The Difference Between Information & Knowledge

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 INDIAN AGRICULTURE

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 Table of Contents
• Agriculture • Insecticides, Fungicides & • Seeds
- Overview Herbicides - Overview
- Size - Demand Pattern In Indian Market - Growth Drivers
- Major Acreages - Insecticides Market Share - Production
- Major Crops - Fungicides Market Share
- Growth drivers - Current Status
- Herbicides Market Share
- Major Issues - Total Cropped Area
- Field Crops: Hybrid Seed Market
- Vegetable Crops: Hybrid Seed
• Fertilizers Market
• Agrochemicals - Overview
- Impact of new technology
- Overview - Consumption
- Regulatory Framework &
- Segments - Fertilizer – Indian Scenario
Challenges
- Consumption - Usage
- Productivity Challenges
- Efficiency
- Growth Drivers - Biotechnology & its effect
- Production
- Top Companies - Way Forward
- Imports
- Key Challenges - Summary
- Subsidy
- State Contribution
- Current Situation
- Growth Drivers
- Challenges
- Policies
May, 2014 Confidential- For Kagashin clients only
 Overview of Indian Agriculture

At 196.90 million hectares, India holds the 2nd largest

agricultural land in the world
Key Statistics

Accounts for 12 % of the nation’s GDP, about 11% of its exports

Total Food grain production stood at 259.32 million tonnes in

FY 2012

833.5 million rural population depends on agriculture as their

principal means of livelihood

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 Evolution of Agriculture in India

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 2012 GDP Contribution

Forestry&Logging
2% Fishing
Community Agriculture 1%
15% 12%
Mining
2%
Financing, Insurance Manufacturing
18% 14%

Electricity
2%
Transport Construction
7% Trade, Hotels& 8%
Restaurant
19%

May, 2014 Confidential- For Kagashin clients only

 GDP at 2004-05 prices
Total GDP Agriculture % Share
USD Billion

1200.00 11.6%
12.0%
12.3%
1000.00 12.3%
13.4%
14.3%
800.00 15.5% 14.7%
16.0%
600.00

400.00

200.00

0.00
2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012-
05 06 07 08 09 10 11 12 13
% Share 16.0% 15.5% 14.7% 14.3% 13.4% 12.3% 12.3% 12.0% 11.6%
Agriculture 79.44 83.83 87.29 92.83 92.57 92.95 101.14 105.09 106.89
Total GDP 495.24 542.18 594.06 649.44 693.11 752.68 822.83 873.93 917.57

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 Size
Contribution of Agriculture & Allied Activities in GDP grew 2.8% in FY’12

GDP by value added of Agricultural and Allied activities (USD Billion)

151.8
155 147.7
CAGR:3.3%
150
145 138
136.5 136.6
140
135 129
130
125
120
115
FY'07 FY'08 FY'09 FY'10 FY'11 FY'12
GDP by value added
May, 2014 Confidential- For Kagashin clients only
Source: Ministry of Agriculture
 Budget FY14: Agriculture remains priority
• Allocation of USD 145.8 billion for agriculture credit, an increase of USD 26.04 billion over last year

• Funds allocated to the Agriculture Ministry increased 22 % to USD 5.63 billion.

• USD 711.4 million is planned for farm research

• Total plan outlay for agriculture in FY 14 raised to USD 3.56 billion from USD 2.87 billion in FY 2013

• Allocation of USD 208.3 million under scheme of Bringing Green Revolution to Eastern India (BGREI)

• Plans to launch crop diversification programmes in Punjab and Haryana

• National Food Security Mission, a scheme to bridge yields gap of major crops provided USD 468.7
million

• Funds for the Integrated Watershed Programme FY14 increased from USD 0.6 billion to USD 1.12
billion in FY13

Source: Ministry of Agriculture, Union Budget 2013-14

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Key Agricultural States & their contributions

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 Area - Million Hectares
Acreages of Major Crops/Major States Year 2011-12
Crops/States MP UP MH Rajasthan AP Karnataka Gujrat West Bihar Punjab Orissa Haryana CG Tamil Assam HP Kerala Uttaran Total
Bengal Nadu chal

Rice 1.66 5.95 1.55 0.13 4.10 1.42 0.84 5.43 3.32 2.82 4 1.24 3.77 1.9 2.54 0.21 40.88
Wheat 4.89 9.73 2.94 0.01 0.23 1.35 0.32 2.14 3.53 2.52 0.05 0.36 0.37 28.44
Total Pulses 5.19 2.42 3.27 4.36 1.93 2.3 0.96 0.16 0.52 0.83 0.18 0.81 0.67 23.60
Cotton 0.71 4.13 0.47 1.88 0.55 2.96 0.56 0.64 11.90
Soybean 5.67 3.01 0.9 0.13 0.19 9.90
Bajra 0.18 0.89 0.84 5.02 0.07 0.29 0.87 0.58 0.05 8.79
Gram 3.04 0.58 1.05 1.43 0.57 0.8 0.24 0.02 0.06 0.24 8.03
Maize 0.86 0.79 0.88 1.05 0.86 1.35 0.52 0.10 0.68 0.13 0.22 0.28 0.29 8.01
Jowar 0.39 0.19 3.38 0.55 0.28 1.14 0.12 0.07 0.2 6.32
Groundnut 0.21 0.3 0.42 1.31 0.68 1.69 0.07 0.39 5.07
Rapeseed & 4.61
Mustard 0.79 2.5 0.42 0.09 0.03 0.54 0.24
Arhar(TUR) 0.53 1.23 0.48 0.77 0.24 0.03 0.14 3.42
Sugarcane 1.02 0.20 0.43 0.22 0.08 0.35 0.03 0.11 2.44
Sesamum 0.36 0.36 0.11 0.55 0.12 0.09 0.19 0.30 0.02 0.05 0.01 2.16
Potato 0.08 0.52 0.03 0.04 0.39 0.15 0.06 0.01 0.01 0.01 0.09 1.39
Mangoes 0.25 0.17 0.38 0.14 0.07 0.16 0.14 0.01 1.33
Jute 0.6 0.13 0.07 0.80
Chillies 0.05 0.01 0.10 0.20 0.11 0.06 0.08 0.01 0.05 0.02 0.69
Masoor 0.59 0.59
Onion 0.06 0.18 0.05 0.04 0.16 0.01 0.03 0.54
Sunflower 0.38 0.02 0.40
Tobacco 0.12 0.15 0.27
Garlic 0.06 0.03 0.03 0.01 0.01 0.14
Ragi 0.04 0.04
Pome Fruits 0.02 0.02 0.04
Grapes 0.04 0.04
Total 25.31 21.73 21.31 20.40 12.60 11.21 9.94 7.68 7.43 7.21 5.82 5.78 4.86 4.12 3.06 0.65 0.21 0.48 169.82
 Major Crops Production
Production: Million tonnes

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 Major States Production of major Crops Year - 2012-13

Production : Million Tonnes

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation

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 Growth Drivers
• Population & income
Demand- side growth
drivers
• Increasing exports

• Favorable demographics

Growth Drivers

• Growing
• Hybrid &
institutional credit
genetically
modified seeds
• Increasing MSP’s
• Mechanization
Supply-side • Introduction of new
Policy Support
drivers schemes
• Irrigation facilities
• Opening up of
• Green Revolution
exports of wheat
in Eastern India Confidential- For Kagashin clients only and rice
 Why India..?

1960-61 Robust Demand Attractive Opportunities 2011-12

Food grain Large population • Increasing demand for
• Food grain
production: hybrid seeds and fertilizers
production
69.3 million • Rising urban and rural incomes : 259.3
tonnes • Potential storage capacity
million
Increasing external demand expansion of 35 million
• tonnes
tonnes

Advantage India
Competitive advantages Policy Support
• Increasing MSP
• High proportion of agricultural land • Schemes to incentivize states to
increase private investment in
• Leading producer of jute, pulses; agriculture and allied sectors
second largest producer of wheat, • Launched National Food Security
paddy, fruits and vegetables Mission (NFSM) to increase food
production

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 Issues in Agriculture

Reducing Arable Land

•Reduction in agricultural land due to industrialization

Declining Holding Size & Fragmented Land Holdings

• Average size of the holdings declined from 2.28 hectares in 1970-71 to 1.16 hectares in
2010-11

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 Issues in Agriculture..Cont’d

Water Management

•Low utilization of rain water (~28.3 percent), due to lack of infrastructure

Climate Change

•Impact due to climate changes is expected to cause a drop between 4.5 and 9
percent by 2039 and by 25 percent by 2099

Unwanted Crop Diversification

• Diversification to commercially attractive crops even in adverse agro climatic conditions

observed

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 Issues in Agriculture..Cont’d

Rural Credit

•Inefficiencies in disbursement of rural credit to farmers undermine the development of

agriculture

Excessive Government intervention

•Government interventions in factor markets and in output markets has constrained

growth of the rural non-farm sector

Over-regulation of domestic agricultural trade

•Over- regulation has led to increased costs, price risks and uncertainty

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 Issues in Agriculture..Cont’d

Fertilizer Overuse

•Overuse of fertilizer has resulted in nutrient imbalance, micro-nutrient deficiency and

deterioration of soil health

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AGROCHEMICALS

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 Table of Contents
• Agriculture • Insecticides, Fungicides & • Seeds
- Overview Herbicides - Overview
- Size - Demand Pattern In Indian Market - Growth Drivers
- Insecticides Market Share
- Major Acreages - Production
- Fungicides Market Share
- Major Crops - Current Status
- Herbicides Market Share
- Growth drivers - Total Cropped Area
- Major Issues - Field Crops: Hybrid Seed Market
- Vegetable Crops: Hybrid Seed
• Fertilizers
Market
• Agrochemicals - Overview
- Consumption - Impact of new technology
- Overview
- Fertilizer – Indian Scenario - Regulatory Framework &
- Segments
- Usage Challenges
- Consumption
- Growth Drivers - Efficiency - Productivity Challenges
- Top Companies - Production - Biotechnology & its effect
- Key Challenges - Imports - Way Forward
- Subsidy
- Summary
- State Contribution
- Current Situation
- Growth Drivers
- Challenges
- Policies

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 Overview
India is the fourth largest producer of Agrochemicals after United States, Japan and China.

Industry Structure

Raw Material Technical Grade

Supplier Manufacturer

Formulator

End User Retailer Distributor

 Loss caused by Pests (% FY2012)

Rodents & Others

15%
Insects
26%

Weeds
33%
Diseases
26%

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 Market Share by Segments

Indian Market -2012

US $ 2 Bn

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 Crop wise Agrochemical Consumption, FY2012

Sugarcane Others
2% 1%

Cereals, Fruits &

Millets & Vegetables
Oilseeds 14%
7% Cotton
50%

Paddy
18%

Plantation &
Crops
Source: Industry reports, Analysis by Tata Strategic

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 State wise key Statistics
Market Share Contribution Agrochemicals Consumption
(Indian Market: US $ 2 Bn), FY2012 FY2012

Tamil Nadu, Assam &

0.09 North East,
0.03 West
West Bihar, Haryana, Bengal
Kerala , 0.02 Others, 0.03
Bengal, 0.05 0.11
Orissa, 5%
0.09 Madhya
0.06 Others AP
Punjab, 0.25 Pradesh,
Haryana 15% 24%
Karnataka, 0.15
5%
0.11

Maharashtr
Gujrat, 0.08
Tamil a
Nadu Gujrat Punjab 13%
5% 7% 11%
Maharashtra,
0.32 MP&
Uttar Chhattisgar
Pradesh, h
0.10 8% Karnataka
7%
Andhra Chattisgarh,
Pradesh, 0.37 0.06 Rajasthan,
0.08

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 Growth Drivers
Domestic Growth Export
Drivers Drivers Drivers

• Increasing population • Excess production capacity

• Limited farmland availability

• Low manufacturing cost
• Growing exports

• Growth of horticulture & floriculture,

• Patent expiry – Opportunity market estimated
• Initiatives taken by Government over USD 3 Bn

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 Potential

CAGR of 14.7% expected during FY'2014-FY'2018 in the Indian crop protection business

COUNTRY WISE PESTICIDE CONSUMPTION No. OF PRODUCT REGISTERED INDIAN CROP YEILDS

Country Pesticide Use (kg/ha) Country Agrochemicals Regd

Avoidable
Crop Cost : Benefit
Loss (%)
Korea 16.56
Europe 600 Cotton 40-90 1: 7
Japan 10.80 Paddy 21-51 1: 7
Mustard 35-75 1 : 12
China 2.0-2.5 Pakistan 495
Sunflower 36-51 1: 8
Europe 1.90 Groundnut 29-42 1 : 26
Vietnam 432
USA 1.50 Maize 20-25 1: 3

Pulses 40-88 1: 4
Thailand 1.37 USA 755
Sugarcane 8-23 1 : 13
Indonesia 0.58 Vegetables 30-60 1: 7
INDIA 210
INDIA 0.38 Fruits 20-35 1: 4

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 Top companies

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 Company Wise Market Share – FY 2013

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 Key Challenges
R&D costs
•High costs (~USD 180 Mn) and long time (~9 years) required for developing a new
molecule

Genetically Modified (GM) seeds

•Self immunity of GM seeds negatively impact the business of agrochemicals

Inefficient Distribution systems

•Inefficiencies in retail distribution exists because of large end user base and improper
management

Support for Integrated Pest Management (IPM) & rising demand for
organic farming

•Increasing awareness of IPM, zero budget farming and usage of bio-pesticides

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 Key Challenges..Cont’d

Cyclical Nature of Demand

•More demand for agrochemicals for kharif crops (~70% of annual consumption of
Pesticides)

Increased Reliance on Exports

•Cyclical nature ,declining demand, resulting in increase exports for better capacity
utilization

Shift in Government Policies in Recent Years

•Stringent registration and export formalities of products delays growth of agrochemicals in
India

Longer period for registration of innovative products

•In India, registration of new products takes 3-5 years which discourages domestic
manufacturers

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INSECTICIDES, FUNGICIDES & HERBICIDES

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 Table of Contents
• Agriculture Insecticides, Fungicides & • Seeds
- Overview Herbicides - Overview
- Size - Demand Pattern In Indian Market - Growth Drivers
- Insecticides Market Share
- Major Acreages - Production
- Fungicides Market Share
- Major Crops - Herbicides Market Share - Current Status
- Growth drivers - Total Cropped Area
- Major Issues - Field Crops: Hybrid Seed Market
- Vegetable Crops: Hybrid Seed
• Agrochemicals Fertilizers Market
-Overview - Impact of new technology
- Overview
-Consumption - Regulatory Framework &
- Segments -Fertilizer – Indian Scenario Challenges
- Consumption -Usage
- Productivity Challenges
- Growth Drivers -Efficiency
-Production - Biotechnology & its effect
- Top Companies
-Imports - Way Forward
- Key Challenges
-Subsidy - Summary
-State Contribution
-Current Situation
-Growth Drivers
-Challenges
-Policies
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 Demand Pattern
USD Billion
Category Year- 2013 CAGR %
Insecticides 1.00 10
Fungicides 0.41 21
Herbicides 0.45 18
Others 0.13 20
Total 2.00 13

Growth Drivers

• Increase in Wages & Scarcity along with consistent increased farmer’s awareness driving Herbicide
demand
• Growing demand of Fruits & Vegetables due to change in dietary pattern leading to more
demand for Fungicides & Plant Nutrition Products

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 Insecticides Market Share

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 Fungicides Market Share

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 Herbicides Market Share

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FERTILIZERS

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 Table of Contents
• Agriculture • Insecticides, Fungicides & • Seeds
- Overview Herbicides - Overview
- Size - Category Pattern In Indian Market - Growth Drivers
- Major Acreages - Insecticides Market Share
- Production
- Fungicides Market Share
- Major Crops - Current Status
- Herbicides Market Share
- Growth drivers - Total Cropped Area
- Major Issues - Field Crops: Hybrid Seed Market
- Vegetable Crops: Hybrid Seed
• Agrochemicals • Fertilizers Market
- Overview - Impact of new technology
- Overview
- Consumption
- Segments - Regulatory Framework &
- Fertilizer – Indian Scenario
Challenges
- Consumption - Usage
- Efficiency - Productivity Challenges
- Growth Drivers
- Production - Biotechnology & its effect
- Top Companies
- Imports - Way Forward
- Key Challenges
- Subsidy - Summary
- State Contribution
- Current Situation
- Growth Drivers
- Challenges
- Policies
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 Salient Features

Contributes to 40-50% of the agricultural productivity

India ranks 3rd in the world for fertilizer production

57 large-sized and 64 medium sized chemical fertilizer production units

Production of 37.6 Mn tonnes (9% rise yoy) of fertilizer in the year 2012-13

yoy- year over year basis

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 Contribution of Fertilizer industry in the Indian
Economy
Agricultural development
•Played a vital role in the green revolution

Capital Investment
•Has more than USD 95 Billion investment

Corporate Development

•Many JV’s, multinationals and cooperatives formed in fertilizer Industry

Regional development
•States having fertilizers plants have a positive impact on their economy

Employment
•Support given to 3.5 lakh families during the last three decades

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 Fertilizer Consumption country wise
N+P+K Consumption(kg/ha)
396 375

284

204.9 188.3
156.1
122.1 114 101

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 Nitrogen Fertilizer – India Scenario
Demand Application by Crop

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 Fertilizer Usage
Million MT

Nutrient 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

N 12.72 13.77 14.42 15.09 15.58 16.56 17.31

P2O5 5.20 5.54 5.51 6.51 7.27 8.05 7.66

K2O 2.41 2.43 2.64 3.31 3.63 3.51 2.66

Total 20.33 21.74 22.57 24.91 26.48 28.12 27.63

Kg/hectare 106 112 115 127 135 144 145

30

25

20
N
15
P2O5
10
K2O
5

0 Total
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

May, 2014 Confidential- For Kagashin clients only

 Fertilizer use efficiency

Year Fertilizer Food grain Production

Consumption

MMT growth rate MMT growth rate

% %

1990-91 12.5 8.5 176.4 3.1

2000-01 18.1 4.1 209.8 1.9

2005-06 20.3 10.6 208.6 5.2

2006-07 21.6 4.4 230.7 1.6

2007-08 22.6 4.4 230.7 6.2

2008-09 24.9 10.4 234.5 1.6

2009-10 26.3 5.6 218.2 6.7

2010-11 28.1 6.8 241.5 9.6

Declining productivity of soil Imbalance in nutrient distribution

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 Fertilizer Production

Million MT
25

20

15
Urea

10 DAP

Complex

2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
May, 2014 Confidential- For Kagashin clients only
 Imports
million MT
Year N P K Total Major product imports
2011-’12
2005-06 1.39 1.145 2.764 5.299
2006-07 2.704 1.373 2.076 6.153 Urea 7.80
2007-08 3.708 1.391 2.668 7.767 DAP 6.90
2008-09 3.756 3.067 3.417 10.239
NP/NPK 4.41
2009-10 3.488 2.85 3.19 9.528
MoP 4.00
2010-11 4.57 3.739 3.896 12.205
5

4
3 N
P
2
K
1

0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

May, 2014 Confidential- For Kagashin clients only

 Fertilizer Subsidy
USD Billion

Product 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Urea 2.386 2.636 3.539 5.124 6.777 4.001 4.30

P&K 1.143 1.466 2.288 3.763 14.522 7.767 6.70

Total 3.529 4.102 5.827 8.887 21.299 11.768 13.17

Mounting subsidy bill over the years!

25
20
15 Urea
P&K
10
Total
5
0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

May, 2014 Confidential- For Kagashin clients only

 Objectives laid down for sector growth

• Expansion and efficiency enhancement through revamping of existing fertilizer plants

• Setting up JV projects in countries having abundant and cheaper raw material resources

• Exploring the use of alternative energy sources like liquefied natural gas, coal gasification,
etc. to overcome the constraints in the availability of conventional energy sources

• Looking at possibilities of revival of some of the closed units by setting up Brownfield units
subject to availability of gas

Source: Ministry of Chemicals & Fertilizers, India

May, 2014 Confidential- For Kagashin clients only

% Share of Various States (Major) in Consumption vis-à-vis
Cultivable Area

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 Current Situation
Successful Capacity Build up

Current status

Production

129.21 Lakh MT of Nitrogen and 47.55 Lakh MT of Phosphates production in 2012-13

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 Current Situation..Cont’d
Successful Joint Ventures
Government is encouraging Indian companies to establish Joint Ventures in Countries with abundant raw
material
 Growth Drivers
• Fast Growing Population
Pressure on land, shall demand increasing productivity

Population Food grain

Year Population Food grain 1600

(Million) (Million MT) 1400
1200
1000
2010 1170 218
800
600
2020 1330 277
400
200
2030 1450 306 0
2010 2020 2030

• New JV’s

• 2/3rd population dependent on farming for source of income

• Agricultural credit facilities/subsidies

• Globally competitive products.

• Manufacturing expertise
May, 2014 Confidential- For Kagashin clients only
 Challenges
• Efficiency
Decreasing efficiency of fertilizers due to lack of R&D , wastage and improper handling

• Investment
This sector is characterized by low investment

• Capacity
Insufficient capacity to meet growing demand

• Competition
Indian production cost (high) and quality (low) compared to international standards

• Changing Government subsidy policies

• Decrease in nominal value of subsidy due to INR Depreciation

• Uncertainty on natural gas prices

May, 2014 Confidential- For Kagashin clients only

 Policies – Fertilizer Sector

RPS Reform Initiatives NPS Regime and FMS

(1970-1990) (1992-2003) (2003-2009)

Objectives Objectives Objectives

- Enhance consumption - Concerns on subsidy - Incentives for increasing

- Create Indigenous capacities - Dec- control not in true sense production efficiency and
- MRP’s untouched capacity utilization
- Production norms lightened - Data capturing through FMS

Impact Impact Impact

- Progress in consumption, - Stagnation in production - No Capacity additions

production - Skewed usage of N - Liquidity and profitability of
- Surplus food grain production - Learning period for domestic industry affected
industry - Uncertain subsidy rates
- Import price highly volatile

May, 2014 Confidential- For Kagashin clients only

 Nutrient Based Subsidy Scheme (2010):
NBS for P&K Fertilizers
Policy Objectives

- Unshackling of fertilizer industry with floating MRP and fixed subsidy

- Availability of right mix of nutrients according to soil and crop needs at reasonable prices

- Access to efficient fertilizer products

Impact of NBS

2010-2011

- Impacting the revenue dynamics for domestic producers

- Availability of fertilizers improved- Encouraged new entrants
- Farmer’s prices of fertilizers remained reasonable
- Fertilizer subsidy more or less in line with the provisions

May, 2014 Confidential- For Kagashin clients only

 NBS for P&K Fertilizers..Cont’d
2011-12

- Removal of cap on MRP leading to price fluctuations

- Low benchmark prices in the beginning led to delay in import decisions resulting in availability constraints
during initial Kharif, 2011

- Revised benchmark prices enabled improved availability from September 2011 onwards

- Mopping of subsidy on closing stocks of previous FY created uncertainty about stability of the policy

- Weakening of Rupee against Dollar impacted farmer’s price

- Adequate Stocks – phenomenon of brand pull noticed

May, 2014 Confidential- For Kagashin clients only

Govt. intention of extending NBS Policy to
Urea
Current Policy

- Urea producers reimbursed on cost plus basis

- This includes cost of production plus a normative profit
Objective of extending NBS to Urea

- Better urea pricing, reduce the government’s subsidy bill and Balanced Fertilization

Potential Impact

- Shift from “fixed price- floating subsidy” to “fixed subsidy- floating price”
- Improved pricing flexibility for the industry, reduced Government’s fertilizer subsidy bill
- Shall address the issue of gas availability and it’s pricing
- Encourage investments in Green-field projects which may become viable and attractive
- Incentivize plans to enhance indigenous urea capacities by about 8 million tonnes/year, including
self sufficiency in coming years

May, 2014 Confidential- For Kagashin clients only

MobileFMS (mFMS) - initiative moving towards
direct subsidization to farmers
Stages Modalities Likely Impact
- Ensuring timely confirmation of receipts
- Ensuring coverage of all the
Subsidy released to manufacturers on retailers/wholesalers i
Phase-I
confirmation of receipts by retailers - Shift in subsidy dispersal from receipts in
district basis to sales basis

- Working capital requirement of dealers will

increase by over 3 times.
- Industry exposure to retailers/dealers will
Phase- II Subsidy to be routed through retailers increase by 3 times
- Significant impact on cash cycle completion

- Purchase capacity of small and marginal

farmers
- Avoid delay in subsidy re-imbursement to
Phase- III Direct subsidy to farmers farmers
- The growth momentum in fertilizer’s usage
is likely to be affected

May, 2014 Confidential- For Kagashin clients only

SEEDS

May, 2014 Confidential- For Kagashin clients only

 Table of Contents
• Agriculture • Insecticides, Fungicides & • Seeds
- Overview Herbicides - Overview
- Size - Demand Pattern In Indian Market - Growth Drivers
- Insecticides Market Share
- Major Acreages - Production
- Fungicides Market Share
- Major Crops - Current Status
- Herbicides Market Share
- Growth drivers - Total Cropped Area
- Major Issues - Field Crops: Hybrid Seed Market
- Vegetable Crops: Hybrid Seed
• Fertilizers
• Agrochemicals Market
- Overview
- Overview - Consumption - Impact of new technology
- Segments - Fertilizer – Indian Scenario - Regulatory Framework &
- Usage Challenges
- Consumption
- Efficiency - Productivity Challenges
- Growth Drivers
- Production - Biotechnology & its effect
- Top Companies - Imports - Way Forward
- Key Challenges - Subsidy
- Summary
- State Contribution
- Current Situation
- Growth Drivers
- Challenges
- Policies
May, 2014 Confidential- For Kagashin clients only
 Overview
• Increased demand for high-yielding varieties to ensure food security has led to growth in
Indian seed industry over years

USD Billion

2.50 2.25

2.00 1.75 1.83

1.50
1.50 1.25
1.00
1.00 0.87

0.50

0.00
2008 2009 2010 2011 2012 2013 2014

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 Indian Seed Market

Vegetables
other 18%
1%
Cotton
Sunflower 34%
2%

Sorghum&
Millets
3% Maize
12%

Wheat Paddy
12% 18%

Total Indian Seed market (6th position in world) – 1.83 USD Bn as of FY’2013.

India cotton seed sales in 2012 - $658 Mn (66.4% of Asia & 34.8 % of global consumption)
Source-Industry & Primary Source, Ken Research

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 Major Seed Producing States

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 Growth Drivers
Growth in Agriculture
•Growth in demand of agricultural products

Improvement in Seed Replacement Rates (SRR)

SRR in hybrids crops like Cotton, Sunflower, Bajra, and Jowar is 100%

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 Growth Drivers…Cont’d
Innovation in seed
•Increase in investments in R&D by both public and private sector

Increase in vegetable seed market size

•Increase in income led to more consumption of fruits and vegetables. Current vegetable
seed market size of 0.015 USD Billion is likely to double in 3-4 years

Effect of PPV&FR Act

•Due to PPV & FR Act, the private sector’s participation has increased in R & D of Open
Pollinated varieties, particularly in Rice and wheat

Attractive for Investment

•Govt. FDI allowance in selected agri- sectors including seed production attracts investment

Improved agronomy in cotton

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 Production/availability of Seed

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Contribution of the private sector in hybrid
seed market

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 Evolution of the Indian Seed Industry
- Private sector

Current Status
accounts for 80%
turnover in seed

- Seed industry boomed - Almost 1/3

Post NSP 1988

as a result of Govt. companies have a
initiatives global
- Minimal Private technology/financial
1960-1980’s

sector participation partner

- FDI allowed and
encouraged
- R&D in public domain - Private seed
companies are
- Imports of improved spending 10-12% of
- Restrictions on varieties and breeding their turnover in R&D
germplasm exchange, lines liberalized
foreign ownership etc
-R&D budget of
- Trade regulations medium sized
liberalized companies is growing
@ 20% p.a.

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 Current status

• Indian seed sector has grown @ 12% compared to <5% growth of global seed market

• Private sector investing in self pollinated crops to develop and promote new varieties
• Seed replacement ratio continues to be low
– Large acres of self pollinated crops – rice, wheat, legumes, etc.

– Low hybrid adoption rates in most crops due to marginal growing conditions and/or
subsistence farming

• Medium and small sized companies are making investments in research and seed processing infrastructure

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 Total Cropped Area
Crop Area (M Ha)
Cotton 9
Cotton Corn 7
Other
s Cor
n Millet 9
Mille
t
Vegetables 7
Vegetables Sunflower 1.4
Sunflower Sorghum (Kh) 4
Sugarcan Sorghum Paddy 43
e
(Kh)
Potat Sorghum (Rabi) 5
o
Groundnu Wheat 26.4
t
Tur 3.4
Soyabean Padd
Mustard 5.3
Gram y
Gram 6.4
Mustar Soyabean 8.1
d Groundnut 6.6
Tur Whea Sorghum
Potato 1.3
t (Rabi) Hybrid crops Sugarcane 4.3
Others 49.7
Total Area is 196.90 Million Hectares.

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 Field crops: Hybrid seed market

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Growth trend of key field crops’ hybrid seed
market

Est. sale in ‘000MT (corn, rice) and million packets (cotton)

Crop 2005 2008 % inc. in 3 2013

years

Cotton 14 23 65% 30

Corn 45 65 45% 80

Rice 9 19 110% 40

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Vegetable crops: Hybrid seed market

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 Growth trend of vegetable hybrid seed market
Crop Sales Volume- 1998 Sales Volume- 2008 Sales Volume - 2013

Tomato
Regular 22 26 35
TLCV Rest Oval 2 5 20
TLCV Rest Acidic 0 17 7
BWR Rest 0.50 2 3
Watermelon 40 70 85
Melon 7 12 15
Chilli Pepper 20 35 55
Okra 250 900 1300
Cabbage 30 50 60
Cauliflower 20 40 50
Brinjal 15 25 35
Ridgegourd 7 27 42
Bittergourd 15 50 70
Bottlegourd 25 50 70
Bell Pepper 0.50 1.50 2
Carrot 12 25
Cucumber 25 50
 Impact of new technology on Cotton

• Bt cotton is the only GM technology approved in India

• First three hybrids of Bt cotton were approved in 2002

• A total of 4 events have been approved

– Bollgard (Cry1Ac) from Monsanto
– Event 1 (Cry1Ac) from JK Agrigenetics
– Fusion Bt (Cry1Ac+Cry1Ab) from Nath Biogene
– Bollgard II (Cry1Ac + Cry2Ab) from Monsanto

• More than 150 Bt cotton hybrids are now available for the farmer to choose from
• More than 80% of the country’s cotton growing area is under Bt cotton
• Cotton production has increased from 12.5 million bales in 2002-03 to 31 million bales in 2007-08
• India has become the second largest producer and second largest exporter of cotton in the world

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 Regulatory framework

– Seed Act, 1966 and Seed Control Order, 1983

- (Seeds Bill 2002 is pending Parliamentary Approval)

– Protection of Plant Varieties and Farmers’ Rights Act, 2001

– Environment Protection Act, 1986
– Biological Diversity Act, 2002

– Destructive Insects and Pests Act, 1914 – Plants, Fruits and Seeds (Regulation of import in India) Order 1989
– Cotton Seed Acts in some states

– Export/Import policies and Regulations

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 Regulatory Challenges

New Seed Bill

• Intends to improve the regulatory framework to encourage the growth of the seed industry

• Self certification through registration of seed producers and accreditation of seed testing labs
- Registration after 2 years of VCU testing
- No provisional registration of transgenic hybrids/varieties
- Duplication of agronomic testing of transgenic hybrids/varieties under EPA and New Seed
Bill
- Performance label and compensation
- Price Control
- Complete exemption of farmers form the operation of the Seed Bill

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 Regulatory Challenges..Cont’d

PPV & FR Act, 2001

- Good beginning to protect the rights of the breeders

- Does not conform to UPOV, 1991

- Gives farmers the right to sell unbranded seed of protected variety

- Allows “innocent infringement” by farmers
- Compulsory licensing and compensation

- Security of the material during field testing for DUS still to be established

- Efficacy of enforcement still needs to be established

- Specific issues still need to be resolved to address the concerns of the industry (e.g. extant
hyrbids/varieties)

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 Regulatory Challenges..Cont’d

Biodiversity Act, 2002

– Restricting exchange of germplasm even of those crops which are covered in the ITPGR

Price Control (through State Acts)

– Arbitrary price controls based on political motivations

– Disincentive to invest in research and infrastructure

– Lead to cost cutting even in critical processes – could affect seed quality adversely

Export/Import regulations
– Inconsistent and politically motivated for commercial seed

– NBPGR retains a sample of seed incase of germplasm imports

– Export of germplasm/research material not allowed in many crops

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 Productivity challenges
• Small marginal farmers with lack of awareness about new technology

• Poorly managed or non-functional Govt. extension systems

• Availability of institutional credit and crop insurance

• Last mile gap (in remote areas) in the delivery / distribution channels
• Abiotic stresses
– Drought
• Low or erratic rainfall in rainfed situations
• Light soils with poor water holding capacity
• Inability to irrigate enough or on time
– Water logging
• Poor drainage
• Excessive rainfall
– Sub optimal temperatures
– Saline soils
– Nutrient deficiencies

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 Productivity challenges..Cont’d

• Biotic stresses

– Fungal, Bacterial and Viral diseases

– Sucking and chewing insect pests

• Sub optimal agronomy

• No or improper use of fertilizer

• Sub optimal cropping systems

• Poor weed management

• Restricted seed supplies due to negative impact of policy

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 Biotechnology and its effects
Non-GM applications of biotechnology GM applications of biotechnology

• Success achieved
• Use of Molecular markers
– Bollworm resistance in cotton
– Stacking of traits
• Other traits of importance
– Increasing breeding gains
– Weed management
– Accelerating product development cycles
– Insect resistance in other crops
– Quality assurance
– Nutritional enhancement
– Protection of IP
– Disease resistance

• Functional genomics – Drought tolerance

– Nutrient stress tolerance

• Other tools viz. Doubled haploid, etc
– Yield enhancement

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Technologies under development in India

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 Way Forward

• Continued focus on customer requirements

– Product fit
– Economic benefit
– Freedom to choose

• Conducive regulatory environment

– Minimal regulation and compliance

– Freedom to price based on ‘value to customers’

– Harmonization of various laws and Uniform enactment of central laws across all states

– Encouragement, through financial incentives, for investment in infrastructure

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 Public private partnership

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 Summary
• Indian seed industry is poised to grow at a rate faster than the global rate (huge opportunity to increase
SRR)
• It has made tremendous contribution to increase productivity through development of superior
hybrids
• It is investing in research and infrastructure
• It has spearheaded the introduction of new technology (Bt cotton)

• Indian seed industry needs policy support to make even bigger contributions in the future:

– Encouragement for investment in research and infrastructure

– Minimal regulation and compliance
– Freedom to operate based on free market principles
– Streamlining of regulatory processes to accelerate the development and introduction of new GM
technology

• Robust PPP models are needed to better serve the farmers by removing the various productivity constraints

through technological interventions

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 Thank You

Office No 339, Regus Business Centre

3rd Floor Neo Vikram
New Link Road, Andheri (W)
Mumbai 400 053
Email: [email protected]

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