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African Journal of Agricultural Marketing ISSN 2375-1061 Vol. 6 (1), pp. 001-010, January, 2018. Available online at 
www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s)                                           Author(s) retain the copyright of this article. 
 
 

 

Full Length Research Paper 

 

Prospects and challenges of seed sector privatisation 

 
Patrick Malope 

 
Department of Agricultural Economics, Education and Extension Botswana College of Agriculture, Gaborone, Botswana. 

E-mail: pmalope@bca.bw. Tel: +267-3650100 or +267-72591713. 
Fax: +267-3928753. 

 
Accepted 08 November, 2018 

 
African countries embarked on privatisation of their seed industries in the 1980s as part of the structural adjustment 
programmes. Botswana however, chose not to privatise its seed production services at that time. This paper 
examines the prospects and challenges for embarking on seed sector privatisation in developing countries using 
Botswana as a case study. The study found that the present system is such that the department of agricultural 
research (DAR) through its seed multiplication unit (SMU) dominates seed production and distribution, especially 
for open pollinated varieties. This has stifled private sector participation in seed production and distribution. The 
present system has a number of shortcomings such as the provision of poor quality seed, insufficient monitoring of 
seed production, unfulfillment of contracts, low returns to DAR and limited capacity for seed distribution. 
Challenges facing the drive for privatisation are: free seed distribution, unreliable seed demand, lack of plant 
breeder’s rights and lack of institutional and policy framework to support private sector participation in the seed 
sector. However, there are a number of prospects that could stimulate private sector participation in the seed 
sector. These include government’s renewed interest in the development of the arable sector through initiatives that 
could stimulate seed demand and the government’s privatisation policy. For the process to succeed it should be 
followed cautiously and the strategy that promises success is that of contracting out and restructuring of the SMU. 
The government should also embark on institutional reforms and come up with an appropriate seed policy which 
will guide private sector participation in the seed industry. 

 

Key words: Privatisation, seed, Botswana, challenges, prospects. 
 
 
INTRODUCTION 

 
African countries embarked on the process of seed 
privatisation in the late 1980s as part of the structural 
adjustment programmes instituted by the international 
bank for reconstruction and development (IBDR) – World 
Bank. The structural adjustment programme’s main 
objective was to liberalise markets in order to improve 
efficiency. In the seed sector, liberalisation involved 
privatisation of seed production and distribution services. 
The process of privatisation emanated from the 
realisation that seed was a very important input in 
agricultural production, hence the efficiency of both 
production and marketing were prerequisites for  
improved agricultural production. As argued by 
Langyintuo et al. (2010) the global food crisis together 
with the effects of climate change makes it even more 
important to explore ways of developing and 
disseminating drought resistant, high yielding crop 

 
 
 
 

 
varieties in order to increase crop productivity. This can 
only be met if there is an efficient seed sector. There was 
therefore, a strong belief that this could only be achieved 
through privatisation of the public seed production and 
marketing. However, the process of privatising seed 
production and distribution has not been a smooth one.  

There are many experiences where privatisation of 
public seed production and distribution in Africa has led to 
abandonment of all seed production facilities owned by 
government. In many instances, the private sector has 
not performed its functions as expected because of many 
teething problems. Chief amongst these being that, the 
privatised public companies have remained inefficient; 
lack of market for the private sector and failure by the 
private sector to engage in unprofitable, but important 
crops (Turner et al., 2001). In countries where the seed 
sector has been liberalised, we have witnessed a 

file:///C:\Users\user\Documents\REPUBLICATION\AGRICULTURAL%20SCIENCES\AppData\Local\Temp\www.internationalscholarsjournals.org


 
 
 

 

proliferation of private seed companies, with no real 
improvement in the performance of the seed sector 
(Langyintuo et al., 2010).  

Botswana chose not to privatise its seed production 
and distribution services at the time when most African 
countries embarked on the process. The main reason 
why Botswana did not embark on seed privatisation was 
that, at that time there was fear that the private sector 
(dominated by multinationals operating outside the 
country) could not be trusted to supply rural areas where 
it might be unprofitable to do so. In addition, unlike other 
African countries which were forced to adopt structural 
adjustment programmes, it was not the case with 
Botswana. Since the 1980s the Botswana’s seed sector 
has grown, albeit at a slow pace. At present there are two 
multinational seed companies operating in the country. 
The seed sector is dominated by government and this 
has stifled the development of the private sector.  

The Botswana’s agricultural sector, especially the crop 
sub-sector has performed poorly, partly due to low use of 
improved technologies such as row planting, use of 
fertilisers and improved seeds. In recent years the 
Government has shown keen interest to develop the 
agricultural sector, particularly the arable sub-sector. 
Coupled with the desire to privatise some of its services 
and the need to improve efficiency in the seed sector, 
government has revisited the issue of privatising the seed 
production services of the seed multiplication unit (SMU) 
of the Department of Agricultural Research (DAR).  

Seed is an essential input in achieving optimum crop 
productivity. Poor access to seed has often been cited as 
one of the most important constraint to improving crop 
productivity (Pray and Ramaswani, 1991). This is 
supported by the fact that in commercial farms, where the 
use of improved seed is high, crop productivity can be 
five (5) times higher than in the communal sector, where 
there is limited use of improved seed and other modern 
methods of farming (Republic of Botswana, 2007).  

By privatising the seed production and distribution 
services, government wishes to improve smallholders’ 
access to improved seeds and hence improve 
productivity and achieve food security at both the 
household and national levels. However, government 
should embark in this process cautiously as there are 
many instances where the process has failed and led to 
huge inefficiencies in the sector. The objective of this 
paper is therefore to determine the prospects and 
challenges of privatising seed production and distribution 
services in Botswana. This will help Botswana and other 
developing countries intending to privatise their seed 
industries avoid pitfalls which other African countries 
have fallen into when trying to privatise their seed 
industries.  

The rest of this paper is organised as follows. 
Subsequently, we discuss the methodology used in the 
study after which we discuss the current situation in seed 
production and distribution. This is followed by the main 

 
 
 
 

 

shortfalls of the present system. We further discuss the 
prospects for involving the private sector in seed 
production and distribution, followed by the challenges 
facing privatisation of seed production and distribution. 
The strategy, which should be followed for privatising the 
seed production and distribution services, is then 
discussed after which the experiences observed 
elsewhere are discussed. Finally, conclusions and 
recommendations are given for successful privatisation of 
the seed production and distribution services of the SMU. 
 

 
METHODOLOGY 

 
The main approach to this study was desktop research in which 
secondary data was collected on seed production and distribution in 
Botswana. In addition, there was extensive stakeholder consultation 
in order to identify problems of the current system, prospects and 
challenges facing seed sector privatisation in Botswana. The 
consultations were done through personal interviews in 2009. 
These stakeholders included among others: Ministry of Agriculture 
Management, Department of Crop Production, Department of Agro-
business Promotions, the Agricultural Hub, Department of 
Agricultural Research, in particular the SMU, National Master Plan 
for Arable Agriculture and Dairy Development (NAMPAADD), 
Botswana Agricultural Marketing Board (BAMB), private seed 
companies, agricultural input suppliers and Botswana Seed 
Grower’s Association. The study was undertaken as part of a 
consultancy project funded by food and agriculture organisation 
(FAO) to assist Botswana in privatisation of her seed production 
and distribution services. 
 

 

CURRENT SITUATION IN PRODUCTION AND 
DISTRIBUTION OF SEEDS 
 

Crop breeding and technology release programmes 

 

The DAR has breeding programmes for cereals 
(sorghum, pearl millet) and grain legumes (cowpeas and 
oilseeds). DAR also evaluates the following crops for 
adaptation: maize, wheat, sunflower, mung bean and 
jugo beans. The main objective of DAR is to increase 
productivity through genetic manipulation and selection. 
Research on these crops emphasises on the 
development of cultivars which have high yield potential 
and tolerance to biotic (pests, diseases, parasitic weeds) 
and abiotic (rainfall, temperature) stresses which are the 
major production constraints in Botswana. Varieties are 
evaluated at several research stations and are also 
tested on farmers’ fields. Breeding plots are not irrigated 
in order to simulate conditions in most of the farming 
areas in the country where crop production is mainly rain-
fed (Mpofu, 2010).  

When enough data has been generated to justify the 
release of a variety, it is presented before the Technology 
Release Committee. Four sorghum varieties were 
released in 1995, while two millet varieties were released 
in 1998. Between 1999 and 2009, four cowpea varieties, 
two bambara nut, and one sorghum variety were 



 
 
 

 

released. Breeder seed of released varieties is handed 
over to the basic seed production arm of the SMU, which 
then multiplies the foundation seed into basic seed. 
Currently, the SMU is producing eight open pollinated 
sorghum varieties and one hybrid (BSH1). The SMU also 
produces basic seed of one sunflower (Russian No. 4), 
one maize (Kalahari Early Pearl - KEP), three cowpea, 
one millet and one mungbean variety (Mpofu, 2010). 

 

Seed production/multiplication and distribution 

 
The SMU multiplies the foundation seed into certified 
seed using contract growers, most of whom are located in 
Southern Botswana and in the area around Gaborone, as 
farmers are required to transport the seeds to the SMU 
headquarters, located in Gaborone. The contracted 
farmers are provided with start up seeds. Farmers are 
expected to sell the seeds to SMU. The SMU is 
responsible for carrying out all the necessary seed quality 
control activities. After buying the seeds from the growers 
and processing them into certified seed, the SMU is 
supposed to sell the seeds to retailers for distribution. 

 

Major institutions in seed production and distribution 
 
Botswana agricultural marketing board (BAMB) 
 
BAMB is a parastatal under the Ministry of agriculture 
(MoA) whose mandate is to buy all scheduled produce 
from local producers, while at the same time ensuring 
that adequate supplies exit for sale to customers at 
affordable prices. The BAMB also acts as a one stop 
agricultural service centre to the farming community and 
customers alike by performing the following functions; 
buying, packaging, processing and marketing locally 
produced grains, pulses; selling a wide range of animal 
feeds, agricultural inputs such as fertilisers, seeds, 
pesticides and packaging materials. The BAMB has 
eleven branches strategically placed in crop producing 
areas throughout the country. BAMB, imports hybrid 
maize and sorghum, groundnut and vegetable seed from 
South Africa and it is also the sole supplier of SEEDCO 
seeds in Botswana. 

 

Cooperatives 
 
Cooperatives are strategically placed in the rural areas 
and hence could act as seed distributors in remote areas 
where there are no BAMB branches. However, 
cooperatives have not been able to perform this task, 
mainly because of poor management. Thus, very little if 
any seed is distributed through this channel. 

 

Private seed companies 
 
There are currently two private seed companies 

 
 
 
 

 

producing and distributing seeds: SEEDCO International 
and Savannah Seeds. These companies supply mainly 
imported hybrid seeds as they do not compete directly 
with the SMU which supplies open pollinated varieties 
(OPVs). SEEDCO has contract growers in Botswana, but 
no longer processes the seed in Botswana. Instead the 
seed produced in the country is sent outside for 
processing and part of it is later re-imported into the 
country. Similarly, Savannah Seeds also has contract 
growers in the country and mainly specialises on hybrid 
seeds, but also produces OPVs mainly for export. The 
company processes the seeds in the country and sells a 
small fraction, while the bulk is exported because of 
limited local market. 
 

 

Other agricultural input suppliers 

 

There are a few agricultural input suppliers who also sell 
seeds. The seeds sold are mainly for vegetables, 
speciality crops and other horticultural crops. These 
suppliers source their seed mainly through imports, 
particularly from South Africa. 
 

 

Government extension services 

 

The Government, through the department of crop 
production (DCP), occasionally distributes seeds through 
its extension services. This occurs in instances where 
seed is offered free as a drought recovery measure or as 
part of government programme to improve crop 
productivity. 
 

 

SHORTFALLS OF THE CURRENT SYSTEM 

 

Un-fulfilment of contracts by growers 

 

As indicated in Table 1, the contracted growers have not 
been able to produce the amount they were contracted in 
most years. It was only in one season, the 1999/00 
planting season that the contracted growers were able to 
produce more than (114%) of what they were contracted 
to produce (for maize only). At times the amount supplied 
has been less than 10% as in the case of millet in the 
2000/2001 planting season.  

When seed growers were asked about their failure to 
supply the amount contracted to them, they mentioned 
two main reasons, first they indicated that seed 
production depends on weather conditions and other 
factors such as pests which are beyond their control. 
Secondly, they indicated that at times they produce 
enough seeds but end up selling to local BAMB depots in 
order to avoid transport costs of taking the seeds to SMU. 
Moreover, in some cases the price differentials between 
the SMU and BAMB are so small that they are more than 



 
 
 

 
Table 1. Seed production for selected crops versus the amount contracted by SMU.  

 

Crop Cropping season 
Amount contracted Amount supplied 

Percentage supplied  

(tonnes) (tonnes)  

   
 

Sorghum 1999/00 1888.8 869.96 46 
 

 2000/01 1188 167 14 
 

 2001/02 1430 437 31 
 

 2008/09 1500 275.88 18 
 

Maize 1999/00 1052 1201.56 114 
 

 2000/01 1045 698 67 
 

 2001/02 1462.5 1248 85 
 

 2008/09 3080 1456.4 47 
 

Millet 1999/00 64 2.21 3 
 

 2000/01 32 0.14 0.4 
 

 2001/02 50 11.52 23 
 

 2008/09 75 0.9 1.2 
 

Cowpeas 1999/00 101.5 64.67 35 
 

 2000/01 120 49 41 
 

 2000/02 130 70 54 
 

 2008/09 241 68.98 27 
 

 
Source: Seed multiplication unit. Data for the years 2002/03 to 2006/07 for all crops not available. 

 
 

 

off-stetted by the transport cost to SMU and hence the 
contracted growers prefer to sell to BAMB where they do 
not have to pay additional transport costs. 
 

 

Poor quality seed 

 

The quality of seeds supplied by contracted growers has 
at times not been impressive due to lack of monitoring on 
the part of SMU. This has resulted in contracted growers 
supplying the SMU with poor quality seeds. As stated 
earlier, the contracted growers are not able to supply the 
SMU with the amount they were contracted to supply. 
Due to the fact that the contracted growers always fail to 
meet the demand by SMU, the latter end up sourcing 
seeds through imports and at times importing grain and 
turning it into seed. This compromises the quality of the 
seeds and hence production at farm level.  

In addition, the DAR has been supplying the contracted 
growers with basic seed that has been recycled for over 
fifty (50) years. This has led to poor quality seed being 
produced by contracted growers as the quality of the 
commercial seed depends on the quality of foundation 
seed.  

The DAR has released very few varieties for farmers to 
choose from. At present there are only nine sorghum 
varieties, including relatively new OPVs. In addition three 
groundnut varieties were released in 1998, making the 
total number of varieties available to four. Unfortunately, 
seed of these varieties is not readily available to farmers 
and the old sorghum varieties are reportedly disap-
pearing from farmers’ fields. 

 
 

 

High costs of multiplication and distribution 

 

The SMU is currently multiplying seeds at a very high 
cost compared to the price at which it sells the seeds. As 
shown in Table 2, the SMU is unable to cover its 
operational costs from the sale of seed for all crops under 
consideration as indicated by the negative gross margins. 
For all the crops, the SMU price is actually below the 
price at which it buys the seeds from contracted growers. 
Gross margin was also calculated based on two prices, 
the actual SMU price and the commercial price and the 
results of such analysis are shown in Table 2. These 
results show that in both cases gross margin is negative. 
It is important to note that fixed costs are not included 
and hence the losses could have been greater. On the 
revenue side, one item which is omitted is the sale of the 
unsuitable seeds, however this is expected to be minimal 
and hence not to alter the results significantly. Thus, as 
argued by Jaffee and Srivastava (1994), some public 
entities like the SMU have been a major financial liability 
to their governments. Tripp and Rohrbach (2001) 
supports this argument by maintaining that the costs of 
multiplication and distribution are high and there is no full 
cost recovery for seed multiplication units such as the 
SMU. 
 

 

Limited capacity for seed distribution 

 
As earlier mentioned the SMU is mandated to produce 
seeds and sell to retailers, notably the BAMB and 
cooperatives throughout the country. However, several 



 
 
 

 
Table 2. Gross margins analysis for selected crops.  

 
Item/Crop Sorghum Maize Millet Cowpeas 

Cost per ton Pula Pula Pula Pula 

Uncertified seeds 1,140.00 1,140.00 1,140.00 3,775.00 

Pesticides 302.50 427.53 302.50 302.50 

Seed pockets 500.00 500.00 500.00 500.00 

Materials 32.50 32.50 32.50 32.50 

Storage 6,000.00 6,000.00 6,000.00 6,000.00 

Maintenance 2,500.00 2,500.00 2,500.00 2,500.00 

Labour 342.58 266.50 32.71 428.60 

Total Variable costs 10,817.58 10,866.53 10,507.71 13,538.60 

Revenue per ton     

Sales at SMU price 1,000.00 1,000.00 1,000.00 2,500.00 

Sales at commercial price 1,630.00 2670.00.00 1,1630.00 na 

Gross margin/ton -9,817.58 -9,866.53 -9,507.71 -11,038.60 

Gross margin/ton (at commercial prices) –9, 187.58 –7, 196.53 –7, 196.53 na 
 

Source: SMU, 2003/04. Key: na – not available. 
 

 

factors limit BAMB and private sector participation in seed 
distribution. Chief amongst these factors is the 
government’s programme of free seed distribution. For 
example, as mentioned by Mpofu (2010), the BAMB did 
not distribute any seed from the SMU during the 
2008/2009 planting season because all the seeds from 
the SMU were distributed by the extension services of 
MoA. Thus, free seed distribution programs have 
discouraged the development of wholesale and retail 
seed trade channels (Tripp, 2000; Kugbei, 2003). The 
SMU also sells seed directly to farmers, especially in 
areas around Gaborone and hence retailers can not 
compete with the SMU as they have to put a mark-up to 
SMU price. Lastly, the performance of cooperatives who 
were supposed to distribute seeds in remotest parts of 
the country has been very poor. Many have not been able 
to do so because the majority have collapsed and those 
that remain are not able to perform this function 
adequately. In addition, there have been instances where 
the government extension services have failed to supply 
farmers with free seeds on time. 

 

Limited market for the private sector 
 
The current arrangement has stifled the development of 
the private sector due to a number of reasons. First, the 
SMU has taken up the limited market available, leaving 
the private sector with very limited market. This is 
because the seeds sold by SMU are sold at subsidised 
prices and hence the private sector cannot compete. 
Secondly, there are many instances whereby government 
offers free seeds through the SMU, especially as a 
drought relief measure or as part of government 
programmes to increase crop production, such as the 
current integrated support programme for arable 
agriculture development (ISPAAD). The issuance of free 
seeds means that the private sector is left with very 

 
 
 

limited market, notably commercial farmers who prefer to 
use hybrid seeds, which are not provided through SMU. 
Some private seed companies who produce OPVs 
choose to export them as they are not able to compete 
with the SMU.  

All these mean that the private sector is left with a very 
limited market, warranting participation uneconomic in 
terms of setting up both production and processing 
facilities. As argued by Tripp and Rohrbach (2001), the 
issuance of free seeds leads to reluctance of the private 
sector in investing in quality seeds due to uncertainty 
about the consistency of seed demand. The private 
sector has therefore concentrated on supplying seeds 
which the SMU does not produce. As argued by Tripp 
and Rohrbach (2001), several multinational seed 
companies have entered national markets only to retreat 
a few years after disappointing sales. This happened with 
one multinational company which was producing and 
processing OPVs in Botswana, but had to abandon its 
production and processing because of limited market and 
competition with the state seed company (SMU). The 
said company is currently producing and processing 
hybrid seed outside the country. Thus, the private sector 
has chosen to supply hybrids seeds because they are not 
offered for free and the SMU does not concentrate on 
their production. 
 

 
PROSPECTS FOR INVOLVING THE PRIVATE 
SECTOR IN SEED PRODUCTION AND DISTRIBUTION 
 

Privatisation policy for Botswana 
 
One of the major prospects regarding privatisation of 
seed production and distribution services is that the 
Government of Botswana (GoB) has adopted a 
privatisation policy through government paper No.1 of 



 
 
 

 

2000. According to GoB’s privatisation policy, privatisa-
tion is broadly defined as encompassing all measures 
and policies aimed at strengthening the role of the private 
sector in the economy. Privatisation is also narrowly 
defined as the transfer of ownership of public enterprises 
to private buyers. It covers a wide range of different policy 
actions resulting in private sector involvement in 
economic activities that have previously been performed 
by the public sector (Republic of Botswana, 2000). 
However, it should be made clear that privatisation does 
not involve government discarding any of its core 
responsibilities for safety and welfare of its citizens. 
Privatisation is broadly defined as encompassing all the 
measures and policies aimed at strengthening the role of 
the private sector in the economy (Republic of Botswana, 
2000). Thus, in terms of policy, privatisation of seed 
production and distribution services is well catered for. 

 

Initiatives that could stimulate seed demand 
 
There are several initiatives that the government is 
currently undertaking or planning to undertake that could 
stimulate the demand for seed and hence the prospects 
for increased private sector participation in seed 
production and distribution. These initiatives are 
discussed as thus explained. 
 
 
National master plan for arable agriculture and dairy 
development (NAMPAADD) 
 
NAMPAADD was instituted in 2002 and its major 
objectives are to improve dry-land arable agriculture, 
irrigated agriculture and dairy farming. Under rain fed 
agriculture, the components of the programme include 
increasing the minimum farm size to at least 150 ha to 
ensure economic viability (average farm sizes are 
presently 4 ha in the communal sector and 100 ha in the 
commercial sector, (Malope, 2009). The main objective of 
NAMPAADD is therefore to increase the area under 
cultivation and hence increase seed demand and 
therefore the prospects for private sector participation in 
the provision of inputs including seeds (Republic of 
Botswana, 2002). NAMPAADD also wishes to increase 
area under irrigation for both field and horticultural crops, 
through the use of both fresh water and urban waste 
water. Thus, NAMPAADD has the potential to increase 
the area under cultivation; hence seed demand and 
therefore the prospects for private sector participation in 
the seed industry. 
 
 
Integrated support programme for arable agriculture 
development (ISPAAD) 
 
The ISPAAD programme was instituted in the 2008/2009 
planting season and its main objectives are to: increase 
grain production; promote food security at household and 
national levels; commercialise agriculture through 

 
 
 
 

 

mechanisation, facilitate access to farm inputs (including 
seeds) and credit; and improve extension outreach. The 
programme offers among other things, free seeds up to a 
maximum amount which can be used to plant 16 ha. For 
hectarage over and above 16 ha, farmers are given 50% 
subsidy on the cost of seed. The seeds offered are OPVs 
of major grains supplied by SMU. Farmers who wish to 
buy hybrids are also offered 50% subsidy on the cost of 
the seed (Ministry of Agriculture, 2009).  

The programme has the potential to increase seed 
demand as demonstrated by the fact that during its first 
year of operation area planted increased by almost three 
folds. This was partly due to the fact that the programme 
also offers subsidies on complementary inputs such as 
ploughing, planting and fertilisers. The most important 
complementary input offered is free ploughing and 
planting up to a maximum of 5 ha and 50% subsidy on 
additional 11 ha. The ISPAAD programme is open to all 
farmers irrespective of their resource endowments and 
size. The programme therefore has the potential to 
increase seed demand in the country and hence the 
prospects for private sector participation in provision farm 
inputs including seeds. 

 

Zambezi agro-industrial project 
 
Government is planning to increase the area under crop 
production by tapping some water from the Zambezi 
River. The plan is to increase area under irrigated farming 
to about 20,000 hectares and this includes arable 
production. Currently, all SMU seeds are planted under 
rain fed conditions and the expectations are that part of 
the land will be used for seed production under irrigated 
conditions. This project also has the potential to increase 
seed demand and hence private sector participation in 
seed production and distribution. 

 

Other initiatives to improve arable production 
 
The Ministry of Agriculture is currently undertaking new 
initiatives with the view of improving the performance of 
the agricultural sector. Such initiatives include the 
agricultural infrastructure development initiative (AIDI) 
and Botswana contributory agricultural insurance scheme 
(BCAIS). The AIDI calls for provision and improvement in 
infrastructure in the farming areas; this include roads,  
telecommunications, electricity and water. This will 
definitely decrease transaction costs for farmers and 
hence their profits and area under arable production. 
 
 
CHALLENGES FACING PRIVATISATION OF SEED 
PRODUCTION AND MARKETING 
 
Free seed distribution 
 
The Government has been involved with free seed 
distribution for OPVs, either as a drought recovery 
measure or as a means to increase crop production. 



 
 
 

 

Free seed distribution does not only create an artificial 
demand for seed, but also limits the market available for 
the private sector. This is demonstrated by the fact that 
currently private sector participation in seed production 
and distribution is limited to the supply of hybrid seeds 
which the SMU does not supply. As noted by Tripp and 
Rohrbach (2001), the strategy for free seed distribution is 
one of the most important constraint to seed system 
development. Free seed programs increase demand for 
seed, but the private sector remains reluctant to invest in 
producing good quality seeds due to uncertainty about 
consistency of seed demand. Free seed distribution 
programmes also discourage the development of 
wholesale and retail seed trade channels. Companies 
prefer to sell to large single buyers as demonstrated by 
SEEDCO which sells to BAMB. 

 

Unreliable demand for seed 
 
Botswana is a drought prone country and this does not 
only disrupt seed production, but also demand. As a 
result of highly variable rainfall, area under cultivation in 
rain fed arable agriculture fluctuates widely. This causes 
unreliability in the demand for seeds. For profitable 
private sector participation, the private sector needs to be 
assured that they will have a stable market for their 
products. Thus, a major challenge facing private sector 
participation in seed production and distribution is lack of 
reliable market. Moreover, the culture or practise of using 
saved seeds which is widely practiced in Botswana limits 
the demand for improved seeds (Mpofu, 2010). 

 

Lack of plant breeders rights 
 
Another challenge facing private sector participation in 
seed production and distribution is lack of intellectual 
property rights (IPR) in the country. Technologically 
superior firms prefer to operate in an environment where 
their investment is protected by intellectual property 
rights. In the seed industry these rights are in the form of 
plant breeders’ rights and provide breeders and research 
programs with a means to limit access to the varieties 
they develop and to gain income from the commercial 
sale of their products. In effect, these rights, insofar as 
they can be enforced, allow public and private 
researchers to obtain larger returns on their investments. 
This increases the likelihood and level of future 
investment in variety development. IPR also help ensure 
returns on investment made in developing markets for 
particular varieties. Lack of IPR is therefore a barrier to 
private sector involvement in variety development and 
seed production (Tripp et al., 2006). 
 
 
Lack of institutional and policy framework for private 
sector participation 
 
The present institutional arrangement in  which  the  SMU 

 
 
 
 

 

is both the producer and the certifier of seeds is not 
conducive to an efficient seed industry. The seed 
production and distribution services should be separated 
from the legislative framework for an efficient seed 
industry. Thus, one can not be judge and a jury at the 
same time if the process is to be transparent. In addition 
there is no seed policy to guide the private sector 
participation in seed production and distribution. For an 
efficient private sector participation in seed production 
and distribution, there must be clear guidelines that direct 
the private sector in the performance of its services. 
Moreover, although the Government has adopted 
privatisation policy since 2000, there is no accompanying 
legislation to help in the implementation of this policy. 
This has stifled privatisation of goods and services 
provided by government, including seed production and 
distribution. 
 
 
THE STRATEGY TO FOLLOW FOR PRIVATISATION 
OF SEED PRODUCTION AND DISTRIBUTION 
 
There are several strategy options that the government 
can follow in privatising seed production and distribution 
services of the SMU (Turner et al., 2001; RoB, 2000). It 
must be noted that no ideal structure exists for the 
national seed system. An efficient system should involve 
both the public and private sector participation in the 
industry. Policy makers should therefore devise policies 
and investments that lead to the two sectors 
complementing each other (Jaffee and Srivastava, 1994). 

 

Leasing SMU assets 

 
Under this arrangement, Government retains the 
ownership of the SMU and other assets involved in seed 
production and multiplication and simply leases them out 
to a private operator who will run the seed production and 
multiplication on his/her own account. The private 
operator assumes commercial risk of operation and 
maintenance and thus, has incentives and obligations to 
reduce costs and maintain long-term value of assets. 
Fees are normally linked to performance and revenue 
generated.  

The leasing of government facilities to private 
companies may be appropriate particularly to seed 
processing plants, which often operate below their 
capacity, especially when government is the contracting 
authority. Plant can therefore be leased on medium to 
long term basis to the private sector. This approach 
allows private companies to make good use of past 
investments. However, it may present management 
problems and it should probably be used only as a 
transient solution until companies have sufficient 
confidence or resources to acquire their own facilities 
(Turner et al., 2001). Moreover, full privatisation can not 
be achieved through leasing of SMU facilities alone. 
Leasing should be complemented by other strategies, 



 
 
 

 

such as contracting out. In addition, the SMU or 
government will need some of these facilities for 
production of basic seeds and certification. 
 

 

Selling of assets/ transfer of ownership 

 

This can either involve selling of assets to a single buyer 
or to several buyers. When selling to a single buyer, the 
new owner buys all the assets of SMU (plant, machinery, 
equipment and stock) but does not buy the SMU itself. 
The new owner is therefore not unencumbered by any of 
the SMU liabilities and obligations such as its contractual 
obligations to its staff, its suppliers (seed growers) and its 
customers (Turner et al., 2001). The assets of SMU can 
also be sold to different buyers, but this may not be 
appropriate because the SMU assets as stated earlier are 
not many and are located in one place and are 
immovable.  

Selling the assets of an existing public institution such 
as SMU to a private company could be effected either 
through the creation and public offer of shares or by 
buying of SMU. The assets could be sold to existing or 
new seed companies. For instance, contracted seed 
growers may wish to form a company of their own which 
will process the seed. However, the seed processing and 
multiplication facilities of the SMU are very old and it 
might be difficult to find a prospective buyer for them. In 
addition, government might need these facilities for the 
production of basic/foundation seed and certification and 
testing. In any case, before considering this route, 
Government should hire professional valuers to value the 
SMU assets as there are no proper valuation records or 
purchase prices and the time in which the assets were 
purchased. 
 

 

Contracting out and restructuring of the SMU 

 

Contracting out is perhaps the most widely used method 
of privatisation (Turner et al., 2001). Under this strategy 
the Government retains ownership and control of the 
activity, but contracts out to the private sector the 
production of goods and services. In the case of seed 
production, Government would maintain control over 
seed production, but would contract out to the private 
sector the actual production and multiplication of seeds. 
The selection of private sector companies is normally 
based on competitive bidding process through invitation 
of tenders. The Government must set service level 
standards and determine specifications with regard to 
quality, quantity and timeliness within which seeds should 
be produced. The successful bidders are required to 
follow these specifications.  

This is perhaps the easiest strategy to follow especially 
during the early days of privatisation. The strategy will 
ensure that the right varieties are supplied and in correct 

 
  

 
 

 

quantities. A number of commercial seed companies 
could be contracted to supply seeds to Government. This 
strategy will also not negate the Government’s 
commitment to increase arable production through the 
issuance of free or subsidised inputs, including seeds. 
Government can buy seeds from contracted companies 
and this will assure companies of a reliable market and 
hence increase their investment, thereby leading to the 
development of a vibrant seed industry in the country. 
 

 

EXPERIENCES ELSEWHERE 

 

Having dealt with a number of strategy options which the 
Government could follow when privatising the seed 
production and marketing services of the SMU, it is 
perhaps logical to briefly summarise experiences 
elsewhere. As mentioned earlier, a number of developing 
countries embarked on the process of privatisation in the 
later 1980s and early 1990s. This involved the removal of 
public monopolies which dominated the pre-privatisation 
era. In many countries, we have witnessed the 
proliferation of private companies. However, the seed 
sectors in these countries have remained inefficient. 
Langyintuo et al. (2010) mentions a number of 
bottlenecks which inhibits efficient private sector 
participation in the seed industry in eastern and southern 
Africa. These constraints include policy bottle necks in 
the form of lengthy varietal release process and trade 
restrictions and establishment bottlenecks which 
manifests themselves in the form of high cost of 
establishment, lack of access to credit and manpower 
constraints. The other constraints are related to 
production, such as lack of access to germplasm, lack of 
production credit and expensive production equipment. 
Marketing also poses problems in the privatised seed 
industry due to lack of contractual agreements at retail 
levels and poor rural road infrastructure. Lastly, there are 
demand bottlenecks resulting from low adoption rates 
and difficulties in estimating demand. Thus, privatisation 
of seed production and distribution has not significantly 
improved the efficiency of the seed sector in eastern and 
southern Africa. 
 

 

CONCLUSIONS AND RECOMMENDATIONS 

 

Private sector participation in Botswana’s seed industry is 
limited due to a variety of reasons, chief amongst them 
being the dominance of the SMU. The seed market, 
especially for OPVs is completely dominated by the SMU 
because the private sector can not compete with it as it 
sells seeds at highly subsidised prices. The issuance of 
free seeds through government programmes meant to 
stimulate crop production has also stifled the 
development of a vibrant private sector in the seed 
industry. The present system has a number of problems 



 
 
 

 

such as unfulfillment of contracts by contracted growers. 
This often leads to importation of grain and turning it into 
grains, resulting in poor quality seed, leading to poor crop 
production. This limits access to good quality seeds 
especially by small-holder farmers.  

Privatisation of the Botswana seed sector is faced with 
a number of challenges. One of these is lack of 
institutional and policy framework to support private 
sector participation in seed production and distribution. 
Although, there is no legislation preventing private sector 
participation in seed production and distribution, the 
current arrangement where there is no proper legislation 
to support the private sector inhibits its growth. The other 
challenge is lack of policy on plant breeders’ rights which 
discourages private firms from investing in variety 
development as their intellectual property rights are not 
protected. 

However, there are a number of prospects for 
increasing private sector participation in the seed sector. 
The main one being the government’s commitment to 
increasing arable production through a number of 
initiatives. These initiatives will surely increase seed 
demand and hence more market for the private sector. In 
addition, the government adopted a privatisation policy in 
2000, through which government seeks to privatise some 
of its services which the private sector could provide 
more efficiently and seed production and distribution has 
been identified as one of them.  

There are a number of strategy options that are 
available for government to follow in its drive to privatise 
seed production and distribution. Each one of them has 
its own advantages and disadvantages. Amongst these 
strategies, contracting out is the preferred strategy 
because it is easy to implement and less costly. For 
privatisation to succeed, government should first create a 
conducive environment for the private sector through 
institutional reform. This should include separation of 
seed production from certification as one can not be a 
‘judge and jury’ at the same time. The government should 
also be clear regarding its practice of issuing free seeds 
as this creates an artificial demand for seed. Thus, for the 
private sector to participate fully, government has to 
ensure that there is a stable market for seed. In the early 
stages of privatisation, government should take the risk of 
unreliable demand for seed through contracting out as 
this will ensure that the private sector has a market for 
seeds. Government should also make sure that seeds 
are supplied to areas where the private sector may find it 
unprofitable to do so.  

In conclusion, they are many benefits that the 
government could reap through privatisation of seed 
production and distribution. These benefits include more 
access to improved seeds and timely supply of seed. This 
will increase both crop production and productivity and 
hence lead to the achievement of Botswana’s agricultural 
policy objectives of food security at both the household 
and national levels. It must be noted that no 

 
 
 
 

 

ideal structure exists for an efficient national seed 
system. An efficient seed system should involve the 
participation of both the public and private sectors in the 
seed industry. Policy makers should therefore devise 
policies that will lead to the two sectors complementing 
each other. In addition, when privatising, government 
should take cognisance of experiences elsewhere where 
privatisation has not been successful because of a 
number of bottlenecks. 
 

 

ACKNOWLEDGEMENTS 

 

The author acknowledges with gratitude the financial and 
technical support from the Food and Agriculture 
Organisation (FAO) to Botswana’s Ministry of Agriculture. 
He also acknowledges all those who participated in this 
project as interviewees and reviewers of the report from 
this study. However, the conclusions arrived at here are 
not necessarily the views of the Food and Agriculture 
Organisation or the Botswana Government. 
 
 
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