August, 2014

Agrochemicals for ensuring foodand Nutritional Security for the Nation

Knowledge and Strategy Paper released at

CONFERENCE 2 0 1 4

th

4 National

AGROCHEM CALS

Knowledge and Strategy Partner

Knowledge and Strategy Partner

01

Knowledge and Strategy Partner

01

Knowledge and Strategy Partner

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Knowledge and Strategy Partner

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1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07

2. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

3. The need of Agrochemicals for food and nutritional security. . . . . . . . . . . . . . . . . . . . 11

4. Indian Agrochemical market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Industry structure and Competitive landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Indian market scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Distribution of domestic crop protection market by Product category. . . . . . . . . . 16

State wise distribution of crop protection market . . . . . . . . . . . . . . . . . . . . . . . . . 17

Distribution and Sales Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Challenges faced by the Indian Crop Protection Industry . . . . . . . . . . . . . . . . . . . . 20

Opportunities and Key Growth Drivers for Indian Crop Protection Market. . . . . . . 22

5. The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Key imperatives for Agrochemical Companies, Govt. and Regulatory bodies . . . . . 24

6. Key Players: Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

7. Annexure - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

8. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

9. About Tata Strategic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Tata Strategic Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Knowledge and Strategy Partner

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Knowledge and Strategy Partner

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Manish PanchalPractice Head - Chemical & Energy

Tata Strategic Management Group

Manish.panchal@tsmg.com

Charu Kapoor Engagement Manager - Chemicals

Tata Strategic Management Group

charu.kapoor@tsmg.com

P S Singh

FICCI

prabhsharan.singh@ficci.com

Head- Chemicals & Petrochemicals

The report on Agrochemicals for food and nutritional security for the nation is a part of joint

endeavor of Federation of Indian Chambers of Commerce and Industry (FICCI) and TATA

Strategic Management Group (TSMG) Chemical Practice's to highlight the importance of

agrochemicals for the Indian agriculture. It has been an ongoing exercise for regularly tracking

the trends in agrochemical and associated industries. The resulting knowledge and experience

gives us an additional advantage to prepare this report.

India requires a robust, modernized agriculture sector to ensure the food and nutrition security

for its population given the fact that the scope for further increasing cultivable land is limited. In

order to meet the food grain requirements of the nation, the agricultural productivity and its

growth needs to be sustained and further improved. In combination with Integrated Pest

Management and Plasticulture techniques Agrochemicals can play a critical role by providing

pre and post-harvest protection to crops and the agricultural output.Through this report we

have highlighted the various challenges faced by Indian Agriculture and Agrochemical sector and

indicated way forward for increasing the penetration of agrochemicals to ensure food and

nutrition security for the nation.

We are grateful to the inputs provided by industry leaders who agreed to interact with us. Their

knowledge and guidance helped us shape the report.

The report is a result of FICCI's objective to highlight the importance of agrochemicals in national

economy and business opportunities present in the sector. We are thankful to FICCI for providing

us an opportunity to develop a report which can play a pivotal role in achieving this objective.

Foreword

Table of Content

1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07

2. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

3. The need of Agrochemicals for food and nutritional security. . . . . . . . . . . . . . . . . . . . 11

4. Indian Agrochemical market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Industry structure and Competitive landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Indian market scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Distribution of domestic crop protection market by Product category. . . . . . . . . . 16

State wise distribution of crop protection market . . . . . . . . . . . . . . . . . . . . . . . . . 17

Distribution and Sales Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Challenges faced by the Indian Crop Protection Industry . . . . . . . . . . . . . . . . . . . . 20

Opportunities and Key Growth Drivers for Indian Crop Protection Market. . . . . . . 22

5. The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Key imperatives for Agrochemical Companies, Govt. and Regulatory bodies . . . . . 24

6. Key Players: Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

7. Annexure - I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

8. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

9. About Tata Strategic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Tata Strategic Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Knowledge and Strategy Partner

05

Knowledge and Strategy Partner

04

Manish PanchalPractice Head - Chemical & Energy

Tata Strategic Management Group

Manish.panchal@tsmg.com

Charu Kapoor Engagement Manager - Chemicals

Tata Strategic Management Group

charu.kapoor@tsmg.com

P S Singh

FICCI

prabhsharan.singh@ficci.com

Head- Chemicals & Petrochemicals

The report on Agrochemicals for food and nutritional security for the nation is a part of joint

endeavor of Federation of Indian Chambers of Commerce and Industry (FICCI) and TATA

Strategic Management Group (TSMG) Chemical Practice's to highlight the importance of

agrochemicals for the Indian agriculture. It has been an ongoing exercise for regularly tracking

the trends in agrochemical and associated industries. The resulting knowledge and experience

gives us an additional advantage to prepare this report.

India requires a robust, modernized agriculture sector to ensure the food and nutrition security

for its population given the fact that the scope for further increasing cultivable land is limited. In

order to meet the food grain requirements of the nation, the agricultural productivity and its

growth needs to be sustained and further improved. In combination with Integrated Pest

Management and Plasticulture techniques Agrochemicals can play a critical role by providing

pre and post-harvest protection to crops and the agricultural output.Through this report we

have highlighted the various challenges faced by Indian Agriculture and Agrochemical sector and

indicated way forward for increasing the penetration of agrochemicals to ensure food and

nutrition security for the nation.

We are grateful to the inputs provided by industry leaders who agreed to interact with us. Their

knowledge and guidance helped us shape the report.

The report is a result of FICCI's objective to highlight the importance of agrochemicals in national

economy and business opportunities present in the sector. We are thankful to FICCI for providing

us an opportunity to develop a report which can play a pivotal role in achieving this objective.

Foreword

Table of Content

Knowledge and Strategy Partner

06

Knowledge and Strategy Partner

07

Figure 1: Losses caused by different pests (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

Figure 2: Indian Rural-Urban population comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Figure 3: Per capita consumption growth in Animal Products . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 4: Per capita arable land (ha). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 5: Average size of landholdings (ha) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 6: Yield comparison (Tonnes/ha) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 7: Crop wise pests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 8: Food requirements (Mn. tonnes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 9: Indian Crop Protection Market (USD Billion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Figure 10: Agrochemical Value Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 11: Key Industry Players in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 12: Indian Crop Protection Market split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Figure 13: Major crop protection products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Figure 14: State wise pesticide consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 15: Crop protection distribution network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Figure 16: Indian Agrochemical Exports, FY10-FY14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 17: Opportunities in generic products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Figure 18: Pesticide consumption (Kg/ha) comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Figure 19: Indicative end to end farmer solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Figure 20: Integrated Pest Management components. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Figure 21: Plasticulture applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Figure 22: Benefits of Plasticulture applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Figure 23: Key Agrochemical Players in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

LIST OF FIGURES

This report is developed by Tata Strategic Management Group with support of FICCI as the

knowledge paper for 4th National Conference on "Agrochemicals for ensuring food and

nutritional security for the nation".

At 1.2 billion, India is the second most populous country after China in the world. According to

United Nations statistics, India will surpass China to become world's most populous country by

2028. French Institute of Demographic Studies, predicts, that by 2050, India will take the top

spot with a staggering population of 1.6 billion ( up from the present level of 1.2 billion) to leave

behind current world leader China, at the second place with 1.3 billion people.However, Indian

Agriculture is facing a critical challenge of maintaining food and nutrition security for the

burgeoning population. According to GHI (Global Hunger Index) rating of 2013, India stands at

16th position amongst 120 developing nations covered.

Increasing urbanization, reduction in arable land, decreasing farm size, consumption shift

towards animal products and heavy dependence on monsoons are some of the critical

challenges faced by Indian agriculture. These factors highlight the importance of agrochemicals

for enhancing food and nutrition security for the nation. Moreover, low per hectare yield as

compared to global average and increasing pest attacks further strengthen the need of

agrochemicals.

The Indian crop protection industry is currently valued at USD 4.3 billion and is expected to grow

at a CAGR of 12% over the next five years. Insecticides is largest sub-segment of agrochemicals

with 60% market share whereas herbicides with 16% market share is the fastest growing

segment in India. Going ahead, opportunities for Indian crop protection industry will come in the

form of exports, growth in generic products, product portfolio expansion, and growth in

herbicides and fungicides.

However, the Industry faces a number of challenges. Some of the key challenges are stringent

environment regulations across the world, low focus on R&D due to high costs and long

gestation period for new products and rising sale of non-genuine products. Non-genuine

products are not only a challenge to agrochemical industry but to the overall Indian economy,

resulting in loss of revenues for farmers, agrochemical companies and Government.

The opportunities and potential exist, however a collaborative approach from the Industry,

Government and Regulatory bodies is required to ensure food and nutrition security for the

nation. Product innovation strategies, end to end comprehensive service offering to the farmer,

effective marketing and distribution strategies like educating the distributors/retailers apart

from farmers and leveraging on IT and Telecommunication infrastructure are some of the

Executive summary1

Knowledge and Strategy Partner

06

Knowledge and Strategy Partner

07

Figure 1: Losses caused by different pests (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

Figure 2: Indian Rural-Urban population comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Figure 3: Per capita consumption growth in Animal Products . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 4: Per capita arable land (ha). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 5: Average size of landholdings (ha) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 6: Yield comparison (Tonnes/ha) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 7: Crop wise pests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 8: Food requirements (Mn. tonnes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 9: Indian Crop Protection Market (USD Billion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Figure 10: Agrochemical Value Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 11: Key Industry Players in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 12: Indian Crop Protection Market split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Figure 13: Major crop protection products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Figure 14: State wise pesticide consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 15: Crop protection distribution network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Figure 16: Indian Agrochemical Exports, FY10-FY14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 17: Opportunities in generic products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Figure 18: Pesticide consumption (Kg/ha) comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Figure 19: Indicative end to end farmer solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Figure 20: Integrated Pest Management components. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Figure 21: Plasticulture applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Figure 22: Benefits of Plasticulture applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Figure 23: Key Agrochemical Players in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

LIST OF FIGURES

This report is developed by Tata Strategic Management Group with support of FICCI as the

knowledge paper for 4th National Conference on "Agrochemicals for ensuring food and

nutritional security for the nation".

At 1.2 billion, India is the second most populous country after China in the world. According to

United Nations statistics, India will surpass China to become world's most populous country by

2028. French Institute of Demographic Studies, predicts, that by 2050, India will take the top

spot with a staggering population of 1.6 billion ( up from the present level of 1.2 billion) to leave

behind current world leader China, at the second place with 1.3 billion people.However, Indian

Agriculture is facing a critical challenge of maintaining food and nutrition security for the

burgeoning population. According to GHI (Global Hunger Index) rating of 2013, India stands at

16th position amongst 120 developing nations covered.

Increasing urbanization, reduction in arable land, decreasing farm size, consumption shift

towards animal products and heavy dependence on monsoons are some of the critical

challenges faced by Indian agriculture. These factors highlight the importance of agrochemicals

for enhancing food and nutrition security for the nation. Moreover, low per hectare yield as

compared to global average and increasing pest attacks further strengthen the need of

agrochemicals.

The Indian crop protection industry is currently valued at USD 4.3 billion and is expected to grow

at a CAGR of 12% over the next five years. Insecticides is largest sub-segment of agrochemicals

with 60% market share whereas herbicides with 16% market share is the fastest growing

segment in India. Going ahead, opportunities for Indian crop protection industry will come in the

form of exports, growth in generic products, product portfolio expansion, and growth in

herbicides and fungicides.

However, the Industry faces a number of challenges. Some of the key challenges are stringent

environment regulations across the world, low focus on R&D due to high costs and long

gestation period for new products and rising sale of non-genuine products. Non-genuine

products are not only a challenge to agrochemical industry but to the overall Indian economy,

resulting in loss of revenues for farmers, agrochemical companies and Government.

The opportunities and potential exist, however a collaborative approach from the Industry,

Government and Regulatory bodies is required to ensure food and nutrition security for the

nation. Product innovation strategies, end to end comprehensive service offering to the farmer,

effective marketing and distribution strategies like educating the distributors/retailers apart

from farmers and leveraging on IT and Telecommunication infrastructure are some of the

Executive summary1

Knowledge and Strategy Partner

08

Knowledge and Strategy Partner

09

possible levers for companies to expand their presence amongst the end users and promote use

of agrochemicals. Integrated Pest and Management and Plasticulture techniques can support

agrochemicals for securing food and nutrition for the nation.

However, the companies cannot achieve their objective in isolation. Continued infrastructural

support from Government is necessary for companies to improve their speed to market.

Government should also provide implementation support in terms of strict actions, regular

crackdowns, and punishments to stop the menace of non-genuine products. Adequate support

is also required for encouraging the industry to invest in R&D activities and develop innovative

solutions.

A collaborative and comprehensive approach can therefore help in overcoming the supply

demand constraints in the Indian agriculture sector, thereby ensuring food and nutrition

security for the nation.

Introduction2The global population currently stands at 7 billion, and is expected to rise to 9.3 billion by 2050.

This will require increase in global food production by 70% in order to meet the rising demand.

On one hand there is need to produce more food, on the other hand the world is facing

challenges of increasing urbanization, decreasing per capita arable land, increasing

malnutrition, rising food inflation and loss of crop output to pests, insects, weeds and diseases.

Globally, up to 40% of crop output is lost due to attack of pests, weeds and diseases. To overcome

these challenges, it is essential to use crop protection chemicals.

The role of crop protection chemicals is not limited to protection; they help in yield

enhancement as well. Use of crop protection chemicals can increase crop productivity up to

50%, which helps mitigate crop loss from pest attacks by 40%. It is estimated that almost 20% of

world's agricultural production is lost due to post-harvest pest attacks.Thus, crop protection

chemicals are essential to ensure food and nutritional security.

Figure 1: Losses caused by different pests (%)

Traditionally, agrochemicals have been manufactured through chemical synthesis but lately

biochemical processes are gaining popularity. Usually, agrochemicals involves active ingredient

in a definite concentration along with adjuvants which enhance their performance, safety and

usability. The agrochemicals are diluted in recommended doses and applied on seeds, soil,

irrigation water and crops to prevent the damages from pests, weeds and diseases.

The crop protection chemicals can be broadly classified into five types:

1.1. Insecticides:Insecticides provide protection to the crops from the insects by either killing

them or by preventing their attack. They help in controlling the pest population below a

desired threshold level.

Weeds

33%

Insects

26%

Diseases

26%

Rodents

6%

Others

8%

Source: Industry Reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

08

Knowledge and Strategy Partner

09

possible levers for companies to expand their presence amongst the end users and promote use

of agrochemicals. Integrated Pest and Management and Plasticulture techniques can support

agrochemicals for securing food and nutrition for the nation.

However, the companies cannot achieve their objective in isolation. Continued infrastructural

support from Government is necessary for companies to improve their speed to market.

Government should also provide implementation support in terms of strict actions, regular

crackdowns, and punishments to stop the menace of non-genuine products. Adequate support

is also required for encouraging the industry to invest in R&D activities and develop innovative

solutions.

A collaborative and comprehensive approach can therefore help in overcoming the supply

demand constraints in the Indian agriculture sector, thereby ensuring food and nutrition

security for the nation.

Introduction2The global population currently stands at 7 billion, and is expected to rise to 9.3 billion by 2050.

This will require increase in global food production by 70% in order to meet the rising demand.

On one hand there is need to produce more food, on the other hand the world is facing

challenges of increasing urbanization, decreasing per capita arable land, increasing

malnutrition, rising food inflation and loss of crop output to pests, insects, weeds and diseases.

Globally, up to 40% of crop output is lost due to attack of pests, weeds and diseases. To overcome

these challenges, it is essential to use crop protection chemicals.

The role of crop protection chemicals is not limited to protection; they help in yield

enhancement as well. Use of crop protection chemicals can increase crop productivity up to

50%, which helps mitigate crop loss from pest attacks by 40%. It is estimated that almost 20% of

world's agricultural production is lost due to post-harvest pest attacks.Thus, crop protection

chemicals are essential to ensure food and nutritional security.

Figure 1: Losses caused by different pests (%)

Traditionally, agrochemicals have been manufactured through chemical synthesis but lately

biochemical processes are gaining popularity. Usually, agrochemicals involves active ingredient

in a definite concentration along with adjuvants which enhance their performance, safety and

usability. The agrochemicals are diluted in recommended doses and applied on seeds, soil,

irrigation water and crops to prevent the damages from pests, weeds and diseases.

The crop protection chemicals can be broadly classified into five types:

1.1. Insecticides:Insecticides provide protection to the crops from the insects by either killing

them or by preventing their attack. They help in controlling the pest population below a

desired threshold level.

Weeds

33%

Insects

26%

Diseases

26%

Rodents

6%

Others

8%

Source: Industry Reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

11

Knowledge and Strategy Partner

10

1.2. Fungicides:Fungicides protect the crops from the attack of fungi and can beof two types -

protectants and eradicants. Protectants prevent or inhibit fungal growth and

eradicantskill the pests on application.

1.3. Herbicides:Herbicidesalso called as weedicides are used to kill undesirable plants. They

can be of two types - selective and non-selective.

1.4. Bio-pesticides:Bio-pesticides are new age crop protection products manufactured from

natural substances like plants, animals, bacteria and certain minerals.They are eco-

friendly, easy to use; require lower dosage amounts for same performance as compared to

chemical based pesticides.

1.5. Others (Fumigants, Rodenticides, Plant growth regulators etc.):Fumigants and

rodenticides are the chemicals which protect the crops from pest attacks during crop

storage. Plant growth regulators help in controlling or modifying the plant growth process

and are usually used in cotton, rice and fruits.

The following sections of the report provide an overview of the Indian crop protection market,

the challenges faced by the Indian agriculture sector and the role of agrochemicals in ensuring

food and nutritional security of the nation.

At 180 million hectares, India holds second largest agricultural land in world. Almost 47% of

India's workforce is employed in agriculture; however its contribution to the GDP is a mere 14%.

Nearly 81 million hectares of India's land is desertified, threatening the food security. The

overgrazing of land and changing climatic patterns are exacerbating the situation. As more land

becomes unusable, the food security of the Indian population is increasingly endangered.

Being the second most populous country in the world, India faces a critical challenge of ensuring

adequate food availability. The recent GHI (Global Hunger Index) rating of 2013 puts India at

16th position amongst the 120 developing nations covered. Compared to the global average of

13.8, the hunger index in India has a value of 21.3. Child malnutrition (under 5 years of age) in

India stands at 44%, much higher than neighbouring countries like Pakistan, Bangladesh and

many African countries.

Critical Challenges faced by Indian Agriculture

Rising urban and declining rural population:The Indian population is estimated to

reach almost 1.5 billion by 2030. It is expected that the Indian agriculture sector has to

produce 355 million tonnes of food grains by 2030 in order to meet the growing

demand. However, a critical challenge faced by the country is the reduction in

agricultural workforce. The percentage share of rural population has consistently

declined from 75% in 1991 to 67% in 2014. This would lead to an increased pressure to

increase agriculture productivity to feed the growing population.

l

The need of Agrochemicals for

food and nutritional security3

Figure 2: Indian Rural-Urban population comparison

1991 2001 2011 2014 (E)

25%

28%

32%

33%

75%

72%

68% 67%

Urban Population (%) Rural Population (%)

Source: Census of India 2011, Tata Strategic Estimates

Knowledge and Strategy Partner

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Knowledge and Strategy Partner

10

1.2. Fungicides:Fungicides protect the crops from the attack of fungi and can beof two types -

protectants and eradicants. Protectants prevent or inhibit fungal growth and

eradicantskill the pests on application.

1.3. Herbicides:Herbicidesalso called as weedicides are used to kill undesirable plants. They

can be of two types - selective and non-selective.

1.4. Bio-pesticides:Bio-pesticides are new age crop protection products manufactured from

natural substances like plants, animals, bacteria and certain minerals.They are eco-

friendly, easy to use; require lower dosage amounts for same performance as compared to

chemical based pesticides.

1.5. Others (Fumigants, Rodenticides, Plant growth regulators etc.):Fumigants and

rodenticides are the chemicals which protect the crops from pest attacks during crop

storage. Plant growth regulators help in controlling or modifying the plant growth process

and are usually used in cotton, rice and fruits.

The following sections of the report provide an overview of the Indian crop protection market,

the challenges faced by the Indian agriculture sector and the role of agrochemicals in ensuring

food and nutritional security of the nation.

At 180 million hectares, India holds second largest agricultural land in world. Almost 47% of

India's workforce is employed in agriculture; however its contribution to the GDP is a mere 14%.

Nearly 81 million hectares of India's land is desertified, threatening the food security. The

overgrazing of land and changing climatic patterns are exacerbating the situation. As more land

becomes unusable, the food security of the Indian population is increasingly endangered.

Being the second most populous country in the world, India faces a critical challenge of ensuring

adequate food availability. The recent GHI (Global Hunger Index) rating of 2013 puts India at

16th position amongst the 120 developing nations covered. Compared to the global average of

13.8, the hunger index in India has a value of 21.3. Child malnutrition (under 5 years of age) in

India stands at 44%, much higher than neighbouring countries like Pakistan, Bangladesh and

many African countries.

Critical Challenges faced by Indian Agriculture

Rising urban and declining rural population:The Indian population is estimated to

reach almost 1.5 billion by 2030. It is expected that the Indian agriculture sector has to

produce 355 million tonnes of food grains by 2030 in order to meet the growing

demand. However, a critical challenge faced by the country is the reduction in

agricultural workforce. The percentage share of rural population has consistently

declined from 75% in 1991 to 67% in 2014. This would lead to an increased pressure to

increase agriculture productivity to feed the growing population.

l

The need of Agrochemicals for

food and nutritional security3

Figure 2: Indian Rural-Urban population comparison

1991 2001 2011 2014 (E)

25%

28%

32%

33%

75%

72%

68% 67%

Urban Population (%) Rural Population (%)

Source: Census of India 2011, Tata Strategic Estimates

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13

Knowledge and Strategy Partner

12

Increasing shift towards animal products: With rising disposable income, the Indian

food consumption pattern is witnessing a shift towards livestock and poultry

products. This is reflected from the fact that ~37% of agricultural output growth over

2005-2011 came from animal products (milk, meat, fish, eggs). On the other hand

fruits and vegetables contributed 23% of growth while cereals resulted in 14%

growth.

This poses an increasing burden to raise the agriculture productivity as it is leading to a

shift from direct to indirect feedgrain consumption. It is estimated that 1kg poultry

meat requires 2-3 kg of feedgrain, 1 kg pork requires 4-5 kg of feedgrain while 1kg of

beef would require 5-10 kg of feedgrain consumption. With limited agriculture

resources this leads to increasing concerns for food security.

l

Decreasing farm size: The average farm size is India has declined by almost 50% from

2.28 ha in 1970s to 1.16 ha (2010-11). 80% of farm land is classified as small or

marginal. The 2011 Census of India indicates that 68% of farms are less than two acres

in size and 95% are less than five acres in terms of owned holdings.While the average

size of landholding is decreasing (also fragmenting) the number of operational

holdings is increasing leading to poor harvest and low incomes for the farmers.

l

Figure 3: Per capita consumption growth in Animal Products

Reduction in arable land: The amount of per capita arable land in India has

consistently declined from ~0.34 ha in 1950s to ~0.15 ha in 2000s. With rising

population it is further expected to reduce to ~ 0.07 ha by 2030.

India has 16,000 sq. km of total cropped area during 10 years from 2000-01 to 2010-

11. During the same period land under urban use increased by 24,000 sq. km, at the

expense of arable land. This has put immense pressure on the current available arable

land for the food and nutritional needs of the population.

l

Figure 5: Average size of landholdings (ha)

1%2%

3%

8%

2%

5%

12%

18%

Milk Fish Eggs Poultry

1994-2005 2005-2010

Source: Industry reports, Analysis by Tata Strategic

Figure 4: Per capita arable land (ha)

0.34

0.15

0.08

0.07

0.4

0.3

0.2

0.1

0

1951 2001 2025 2030

Source: Industry reports, Analysis by Tata Strategic

Source: Agricultural Census, Analysis by Tata Strategic

2.28

1.84

1.55

1.33

1.16

2.5

2

1.5

1

0.51970-71 1980-81 1990-91 2000-01 2010-11

Hecta

res

Knowledge and Strategy Partner

13

Knowledge and Strategy Partner

12

Increasing shift towards animal products: With rising disposable income, the Indian

food consumption pattern is witnessing a shift towards livestock and poultry

products. This is reflected from the fact that ~37% of agricultural output growth over

2005-2011 came from animal products (milk, meat, fish, eggs). On the other hand

fruits and vegetables contributed 23% of growth while cereals resulted in 14%

growth.

This poses an increasing burden to raise the agriculture productivity as it is leading to a

shift from direct to indirect feedgrain consumption. It is estimated that 1kg poultry

meat requires 2-3 kg of feedgrain, 1 kg pork requires 4-5 kg of feedgrain while 1kg of

beef would require 5-10 kg of feedgrain consumption. With limited agriculture

resources this leads to increasing concerns for food security.

l

Decreasing farm size: The average farm size is India has declined by almost 50% from

2.28 ha in 1970s to 1.16 ha (2010-11). 80% of farm land is classified as small or

marginal. The 2011 Census of India indicates that 68% of farms are less than two acres

in size and 95% are less than five acres in terms of owned holdings.While the average

size of landholding is decreasing (also fragmenting) the number of operational

holdings is increasing leading to poor harvest and low incomes for the farmers.

l

Figure 3: Per capita consumption growth in Animal Products

Reduction in arable land: The amount of per capita arable land in India has

consistently declined from ~0.34 ha in 1950s to ~0.15 ha in 2000s. With rising

population it is further expected to reduce to ~ 0.07 ha by 2030.

India has 16,000 sq. km of total cropped area during 10 years from 2000-01 to 2010-

11. During the same period land under urban use increased by 24,000 sq. km, at the

expense of arable land. This has put immense pressure on the current available arable

land for the food and nutritional needs of the population.

l

Figure 5: Average size of landholdings (ha)

1%2%

3%

8%

2%

5%

12%

18%

Milk Fish Eggs Poultry

1994-2005 2005-2010

Source: Industry reports, Analysis by Tata Strategic

Figure 4: Per capita arable land (ha)

0.34

0.15

0.08

0.07

0.4

0.3

0.2

0.1

0

1951 2001 2025 2030

Source: Industry reports, Analysis by Tata Strategic

Source: Agricultural Census, Analysis by Tata Strategic

2.28

1.84

1.55

1.33

1.16

2.5

2

1.5

1

0.51970-71 1980-81 1990-91 2000-01 2010-11

Hecta

res

Knowledge and Strategy Partner

15

Knowledge and Strategy Partner

14

An increase in the number of fragmented landholdings has led to more landholdings

but a decrease in the operating size of farms. Irrigation difficulties and restrictions in

crop variety due to small size impact the productivity. Hence, there is a need to make

optimum utilization of the limited available land.

Per hectare yield in India lower than the rest of the world: Per hectare yield in India is

amongst the lowest in the world. Compared to global average of 4tonnes/ha the yield

in India stands at 3 tonnes/ha. Developed countries like USA, UK, France and Germany

are able to achieve higher per hectare yields than India due to the extensive and

judicious use of agrochemicals. This calls for wise and balanced application of

agrochemicals in a sustainable and environment friendly manner and simultaneously

ensuring food security for the nation.

lBel

gium

Net

herla

nds

Fra

nce

Ger

man

y/U.K

./USA

Chi

na

Indo

nesia

Ban

glad

esh

Sri/

Lank

a

Wor

ld

Bra

zil

Pak

ista

n

Indi

a

Source : Industry reports, Analysis by Tata Strategic

10

9

7.5

76.5

54.5

4 4 3.8

3 3

Figure 6 : Yield comparison (Tonnes/ha)

Increasing Pest Attacks: The total number of pests and serious pests for major crops

has increased significantly from 1940s. For instance, the number of harmful pests in

rice has increased from 10 to 17 andsimilarly there has been an increase in number of

harmful pests from 2 to 19 in case of wheat. The increased loss of crops to pests poses

a serious threat and highlights the importance of agrochemicals for ensuring food

security.

l

Figure 7: Crop wise pests

Figure 8: Food requirements (Mn. tonnes)

This will lead to an increase in demand for food grains. The current requirement of

rice, wheat and coarse cereals is 55 million tons which is expected to increase to 62

million tons after the introduction of the Bill. Decreasing arable land, increased pest

attacks, lower yields and farm size is going to make this a daunting task. However,

increased usage of agrochemicals on the limited arable land can help in yield

enhancement necessary to meet the increasing demand.

This reflects the need for increasing the crop productivity in India to ensure future

self-sufficiency for a billion-plus population. To address the issue of food and

nutritional security, India needs a robust and modernized agricultural sector with

special emphasis on the applications of agrochemicals.

Crop 1940 At present

Total pests Serious Pests Total pests Serious Pests

Rice

Wheat

Sugarcane

Groundnut

Mustard

Pulses

35

20

28

10

10

35

10

2

2

4

4

6

240

100

240

100

38

250

17

19

43

12

12

34

Source: Industry reports, Analysis by Tata Strategic

65

60

55

50

45

40

35

30Current

Requirement

Estimated

Increase

New

Requirement

Source: Food Security Bill, Business Press, Tata Strategic Analysis

(Estimated increase due to implementation of Food Security Bill)

7

55

62

Food Security Bill increasing food grain requirement: Under the new Food Security

Bill, two-thirds of the population will receive 5kg of food grain every month at

subsidized rates of Rs. 1-3 per kg, with the poorest households continuing to receive

35 kg of food grains per month at subsidized prices.

l

Knowledge and Strategy Partner

15

Knowledge and Strategy Partner

14

An increase in the number of fragmented landholdings has led to more landholdings

but a decrease in the operating size of farms. Irrigation difficulties and restrictions in

crop variety due to small size impact the productivity. Hence, there is a need to make

optimum utilization of the limited available land.

Per hectare yield in India lower than the rest of the world: Per hectare yield in India is

amongst the lowest in the world. Compared to global average of 4tonnes/ha the yield

in India stands at 3 tonnes/ha. Developed countries like USA, UK, France and Germany

are able to achieve higher per hectare yields than India due to the extensive and

judicious use of agrochemicals. This calls for wise and balanced application of

agrochemicals in a sustainable and environment friendly manner and simultaneously

ensuring food security for the nation.

l

Bel

gium

Net

herla

nds

Fra

nce

Ger

man

y/U.K

./USA

Chi

na

Indo

nesia

Ban

glad

esh

Sri/

Lank

a

Wor

ld

Bra

zil

Pak

ista

n

Indi

a

Source : Industry reports, Analysis by Tata Strategic

10

9

7.5

76.5

54.5

4 4 3.8

3 3

Figure 6 : Yield comparison (Tonnes/ha)

Increasing Pest Attacks: The total number of pests and serious pests for major crops

has increased significantly from 1940s. For instance, the number of harmful pests in

rice has increased from 10 to 17 andsimilarly there has been an increase in number of

harmful pests from 2 to 19 in case of wheat. The increased loss of crops to pests poses

a serious threat and highlights the importance of agrochemicals for ensuring food

security.

l

Figure 7: Crop wise pests

Figure 8: Food requirements (Mn. tonnes)

This will lead to an increase in demand for food grains. The current requirement of

rice, wheat and coarse cereals is 55 million tons which is expected to increase to 62

million tons after the introduction of the Bill. Decreasing arable land, increased pest

attacks, lower yields and farm size is going to make this a daunting task. However,

increased usage of agrochemicals on the limited arable land can help in yield

enhancement necessary to meet the increasing demand.

This reflects the need for increasing the crop productivity in India to ensure future

self-sufficiency for a billion-plus population. To address the issue of food and

nutritional security, India needs a robust and modernized agricultural sector with

special emphasis on the applications of agrochemicals.

Crop 1940 At present

Total pests Serious Pests Total pests Serious Pests

Rice

Wheat

Sugarcane

Groundnut

Mustard

Pulses

35

20

28

10

10

35

10

2

2

4

4

6

240

100

240

100

38

250

17

19

43

12

12

34

Source: Industry reports, Analysis by Tata Strategic

65

60

55

50

45

40

35

30Current

Requirement

Estimated

Increase

New

Requirement

Source: Food Security Bill, Business Press, Tata Strategic Analysis

(Estimated increase due to implementation of Food Security Bill)

7

55

62

Food Security Bill increasing food grain requirement: Under the new Food Security

Bill, two-thirds of the population will receive 5kg of food grain every month at

subsidized rates of Rs. 1-3 per kg, with the poorest households continuing to receive

35 kg of food grains per month at subsidized prices.

l

Knowledge and Strategy Partner

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Knowledge and Strategy Partner

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Overview

The Indian crop protection industry is estimated to be USD 4.25 billion in FY14

and is expected to grow at a CAGR of 12% to reach USD 7.5 billion by FY19. Exports

currently constitute almost 50% of Indian crop protection industry and are

expected to grow at a CAGR of 16% to reach USD 4.2 billion by FY19, resulting in

60% share in Indian crop protection industry. Domestic market on the other hand

would grow at 8% CAGR, as it is predominantly monsoon dependent, to reach

USD 3.3 billion by FY19. Globally, India is fourth largest producer of crop

protection chemicals, after United States, Japan & China.The crop protection

companies in India can be categorized into three types Multi-National, Indian

including public sector companies and small sector units.

Industry structure and Competitive landscape

The Indian crop protection industry is dominated by generic products with more than 80% of

molecules being non-patented. This results in very low entry barriers for the industry. Hence,

strong distribution network, appropriate pricing, brand recall and dealer margins are some of

the critical factors for companies to succeed. Crop protection chemicals are manufactured as

technical grades and converted into formulations for agricultural use.

The Indian Agrochemical value chain comprises of technical grade manufacturers, formulators

producing the end products, distributors and end use customers.According to Pesticide

Monitoring Unit, GOI, there are about 125 technical grade manufacturers, including about 10

multinationals, more than 800 formulatorsand over 145,000 distributors in India.More than60

technical grade pesticides are being manufactured indigenously.

Indian Agrochemical market4

Figure 9: Indian Crop Protection Market (USD Billion)

Figure 10: Agrochemical Value Chain

In India top ten companies control almost 75-80% of the market share (Refer Annexure-I for list

of top agrochemical companies in India). The market share of large players depends primarily on

product portfolio and introduction of new molecules. The market has seen a number of mergers

and acquisitions with large players buying out small manufacturers. Companies are also looking

for strategic alliances and partnerships in order to expand their market reach.

Domestic

Exports

2.25

3.3

2

4.2

TotalUSD 4.25

billion

Source: Industry reports, Analysis by Tata Strategic

FY14 FY19

12%

USD 7.5

billion

16%

8%

Formulators

(~800)

Technical grade

manufacturers

(~125)

Distributors

(~145,000)

End use

customers

Presence of key industry participants across product segments

Company Insecticides Herbicides Fungicides Others

BASF India - Seed treatment

Bayer Crop science Ltd Seed treatment, plant growth regulators

Dhanuka Agritech Limited PGRs, Surfactants

Dow AgroSciences India Pvt. Ltd. Plant Growth Regulator

DuPont Growth Enhancer

Excel Crop Care Limited Seed treatment, Home & Garden

Gharda Chemicals Ltd. Plant growth Regulator

Meghmani Organics Limited Pesticide Intermediates

Monsanto India Ltd. - -

Nagarjuna Agrichem Limited Fertilizers, Micro Nutrients, Liquid Fertilizers,

PI Industries Ltd Speciality Products

Rallis India Rodenticides, Seed treatment

Syngenta India Seed treatment

United Phosphorous Limited Fumigants, Rodenticides

Maize seeds

Figure 11 : Key Industry Players in India

Knowledge and Strategy Partner

17

Knowledge and Strategy Partner

16

Overview

The Indian crop protection industry is estimated to be USD 4.25 billion in FY14

and is expected to grow at a CAGR of 12% to reach USD 7.5 billion by FY19. Exports

currently constitute almost 50% of Indian crop protection industry and are

expected to grow at a CAGR of 16% to reach USD 4.2 billion by FY19, resulting in

60% share in Indian crop protection industry. Domestic market on the other hand

would grow at 8% CAGR, as it is predominantly monsoon dependent, to reach

USD 3.3 billion by FY19. Globally, India is fourth largest producer of crop

protection chemicals, after United States, Japan & China.The crop protection

companies in India can be categorized into three types Multi-National, Indian

including public sector companies and small sector units.

Industry structure and Competitive landscape

The Indian crop protection industry is dominated by generic products with more than 80% of

molecules being non-patented. This results in very low entry barriers for the industry. Hence,

strong distribution network, appropriate pricing, brand recall and dealer margins are some of

the critical factors for companies to succeed. Crop protection chemicals are manufactured as

technical grades and converted into formulations for agricultural use.

The Indian Agrochemical value chain comprises of technical grade manufacturers, formulators

producing the end products, distributors and end use customers.According to Pesticide

Monitoring Unit, GOI, there are about 125 technical grade manufacturers, including about 10

multinationals, more than 800 formulatorsand over 145,000 distributors in India.More than60

technical grade pesticides are being manufactured indigenously.

Indian Agrochemical market4

Figure 9: Indian Crop Protection Market (USD Billion)

Figure 10: Agrochemical Value Chain

In India top ten companies control almost 75-80% of the market share (Refer Annexure-I for list

of top agrochemical companies in India). The market share of large players depends primarily on

product portfolio and introduction of new molecules. The market has seen a number of mergers

and acquisitions with large players buying out small manufacturers. Companies are also looking

for strategic alliances and partnerships in order to expand their market reach.

Domestic

Exports

2.25

3.3

2

4.2

TotalUSD 4.25

billion

Source: Industry reports, Analysis by Tata Strategic

FY14 FY19

12%

USD 7.5

billion

16%

8%

Formulators

(~800)

Technical grade

manufacturers

(~125)

Distributors

(~145,000)

End use

customers

Presence of key industry participants across product segments

Company Insecticides Herbicides Fungicides Others

BASF India - Seed treatment

Bayer Crop science Ltd Seed treatment, plant growth regulators

Dhanuka Agritech Limited PGRs, Surfactants

Dow AgroSciences India Pvt. Ltd. Plant Growth Regulator

DuPont Growth Enhancer

Excel Crop Care Limited Seed treatment, Home & Garden

Gharda Chemicals Ltd. Plant growth Regulator

Meghmani Organics Limited Pesticide Intermediates

Monsanto India Ltd. - -

Nagarjuna Agrichem Limited Fertilizers, Micro Nutrients, Liquid Fertilizers,

PI Industries Ltd Speciality Products

Rallis India Rodenticides, Seed treatment

Syngenta India Seed treatment

United Phosphorous Limited Fumigants, Rodenticides

Maize seeds

Figure 11 : Key Industry Players in India

Knowledge and Strategy Partner

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State wise distribution of crop protection market

Erstwhile Andhra Pradesh (Seemandhra and Telangana), Maharashtra and Punjab are top three

states contributing to 45% of pesticide consumption in India. Erstwhile Andhra Pradesh is the

leading consumer with 21% share. The top seven states together account for more than 70% of

crop protection chemicals usage in India.

Indian market scenario

Distribution of domestic crop protection market by Product category

The Indian crop protection market is dominated by Insecticides, which form almost 60% of

domestic crop protection chemicals market. The major applications are found in rice and cotton

crops. Fungicides and Herbicides are largest growing segments accounting for 18% and 16%

respectively of total crop protection chemicals market.As the weeds grow in damp and warm

weather and die in cold seasons, the sale of herbicides is seasonal. Rice and wheat crops are the

major application areas of herbicides. Increasing labor costs and labor shortage are key growth

drivers for herbicides. The fungicides find applications in fruits, vegetables and rice. The key

growth drivers for fungicides are shift in agriculture from cash crops to fruits and vegetables and

government support for exports of fruits and vegetables. Biopesticides include all biological

materials organisms, which can be used to control pests. Currently biopesticides constitute only

3% of Indian crop protection market;however they provide significant growth opportunities due

to increasing concerns of safety and toxicity of pesticides, stringent regulations and government

support.

Figure 12: Indian Crop Protection Market split

Figure 14: State wise pesticide consumption

Distribution and Sales Channel

The sales of crop protection chemicals are predominantly in rural areas. Thereforelarge

manufacturers with all India presence use a three-tier sales and distribution network comprising

distributors, wholesalers and retailers for wider market reach. On the other hand, regional

participants cater only to the local markets.Source : Industry reports, Analysis by Tata Strategic

Insecticides

60%

Herbicides

16%

Fungicides

18%

Others, 3%Biopesticides

3%

Figure 13: Major crop protection products

Segment Major Products Main Applications

Insecticides Acephate, Monocrotophos, Cypermethrin Cotton, Rice

Fungicides Mancozeb, Copper Oxychloride, Ziram Fruits, Vegetables, Rice

Herbicides Glyphosate, Isoproturan, 2,4-D Rice, Wheat

Bio-pesticides Spinosyns, neem based Rice, Maize, Tobacco

Others Zinc Phosphide, Aluminum Phosphide Stored produce

Erstwhile AP

21%

Maharashtra

13%

Punjab, 11%

Uttar Pradesh

10%

West Bengal

8%

MP &

Chattisgarh,

6%

Haryana, 6%

Gujarat, 6%

Karanataka

5%

Bihar, 5%

Tamil

Nadu, 5%Others, 4%

Source: Industry reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

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State wise distribution of crop protection market

Erstwhile Andhra Pradesh (Seemandhra and Telangana), Maharashtra and Punjab are top three

states contributing to 45% of pesticide consumption in India. Erstwhile Andhra Pradesh is the

leading consumer with 21% share. The top seven states together account for more than 70% of

crop protection chemicals usage in India.

Indian market scenario

Distribution of domestic crop protection market by Product category

The Indian crop protection market is dominated by Insecticides, which form almost 60% of

domestic crop protection chemicals market. The major applications are found in rice and cotton

crops. Fungicides and Herbicides are largest growing segments accounting for 18% and 16%

respectively of total crop protection chemicals market.As the weeds grow in damp and warm

weather and die in cold seasons, the sale of herbicides is seasonal. Rice and wheat crops are the

major application areas of herbicides. Increasing labor costs and labor shortage are key growth

drivers for herbicides. The fungicides find applications in fruits, vegetables and rice. The key

growth drivers for fungicides are shift in agriculture from cash crops to fruits and vegetables and

government support for exports of fruits and vegetables. Biopesticides include all biological

materials organisms, which can be used to control pests. Currently biopesticides constitute only

3% of Indian crop protection market;however they provide significant growth opportunities due

to increasing concerns of safety and toxicity of pesticides, stringent regulations and government

support.

Figure 12: Indian Crop Protection Market split

Figure 14: State wise pesticide consumption

Distribution and Sales Channel

The sales of crop protection chemicals are predominantly in rural areas. Thereforelarge

manufacturers with all India presence use a three-tier sales and distribution network comprising

distributors, wholesalers and retailers for wider market reach. On the other hand, regional

participants cater only to the local markets.Source : Industry reports, Analysis by Tata Strategic

Insecticides

60%

Herbicides

16%

Fungicides

18%

Others, 3%Biopesticides

3%

Figure 13: Major crop protection products

Segment Major Products Main Applications

Insecticides Acephate, Monocrotophos, Cypermethrin Cotton, Rice

Fungicides Mancozeb, Copper Oxychloride, Ziram Fruits, Vegetables, Rice

Herbicides Glyphosate, Isoproturan, 2,4-D Rice, Wheat

Bio-pesticides Spinosyns, neem based Rice, Maize, Tobacco

Others Zinc Phosphide, Aluminum Phosphide Stored produce

Erstwhile AP

21%

Maharashtra

13%

Punjab, 11%

Uttar Pradesh

10%

West Bengal

8%

MP &

Chattisgarh,

6%

Haryana, 6%

Gujarat, 6%

Karanataka

5%

Bihar, 5%

Tamil

Nadu, 5%Others, 4%

Source: Industry reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

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20

Companies with PAN India presence have 400-1000 distributors supplying to 25,000-30,000

retailers. Stocks are kept in warehouses or depots from where they are supplied to distributors.

To leverage on local companies distribution network several MNCs have tied-up synergistically

for co-distribution or co-marketing The mid-size and small scale companies operate through

direct marketing of their products. Most companies also perform field demonstrations to

increase farmer awareness and promote their products.

Stringent regulations: Stringent environment regulations across the world are

increasing the cost of developing new products and simultaneously delaying the

introduction of new products in the market. For instance, in the European Union any

agrochemical product if found to be mutagenic, carcinogenic or endocrine disruptor

would not achieve registration or re-registration irrespective of the level of exposure

generated. It takes almost nine to ten years to bring a new product.

Low focus on R&D by domestic manufacturers due to high costs: The industry is facing

a serious challenge owing to the rising R&D costs. It takes almost USD 250 million in

research and development to introduce a new product in the market. This prevents

the companies to invest in R&D activities and focus more on the generic products

which require low investments in research and development.

Lack of education and awareness among farmers:It is important to educate the

farmers about the appropriate kind of pesticide, its dosage and quantity and

Challenges faced by the Indian Crop Protection Industry

l

l

l

application frequency. However it is not easy to reach the farmers owing to

infrastructure issues, regional languages and dialects. The main point of contact

between the farmers and the manufacturers are the retailers who don't have much of

a technical experience and are unable to provide a proper product understanding to

the farmers. It is also very difficult for the farmers to convey their needs effectively to

the manufacturers.

Need for efficient distribution systems:The large number of end users and the market

being predominantly generic in nature makes a strong and efficient distribution

network essential for the crop protection market. However, the industry is facing

problems due to supply chain inefficiencies and inadequate infrastructure which

results in post-harvest losses estimated at INR 45,000 crore every year, thereby

impacting the farmers. The lack of efficient distribution system also makes it difficult

for the agrochemical companies to reach the farmers to promote their products and

educate them about their usage and benefits.

Non-genuineproducts: There is a significant share of non-genuinepesticides which

can be counterfeit, spurious, adulterated or sub-standard. According to industry

estimates the non-genuine pesticides could account for upto40% of the pesticides

sold in India in FY13. These products are inferior formulations which are unable to kill

the pests or kill them efficiently.Some such products do perform but leave by-

products which may significantly harm the soil and environment. The damage

through such products is multifold. Apart from crop loss and damage to soil fertility,

use of non-genuine products leads to loss of revenue to farmers, agrochemical

companies and government.

Some of the key reasons for use of non-genuine products are lack of awareness

amongst the farmers, difficulty in differentiating between genuine and non-genuine

products, supply chain inefficiencies, law enforcement challenges and influencing

power of distributors/retailers.

In association with FICCI, TATA Strategic has taken up a study focusing on this subject.

Long gestation period for new products: It takes almost 10 years to bring a new

molecule into the market. Even for the generic products, it can take up to 5 years to get

the product registered. The regulatory bodies do not have adequate resources and

infrastructure to execute timely registration of products. Sometimes the rules are not

clearly defined creating interpretation challenges for the regulatory bodies.,leading

to confusions thereby adding to the complexities for the crop protection chemical

companies.

l

l

l

Figure 15: Crop protection distribution network

Source: Tata Strategic Analysis

In-house formulators

Formulators Retailers/Dealers Distributors

Retailers

Technical Grade manufactures

End usersRetailers

Distributors

Knowledge and Strategy Partner

21

Knowledge and Strategy Partner

20

Companies with PAN India presence have 400-1000 distributors supplying to 25,000-30,000

retailers. Stocks are kept in warehouses or depots from where they are supplied to distributors.

To leverage on local companies distribution network several MNCs have tied-up synergistically

for co-distribution or co-marketing The mid-size and small scale companies operate through

direct marketing of their products. Most companies also perform field demonstrations to

increase farmer awareness and promote their products.

Stringent regulations: Stringent environment regulations across the world are

increasing the cost of developing new products and simultaneously delaying the

introduction of new products in the market. For instance, in the European Union any

agrochemical product if found to be mutagenic, carcinogenic or endocrine disruptor

would not achieve registration or re-registration irrespective of the level of exposure

generated. It takes almost nine to ten years to bring a new product.

Low focus on R&D by domestic manufacturers due to high costs: The industry is facing

a serious challenge owing to the rising R&D costs. It takes almost USD 250 million in

research and development to introduce a new product in the market. This prevents

the companies to invest in R&D activities and focus more on the generic products

which require low investments in research and development.

Lack of education and awareness among farmers:It is important to educate the

farmers about the appropriate kind of pesticide, its dosage and quantity and

Challenges faced by the Indian Crop Protection Industry

l

l

l

application frequency. However it is not easy to reach the farmers owing to

infrastructure issues, regional languages and dialects. The main point of contact

between the farmers and the manufacturers are the retailers who don't have much of

a technical experience and are unable to provide a proper product understanding to

the farmers. It is also very difficult for the farmers to convey their needs effectively to

the manufacturers.

Need for efficient distribution systems:The large number of end users and the market

being predominantly generic in nature makes a strong and efficient distribution

network essential for the crop protection market. However, the industry is facing

problems due to supply chain inefficiencies and inadequate infrastructure which

results in post-harvest losses estimated at INR 45,000 crore every year, thereby

impacting the farmers. The lack of efficient distribution system also makes it difficult

for the agrochemical companies to reach the farmers to promote their products and

educate them about their usage and benefits.

Non-genuineproducts: There is a significant share of non-genuinepesticides which

can be counterfeit, spurious, adulterated or sub-standard. According to industry

estimates the non-genuine pesticides could account for upto40% of the pesticides

sold in India in FY13. These products are inferior formulations which are unable to kill

the pests or kill them efficiently.Some such products do perform but leave by-

products which may significantly harm the soil and environment. The damage

through such products is multifold. Apart from crop loss and damage to soil fertility,

use of non-genuine products leads to loss of revenue to farmers, agrochemical

companies and government.

Some of the key reasons for use of non-genuine products are lack of awareness

amongst the farmers, difficulty in differentiating between genuine and non-genuine

products, supply chain inefficiencies, law enforcement challenges and influencing

power of distributors/retailers.

In association with FICCI, TATA Strategic has taken up a study focusing on this subject.

Long gestation period for new products: It takes almost 10 years to bring a new

molecule into the market. Even for the generic products, it can take up to 5 years to get

the product registered. The regulatory bodies do not have adequate resources and

infrastructure to execute timely registration of products. Sometimes the rules are not

clearly defined creating interpretation challenges for the regulatory bodies.,leading

to confusions thereby adding to the complexities for the crop protection chemical

companies.

l

l

l

Figure 15: Crop protection distribution network

Source: Tata Strategic Analysis

In-house formulators

Formulators Retailers/Dealers Distributors

Retailers

Technical Grade manufactures

End usersRetailers

Distributors

Knowledge and Strategy Partner

23

Knowledge and Strategy Partner

22

Opportunities and Key Growth Drivers for Indian Crop Protection Market

Export Opportunities: The export of pesticides from India hasseen a strong growth

over the last few years.Globally, India is the thirteenth largest exporter of pesticides.

Most of the exports are off-patent products. The major exports from India happen to

Brazil, USA, France and Netherlands. The key growth drivers are India's capability in

low cost manufacturing, availability of technically trained manpower, seasonal

domestic demand, overcapacity (Production capacity of 1,50,00 MT against

production of 85,000 MT in FY13), better price realization globally and strong

presence in generic pesticide manufacturing (India has process technologies for more

than 60 generic molecules).

Post Tsunami Japanese companies are trying to build manufacturing capacities

outside Japan to derisk themselves. The Japanese companies are highly particular

about confidentiality and intellectual property protection and some of them have

seen opportunity in India and are now creating a base here.However, complex

registration procedures pose a major challenge for the Indian crop protection

chemicals export.

l

Agrochemicals worth USD 6.3 billion are expected to be taken off-patent list by 2020.

Globally, percentage share of generic products have increased from 33% in 2000 to

52% in 2013. The patented products share has reduced from 30% to 22% in the same

period while the rest is constituted by proprietary off-patent products.

This provides significant export opportunities for Indian companies which have

expertise in generic segment. Top 6 importing nations constitute only 44% of India's

agrochemical exports. This also indicates export potential for Indian companies. In

order to build a strong export base, companies should set up marketing offices in

association with domestic players in export geographies. Companies can look for

strategic alliances with local companies to expand their marketing and distribution

reach. Companies can also explore merger and acquisition opportunities to increase

their global presence.

Figure 16: Indian Agrochemical Exports, FY10-FY14

Figure 17: Opportunities in generic products

Growth in herbicides and fungicides: Labor shortage, rising labor costs and growth in

GM crops has led to growth in the use of herbicides. The herbicide consumption in

India currently stands at 0.3 USD billion and is expected to grow at a CAGR of 15% over

the next five years to reach 0.6 USD billion by FY18. On the other hand the fungicide

industry in India has grown due to the growth in Indian horticulture industry, which

has grown at a CAGR of 7.5% over the last five years.

Low consumption of pesticides in India:The per hectare consumption of pesticides in

India is amongst the lowest in the world and currently stands at 0.6 kg/ha. On the

other hand consumption in developed nations ranges from 5-7 kg/ha whereas at 13

kg/ha China is almost 20-30 times as compared to India. In order to increase yield and

ensure food security for its enormous population agrochemicals penetration in India

is bound to go up.

l

l

Figure 18: Pesticide consumption (Kg/ha) comparison

CAGR 17.5%

Source : Trademap Statistics, Tata Strategic Analysis

1.051.15

1.38

1.66

2.00

FY10 FY11 FY12 FY13 FY14

India Agrochemicals Exports (USD Bn.)

1.3

0.9

1.2

1.6

0.4

0.7

0.2

2014 2015 2016 2017 2018 2019 2020

Source: Industry reports, Analysis by Tata Strategic

Agrochemicals going off-patent, 2014-2020 (USD billion)

0.75

55

7 7

12

13

17

Indi

a

UK

Fra

nce

Kor

ea

USA

Japa

n

Chi

na

Taiw

an

Source: Industry reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

23

Knowledge and Strategy Partner

22

Opportunities and Key Growth Drivers for Indian Crop Protection Market

Export Opportunities: The export of pesticides from India hasseen a strong growth

over the last few years.Globally, India is the thirteenth largest exporter of pesticides.

Most of the exports are off-patent products. The major exports from India happen to

Brazil, USA, France and Netherlands. The key growth drivers are India's capability in

low cost manufacturing, availability of technically trained manpower, seasonal

domestic demand, overcapacity (Production capacity of 1,50,00 MT against

production of 85,000 MT in FY13), better price realization globally and strong

presence in generic pesticide manufacturing (India has process technologies for more

than 60 generic molecules).

Post Tsunami Japanese companies are trying to build manufacturing capacities

outside Japan to derisk themselves. The Japanese companies are highly particular

about confidentiality and intellectual property protection and some of them have

seen opportunity in India and are now creating a base here.However, complex

registration procedures pose a major challenge for the Indian crop protection

chemicals export.

l

Agrochemicals worth USD 6.3 billion are expected to be taken off-patent list by 2020.

Globally, percentage share of generic products have increased from 33% in 2000 to

52% in 2013. The patented products share has reduced from 30% to 22% in the same

period while the rest is constituted by proprietary off-patent products.

This provides significant export opportunities for Indian companies which have

expertise in generic segment. Top 6 importing nations constitute only 44% of India's

agrochemical exports. This also indicates export potential for Indian companies. In

order to build a strong export base, companies should set up marketing offices in

association with domestic players in export geographies. Companies can look for

strategic alliances with local companies to expand their marketing and distribution

reach. Companies can also explore merger and acquisition opportunities to increase

their global presence.

Figure 16: Indian Agrochemical Exports, FY10-FY14

Figure 17: Opportunities in generic products

Growth in herbicides and fungicides: Labor shortage, rising labor costs and growth in

GM crops has led to growth in the use of herbicides. The herbicide consumption in

India currently stands at 0.3 USD billion and is expected to grow at a CAGR of 15% over

the next five years to reach 0.6 USD billion by FY18. On the other hand the fungicide

industry in India has grown due to the growth in Indian horticulture industry, which

has grown at a CAGR of 7.5% over the last five years.

Low consumption of pesticides in India:The per hectare consumption of pesticides in

India is amongst the lowest in the world and currently stands at 0.6 kg/ha. On the

other hand consumption in developed nations ranges from 5-7 kg/ha whereas at 13

kg/ha China is almost 20-30 times as compared to India. In order to increase yield and

ensure food security for its enormous population agrochemicals penetration in India

is bound to go up.

l

l

Figure 18: Pesticide consumption (Kg/ha) comparison

CAGR 17.5%

Source : Trademap Statistics, Tata Strategic Analysis

1.051.15

1.38

1.66

2.00

FY10 FY11 FY12 FY13 FY14

India Agrochemicals Exports (USD Bn.)

1.3

0.9

1.2

1.6

0.4

0.7

0.2

2014 2015 2016 2017 2018 2019 2020

Source: Industry reports, Analysis by Tata Strategic

Agrochemicals going off-patent, 2014-2020 (USD billion)

0.75

55

7 7

12

13

17

Indi

a

UK

Fra

nce

Kor

ea

USA

Japa

n

Chi

na

Taiw

an

Source: Industry reports, Analysis by Tata Strategic

Knowledge and Strategy Partner

25

Knowledge and Strategy Partner

24

Effective Marketing and distribution: Effective marketing and distribution and

increased reach to farmers is a key growth driver for the agrochemical companies.

However, rising sales of non-genuineagrochemical products has impacted the

industry image. Companies are already investing in marketing activities to educate

l

the farmers and increase their customer base. However, some additional strategies

which can be adopted by companies are: Apart from educating the end users

companies should also work on influencing the distributors and retailers. Pesticide

distributors and retailers play a critical role in agrochemical supply chain. Often the

farmer decision to purchase a pesticide is guided by the distributors and retailers.

Hence it is not only critical for companies to promote their products amongst the

retailers/distributors but also incentivize them to sell genuine products. Industry

bodies also need to invest in overall "Image improvement" of the industry. Companies

should come together and develop strategies to promote the use of genuine products

amongst the end users. Joint efforts should be undertaken to educate farmers about

pesticide use in a judicious and appropriate manner. Benefits of Bio-pesticides also

need to be promoted to encourage shift from the traditional products.

Leverage on IT and Telecommunications: Companies should leverage on IT and

Telecommunication infrastructure. Apart from Television and Radio, companies can

capitalize on SMS services to be in touch with distributors' retailers and farmers. IT

services can be used to provide technical and operational guidance. Portals in regional

languages can help build connect and enduring relationships with farmers.

l

Key imperatives for Agrochemical Companies, Govt. and

Regulatory bodies

Agrochemicals can play a crucial role in overcoming the challenges faced by Indian agriculture

sector, thereby ensuring food and nutritional security for the nation. This can be achieved by

developing innovative products, expand the product/service offering and promoting the use of

agrochemicals amongst the end users, i.e. the farmers. The low consumption levels provide a

significant opportunity for agrochemical companies to increase their market penetration. Some

of the key imperatives are:

Product innovation: Product innovation needs to capture emerging market trends and match

international standards. Companies in agro-chemical space can focus on the following:

Companies need to innovate products which can improve the effectiveness of

pesticide usage as well as reduce the negative impacts on environment. With the

advent of GM crops and increasing popularity of bio-pesticides, environment

friendliness of the agro-chemicals could be a differentiating factor.

Indian companies would need to increase focus on developing new active ingredients

rather than just focusing on generics. Indian companies usually spend 1-2% of their

turnover on R&D as compared to global companies which spend 5-10% of their

turnover on R&D.

Indian companies can also look for strategic tie-ups/ alliance with large MNCs for

contract manufacturing if they lack the ability to invest in developing new molecules.

In line with global trend, Indian companies can look for opportunities to expand their

presence in value chain by incorporating seeds in their product portfolio. Globally it

has been witnessed that EBITDA and PAT margins have increased as companies have

integrated into seed manufacturing. This would help in increasing the reach amongst

the farmers.

End to end farmer solution: Companies should look for opportunities to provide a

comprehensive agri offering to the farmer. A one stop solution for the farmer ranging from

agriculture and farm inputs to procurement, storage and distribution services on the output side

would help companies develop sustainable business models. End to end solution not only

creates a better reach with the farmers but will also turns threats like genetically modified seeds,

organic farming etc. into opportunities. Many companies are already following the integrated

model. While it has helped the farmers to improve their yield, get technical assistance and better

value for their produce, it has also helped companies to strengthen their presence amongst the

farmers.

l

l

l

l

The Way Forward5

Figure 19: Indicative end to end farmer solution

Procurement

Animal feed

& Fuel

Logistics & Storage

Crop Protection

& Seeds

Contract FarmingFertilizers

Farm A

dvisory, Farm S

ervices, Finance

INP

UT

SID

E

OU

TP

UT

SID

E

Farmer

Knowledge and Strategy Partner

25

Knowledge and Strategy Partner

24

Effective Marketing and distribution: Effective marketing and distribution and

increased reach to farmers is a key growth driver for the agrochemical companies.

However, rising sales of non-genuineagrochemical products has impacted the

industry image. Companies are already investing in marketing activities to educate

l

the farmers and increase their customer base. However, some additional strategies

which can be adopted by companies are: Apart from educating the end users

companies should also work on influencing the distributors and retailers. Pesticide

distributors and retailers play a critical role in agrochemical supply chain. Often the

farmer decision to purchase a pesticide is guided by the distributors and retailers.

Hence it is not only critical for companies to promote their products amongst the

retailers/distributors but also incentivize them to sell genuine products. Industry

bodies also need to invest in overall "Image improvement" of the industry. Companies

should come together and develop strategies to promote the use of genuine products

amongst the end users. Joint efforts should be undertaken to educate farmers about

pesticide use in a judicious and appropriate manner. Benefits of Bio-pesticides also

need to be promoted to encourage shift from the traditional products.

Leverage on IT and Telecommunications: Companies should leverage on IT and

Telecommunication infrastructure. Apart from Television and Radio, companies can

capitalize on SMS services to be in touch with distributors' retailers and farmers. IT

services can be used to provide technical and operational guidance. Portals in regional

languages can help build connect and enduring relationships with farmers.

l

Key imperatives for Agrochemical Companies, Govt. and

Regulatory bodies

Agrochemicals can play a crucial role in overcoming the challenges faced by Indian agriculture

sector, thereby ensuring food and nutritional security for the nation. This can be achieved by

developing innovative products, expand the product/service offering and promoting the use of

agrochemicals amongst