED CO Group Structure HOLDING COMPANY SEED CO LIMITED
PROPERTY OWNING COMPANIES (ZIMBABWE)
REGIONAL OPERATIONS QUTON TANZANIA SEED CO (100 OWNED) INTERNATIONAL (BOTSWANA 100% OWNED)
SEED CO INTERNATIONAL TANZANIA (100% OWNED) The African Seed Company
AGRI SEED CO KENYA (100% OWNED)
ZIMBABWE OPERATIONS (100% OWNED)
QUTON TANZANIA (75% OWNED)
REGIONAL OPERATIONS SEED CO ZAMBIA (100% OWNED)
SEED CO MALAWI (100% OWNED)
MAJOR SHAREHOLDERS 1.
AICO AFRICA LIMITED
2.
OLD MUTUAL LIFE ASSURANCE COMPANY ZIMBABWE LTD
3.
FED NOMINEES (PVT) LTD
4.
BARCLAYS ZIMBABWE NOMINEES (P/L
5.
OLD MUTUAL ZIMBABWE LTD
6.
STANBIC NOMINEES (PVT) LTD NNR
7.
LOCAL AUTHORITIES PENSION FUND
8.
NATIONAL SOCIAL SECURITY AUTHORITY-WICF
9.
DATVEST NOMINEES (PVT) LTD
10. EDWARDS NOMINEES (PVT) LTD NNR
ORGANOGRAM
Group CEO
MDZambia
MDZimbabwe
MDMalawi
MD-Tanzania
MD-Kenya
MD-Quton
SCI- Business Development
CONTINENTAL FOOTPRINT
• Seed Co Zimbabwe • Seed Co Zambia • Seed Co Kenya • Seed Co International (Botswana) • Seed Co Malawi • National Seed Co of Zimbabwe • Seed Co Swaziland • Seed Co Uganda Substantive Presence
Agencies
Strategic priorities
Strategic priorities
OUR BUSINESS IDEA Research
High rate of product innovation
Seed Production
Strong Out‐ grower Network
Seed Processing
Use of world class processing and packaging technologies and facilities
Seed Marketing & Distribution
Strong Market Share New Markets Strong Distribution Unique core brand architecture
Exports Establish local office Conduct local production Establish support structure Fully fledged SBU
OUR BUSINESS MODEL • Building barriers to entry – 1. Product line up, germplasm, big lead times 2. Customer loyalty, deliver right products at right time 3. Facilities, capital intensive 4. People, strong team of breeders
OUR BUSINESS MODEL Growth opportunities Criteria • Build relationships in target markets • Size of market must be meaningful • Must be a commercial grain market • Language, Culture, Legal and Banking systems former Commonwealth countries good for this • Continuous wherever possible e.g. East Africa • West Africa will be a big step, caution!
Strong Financial balance sheet R&D capability Relevant
product and high adaptability
Brand equity & marketing capability
OUR BUSINESS MODEL Other issues – • Very strong boards of directors • Close to Govt. Seed agencies • Work closely with CIMMYT, ICRISAT etc. • Very strong germ plasm library • Technical cooperation (Syngenta)
Key Success Factors Strong balance sheet
R & D capability & Collaborations
Brand equity & marketing capability
Product range and adaptability
Management & HR capability
SIX RESEARCH CENTRES Station
Research focus area
GLS, MSV, Ht, RARS (Zimbabwe) Heat & drought KRC (Zimbabwe) GLS, MSV, Ht, PLS SRS (Zimbabwe) Mpongwe Research station Diplodia ear rots, NCLS, Ht, GLS,Rust, Septoria, soyabean rust (Zambia) Diplodia ear rots, NCLS, Ht, GLS,Rust, Lusaka Research Station Septoria, soyabean rust (Zambia) Highland rust, GLS, Ht, ear rots, EARC Cold tolerance (Kitale Kenya) The African Seed Company
RESEARCH • Currently 30 breeders (Scientists) • New breeding methods • Marker assisted breeding • Double haploid technology • Biotech licensing adoption
Germplasm adaptation :ecologicalclimatic zones
IMPACT OF SEED CO BREEDING IN SMALLHOLDER AGRICULTURE IN AFRICA • First organization to introduce productive hybrid maize culture in Smallholder Agric Sector in Africa. • SC maize hybrids substantially raised small holder maize yield in Zimbabwe over the past 40 years. • SC maize hybrids converted Zambia, Malawi, Botswana, Swaziland, South Africa, Kenya and Tanzania from OPVs to hybrids. • Malawi achieved a national bumper harvest of 3,6 million metric tones in 2010 and 3.8mt in 2011 i.e. twice their domestic requirements. • Pioneer in the release of Maize Streak and Mottle Virus resistant hybrids • First organization to address Grey Leaf Spot disease pandemic
• Pioneer and largest soyabean Breeding Programme in Central and East Africa with 21 varieties released so far. • World leader in breeding and release of pandemic soyabean rust resistant varieties. • Top programme in release of high yielding, high industrial quality irrigated wheat. • Seed Co’s subsidiary Quton is the only real cotton seed company in Africa. • Fast progress in incorporating genetically modified herbicide tolerance and insect pest resistance in the new competitive varieties is being made • New opportunity for cotton seed in Tanzania
Production trends (mt) 100000 94219 90000 80000 70000 60000 56984 50000 40000 36158
33658 30000 20000 10000 0 F09
F10
F11
F12
Stringent out grower selection designed to ensure integrity, identity and purity of the seeds we deliver
Production mix is determined by market requirements
Certification of minimum acceptable genetic purity and specified physical quality in terms of germination percentage, seed moisture and physical purity.
VERY HIGH QUALITY STANDARDS Germination (minimum) ‐
90%
• Physical purity (minimum) ‐
99%
• Insect damaged seed (maximum)
1.5%
• Damaged seed (maximum) ‐
0.75%
• Diseased seed (maximum) ‐
0.75%
• Total defects (maximum) ‐
2.0%
• Genetic purity (minimum) ‐
95%
•
Our Brands
• • • •
4 Series Early maturity Grey leaf spot Drought stress tolerance • Malawi, Zimbabwe, Zambia & East Africa
• 6 Series • Medium Maturity • Zimbabwe, Zambia, Malawi & East Africa
Tsoko Kanyani
Mbizi Punda Milia
Shumba Simba
Nzou Tembo
• 5 Series • Medium maturity • Grey Leaf spot tolerance • Heat drought stress tolerance trait (SC533 & SC529) • Zimbabwe, Zambia, Malawi and East Africa
• 7 Series • Late Maturity • Zimbabwe, Zambia, Malawi & East Africa
Market share .
10%
Kenya
40%
Tanzania
53%
Malawi
55%
Zambia
70%
Zimbabwe
0%
10%
20%
30%
40%
50%
60%
70%
80%
Sales performance 6% 4% 8% Maize Cotton Soya
14%
wheat Other 68%
Aggregate Demand Maize Seed (Tonnes)
Estimated Current Aggregate Estimated Demand Quton Demand Market size for Cotton Seed Supply Wheat Seed Hybrid Seed (tonnes) (Tonnes) (tonnes)
Zimbabwe
51,900.
30,000
12,000
Zambia
23,358
17,051
4,300
Malawi
35,000
11,383
1,600
1,338
200
Tanzania
62,000
11,160
6,500
400
9,200
Kenya South Africa
57,000
41,040
840
10,000
30,000
63,000
400
42,000
Botswana
840
500
Swaziland
1,896
1,250
DRC
59,355
12,000
5,000 3,000
24 500
544
Certified seed adoption rate (Maize) Angola Ethopia Mozambique Uganda Kenya Adoption rate %
Tanzania Malawi Zambia Zimbabwe -
50.0
100.0
C
E
E
H A
C
Nigeria
96,125
4,806
5
Ethiopia
44,203
8,399
19
Angola
31,081
2,500
5
Ghana
28,632
286
1
Mozambique
28,000
3080
11
Uganda
26,610
9,314
35
Cameroun
18,600
100
1
Mali
18,543
185
Benin
14,926
Country
Estimated Demand Cotton Seed (tonnes)
Zimbabwe
7,600
Malawi
2,200
Mozambique
3,920
Tanzania
6,500
Cotton Area Harvested (ha)
Estimated Demand Cotton Seed (tonnes)
196,000
3,920
215,000
4,300
Nigeria
405,000
8,100
Mali
260,000
5,200
Benin
180,000
3,600
1,000,000
20,000
Sudan
496,000
9,920
Cameroun
160,000
3,200
Country Mozambique Zambia
Uganda
Uganda, Sudan, Nigeria, Mali, Zambia and Mozambique country markets command a strong demand for Cotton seed that presents prospective opportunities for business growth.
Aggregate demand wheat seed (tonnes)
Current Seed Co supply (tonnes)
Aggregate demand Soya Bean (tonnes)
Zimbabwe
5,000
2,500
5,000
Zambia
3,000
1,255
2,000
Malawi
200
30
2,500
Country
Estimated demand Wheat seed (tonnes)
Ethiopia
101,767
124
1,600
17,640
Nigeria Egypt Uganda Sudan Tanzania
Estimated demand Soya bean seed (tonnes)
237,915 960
8,400
40,000 9,200
225
Kenya
10,000
2,200
South Africa
41,762
10,698
544
1,620
DRC
160 140 120 100 80 60 40 20 0
Seed Co Limited share price graph (USc)
Outlook • • • • • • • • • • •
Zim production going up from 23,000t to 32,000t Zambia now on centralised processing facilities New Tanzania SBU established to meet demand New SBU in Kenya Malawi production being ramped up Exclusive cotton seed opportunity in Tanzania New maize seed markets : – Ethiopia, Nigeria, Benin, Angola and Ghana Replicate the cotton seed model in other markets Vertical integration – own production Large scale agriculture Related diversification – chemicals etc
Strategic thrust going forward
We can.. We Will…!!!
