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REPORT

ON

Pesticides Industry

Submitted to: Submitted by:

Etali Sarmah

Ashok Kumar Ora

Bharat Bhushan Sharma

Manish Singhal

Kamal Bhukkal

Institute of Agri Business Management

S K Rajasthan Agricultural University, Bikaner

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Contents

S.No. Particulars Page No.

1 Introduction 3

2 Pesticides : Global Perspective 3-6

3 Pesticides industry in India 7

4 Product and Consumption pattern 7-8

5 Import and Export trend 9-10

6 State wise consumption of pesticides 11-12

7 Insecticides market in India 12-13

8 Fungicides market in India 13-14

9 Herbicides market in India 14-15

10 Contemporary issue 15-16

11 Marketing mix of Pesticides Industries 17

12 Safety aspects: Human & Environmental 17-18

13 Integrated pest management 18-19

14 Biopesticides in use 19

15 Govt. Laws and Impacts of WTO 20-22

16 Opportunities in the Indian Market 23-24

17 References 24

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Introduction

Agriculture is the keystone of the Indian economy. Ensuring food security for more than

1 billion Indian populations with diminishing cultivable land resource is a herculean task.

This necessitates use of high yielding variety of seeds, balance use of fertilizers, judicious

use of quality pesticides along with education to farmers and the use of modern farming

techniques. It is estimated that India approximately loses 18 percent of the crop yield

valued at Rs.900 billion due to pest attack each year. The use of pesticides help to

reduce the crop losses, provide economic benefits to farmers, reduce soil erosion and help

in ensuring food safety & security for the nation.

The Pesticide Management Bill 2008 defines “Pesticide” as, “Any

substance or mixture of substances of chemical or biological origin intended for preventing,

destroying, attracting, repelling, mitigating or controlling any pest including unwanted

species of plants or animal feeds.” Pesticides can be manufactured and sold mainly in two

forms:-

1. Technical 2. Formulations

Technical is the first stage of manufacture where the chemical is concentrated and

unsuitable for direct use. This is then processed with other materials to create

formulations. The conversion from technical grade to formulations adds substantial value to

the product.

Pesticides Industry : Global Perspective

The world pesticide industry is dominated by nine multinational basic

producers from the United States and Western Europe; they account for nearly one-half of the

total output. Monsanto, Bayer, DuPont, Dow agroscience,BASF, in the top ten is AgrEvo,

a joint venture of Hoechst and Schering. Producers in the second tier (annual sales below $1

billion) include Sumitomo, Sandoz, FMC, and Rohm & Haas. Expenditures on herbicides

accounted for the largest portion of total expenditures – more than 40%, followed by

expenditures on insecticides,fungicides and other pesticides respectively.

Production and percentage of different types of Pesticides in World

Types of Pesticides World Market(in million dollars)

World Market (in %)

Herbicides 14,118 44 Insecticides 8,763 28 Fungicides 6,027 19 Other 2,848 9 Total 31,756 100

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Global Market Of MNCs

Company Sales 2007(US $ milliion)-%market share

1 Bayer (Germany) $ 7,458m – 19%

2 Syngenta (Switzerland) $ 7,285m – 19%

3 BASF(Germany) $ 4,297m – 11%

4 Dow AgroScience(USA) $ 3,779m – 10%

5 Monsanto(USA) $ 3,599m – 9%

6 DuPont(USA) $ 2,369m – 6%

7 Makhteshim Agan(Israel) $ 1, 895m – 5%

8 Nufarm (Australia) $ 1,470m – 4%

9 Sumitomo Chemical (Japan) $ 1,209m – 3%

10 Arysta Lifescience (Japan) $ 1,035m – 3%

11 Total $ 34,396m – 89%

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Major players of Indian Pesticides industry

Indian Players – 1) Tata Rallis India Ltd.

2) United Phosphorous Ltd.

3) Excel Industries Ltd.

4) P.I. Industries Ltd.

5) Gharda Chemicals Ltd.

Small Scale Firms – 1) Dhanuka Pesticides

2) Bharat Insecticides

3) Hindustan Insecticides Ltd

MNCs Pesticides Products

Companies Insecticides Fungicides Herbicides

Bayer Confidor,Calpso,decis, Oberon,libacid

Antrawl,baycon,eolicur,Monceren

Atlantis,basta, topstar,whipsuper

BASF vesimol bavastin Pursuite,stamp.

Dupont Avaunt,caesar,lannate,rebord,magister

Rubigan,mustar,curzate,kocide

Algrip,almix, brackett,kloben,

Monsanto Yieldgaurd,vistive,seminis Seed treatment products Roundup- ready

interno,leader

Dow agroscience

Dursban,imiden,success,pride,tracer,nureblle

Beam,bengaurd,savior,spencer

Goal,weedall,clincher

Syngenta Actara,proclaim,cigna,metador,pegasas

Amister,ridomil,score,tilet,kavach

Rift,gramoxone,topik

Makhteshim-Agan

Thionex, seizer, rimon, diazol folpan, magnate, merpan, nimrod

atranex, azoln

Arysta LifeScience

orthene® elevate®, Captan everest® , select®

Sumitoma chemical

Parmathion, Hakusap, Vegiphon, Mikantop

Sumilex , Powmyl Sumiherb ,Cremar

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Indian pesticides companies products

Companies Insecticides Fungicides Weedicides

Tata rallis Daksh,tatamida,reeva, asataf,manik,rogor

Contaf,contaf plus,master

Fateh,tatametri, tata panida

Excel crop care ltd. Endosulfan,chloropyriphos ,profenphos,imidacholprid

Sulfex80 , sulfex gold

glyphosate

UPL Ustaad, Hunter, Perkill Zeemil ,Rampart Orraza ,Kabbu

PI Industries carena, Rocket(cypermethrin)

Kitazin,Sanit Solaro(atrazine), jUpiter

Gharda chemical ltd.

Chlorpyrifos,Quinalphos, Triazophos

Carbendazim Dicamba, Isoproturon

Dhanukha Pesticides

Cypermethrin,monocrotophos Carbendazim Terga super,Nukil

Bharat Insecticides Endosulfan,Malathion Capton ,Mancozeb Isoproturan, Propanil

Hindustan Insecticdes

Endosulfan,Malathion, Monocrotophos

Mancozeb Butachlor

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Pesticides Industry in India

India is one of the most dynamic generic pesticide manufacturers in the world with more

than 60 technical grade pesticides being manufactured indigenously by 125 producers

consisting of large and medium scale enterprises (including about 10 multinational

companies) and more than 500 pesticide formulators spread over the country. The Indian

pesticide industry is ranked second in Asia (behind China) and twelfth globally. India

produces 90,000 metric tons of pesticides a year. In contrary to the world statistics where

herbicide usage dominates the pesticide overall use, in India insecticides dominates the

entire use percentage.

The monsoons have always been a challenge to the Rs 4500 crore Indian Pesticide

market. The Indian Meteorological Department has now declared a deficiency of 29 per

cent in the south-west monsoon in India .This holds very important and far reaching

implications on the agriculture in general and the pesticide industry in particular.

The per hectare consumption of pesticide is low in India at 381 grams when compared to

the world average of 500 grams.

In India, due to the huge presence of off-patent and generic molecules, the pesticide

industry is usually low and medium sized in nature. In the case of off-patent molecules,

the presence of wide distribution, the strong brand image and superior quality

product acts as entry barriers. Due to this nature of the industry, there have been very

little investments in R&D. But with the new patent regime since 2005, the discovery of

new proprietary molecules and entry of MNC players with strong research and

development many new patented products have been launched, for example,

Abamectin, Buprofezin, Imidaclopid etc. This makes the need of the Indian companies

to invest in R&D as a necessity to survive in competition against the big players.

There is also the presence of skewed balance in the crop-wise and state-wise use

of pesticides. It is in the favour of Kharif crops- rice and cotton and states like Andhra

Pradesh, Karnataka and Punjab. The pesticide industry is also highly dependent on the

vagaries of monsoon and the maximum demand for them is in the months of July –

September period.

Demand and Supply

The demand drivers for this industry are the increase in the acreage for commercial crops,

use of high yielding varieties seeds in the key crops like cotton, rice, sugarcane and the

intensive work being done by the government authorities and the industry players. The

continuos extension of new agricultural practices like the use of genetically modified seeds

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like cotton and the use of newer pesticide molecules in the plant protection business keeping

in mind the cost benefit ratio of pesticides use is also changing the demand and supply

dynamics of the pesticide industry.

As cotton is no longer a major pesticide user, its share has dropped to less than 20% from

50%.Now,paddy is the driving factor for the pesticide industry, the crop’s share in pesticide

use has increased up to 40%.But the monsoons this year have also not been favourable due

to which the area under paddy has shrunk considerably- by about 26 per cent. The area

under Kharif paddy has shrunk from 257 lakh hectares in 2008 to 191 lakh hectares.

In 1992, the government formulated the law, which made it obligatory for manufacturers of

basic bulk agrochemicals, called technicals, to sell 50% of their output to the outside

formulation manufacturers After the law was repealed, the formulator were starved of raw

materials which lead to an increase on the number of agrochemical manufacturers which lead

to a huge addition to the capacity.

The overall demand of pesticides in India has been decreasing in terms of volume but at the

same time the value in terms of sales has been increasing over the years .

This can be attributed to the entry of more efficient chemicals with lower dosages and

efficacy at very low concentration.

Production and Demand of Pesticides in India

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Production and Consumption Pattern

Import and Export Trends

In India, the imports are usually the new sophisticated

molecules, which are not manufactured in India. The concerned multinationals go through

the process of registering and importing the new molecule in India if it is a fit for controlling

a specific pest.

In the case of agrochemicals trade India has a healthy surplus on account of abundant

and easy availability of high quality and low cost raw materials and intermediates. The high

quality of Indian products such as cypermethrin, chlorpyriphos etc give India a distinctive

advantage over China. The following table give the product-wise export of some selected

pesticides and insecticides from India.

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Import and Exports Scenario

Product-wise Export of Selected Pesticides and Insecticides from India

Products 2002-03 2003-04 2004-05 2005-06

Qty. Value Qty. Value Qty. Value Qty. Value

D.D.T. 9 16 958 1456 1763 2103 1204 1445

Malathion 1574 1506 0 0 0 0 0 0

Parathion

(Methyl)

53 381 478 891 200 240 413 904

Dimethoate 105 158 154 324 88 857 148 1796

D.D.V.P. 365 379 345 1077 619 921 455 614

Quinalphos 180 335 86 137 273 449 442 764

Endosulphan 4447 9610 5399 9960 4628 9355 3070 6043

Cypermethrin 7139 26300 6448 23235 7369 23663 10772 41245

Fenthion 2 5 109 694 26 45 174 804

Lindane 64 152 66 333 23 52 60 118

Ziram(Thio

Barbamate)

70 65 0 0 0 0 0 0

Copper-

Oxychloride

0 0 5 8 373 298 412 434

2, 4-D 753 708 713 611 1345 1324 4138 4719

Isoproturon 1201 2163 2033 3233 1988 3562 1078 2041

Aluminium 1000 3345 824 2263 1410 4322 1343 3947

Methyl 3 8 2389 8432 1617 4606 518 2007

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Bromide

(Quantity in mn tonnes)

State wise Consumption of Pesticides

The pesticide Industry also differs in quantum and sales from one state to other,

depicting the scale of modernization and development in agriculture. The revenue

generated by the crop protection chemicals as per the states is depicted in the graph

below.

Pesticides Industry Scenario in value

The different crop protection chemicals sold in India differs from state to state and further from crop to crop. Rice is the major crop protection chemical consuming crop followed after cotton. Introduction of Bt cotton has considerably reduced the pesticide usage in cotton and hence rice is the main driver for demand of pesticides.

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12The future of GM crops and its implication on pesticide usage is highly debatable at one hand the pro GM group is advocating to increase its acreage on its promise of providing in built safety from pests, on the contrary a different school of thought brings in to picture the chances of resistance and resurgence to get erupted in pests from GM and again escalating the usage of Pesticides.

The introduction of herbicide tolerant GM crops can still increase the usage

quantity of pesticides in India .The same has been the reason for higher usage of

pesticides in other countries than in India. The glyphosate tolerant crops in USA have

pushed upward the usage of Round- up (glyphosate).

Insecticides Market in India

The chart clearly depicts that the highest use of pesticides is in

Andhra Pradesh followed by Maharashtra, Punjab and Karnataka. Much of this is because

of the cropping pattern and agricultural development in the respective state. A.P. is major

cotton and rice producing centre of India and the maximum insecticide application is in

cotton and rice only, Punjab also enjoys Rice – Wheat cropping system which accounts for

the high insecticide usage. Cotton cultivation further escalates the use of insecticides .With

the advent of Bt technology there has been a shift of insect pest dominance in cotton

ecosystem eg. thrips, mites etc which used to be the minor pests earlier have now become

major pest as the Cry 1 AC gene provides safety from Spodopteran and Lepidopteran

group insects (Boll worms and Cut worms ).

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Insecticide market by State(2006)

Other potential drivers of the insecticide usage are vegetables and high value flowers which

demand very intensive care and safety from insects. Maharashtra and Karnataka being centres

of Floriculture and high value crops drive ahead the pesticide industry .Vegetables as brinjal ,

tomato ,bhendi etc are heavy feeders of pesticides on account of heavy infestation of

borer insects as Helicoverpa armigera and leaf feeding insects as Serpentine leaf miner ,Ash

weevil etc. Fruit crops are also in ample need of insecticide eg: Pomegranate needing

protection against borers, Grapes against Grape weevil etc.

Insecticide Market (2006), Rs26,929 mn by crop

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Fungicides Market in India

Fungal diseases form an important part of the entire

plant diseases in India and hence fungicides are highly important in controlling fungal

diseases. The classical Bengal famine of rice by epidemic of brown spot disease

Cochliobolus miyabeanus reveals the importance of fungicides in India. It is further

augmented by Irish famine of 1741 caused by early leaf blight of potato.

The major crops consuming fungicides are: rice and potato on grounds of

serious diseases as Rice blast in rice and early and late leaf blight in potato. Grape’s

downy and powdery mildew attract a chunk of fungicides for remedy, vegetables also

attract a lot of fungicides as anthracnose in chilies, mildew diseases etc.

The major crops accounting for maximum revenue from fungicides are depicted in the

graph:

Fungicides Market By Crops Rs.7656 mn(2006)

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Fungicides Market Statewise (2006)

Herbicides Market in India

Unlike the international market, the herbicide market is yet to pick up in

India, but based on international trends it too should be a huge market, creating

opportunities for safer biotechnology generated alternatives to agri-inputs. If in future,

herbicide tolerant GM crops like Round up ready soyabean ( USA) are launched the herbicide

market is expected to catch up and match the international quantum and sales of herbicides .

The existing market of herbicides are concentrated in the rice – wheat cropping system in

North west India ie . “The grain bowl of India ” (Punjab ,haryana,Western UP).

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Herbicides Market by Rs.8506 mn By crops

Contemporary Issue of Endosulfan

The 27-member EU bloc has been lobbying to ban endosulfan through Stockholm and

Rotterdam Conventions, which work on chemicals, and of which India is a member.

Says a source closely associated with the Indian government, "Every pesticide is dangerous if

used incorrectly. EU wants a ban on endosulfan, as it is a low-priced generic pesticide, and they

want India to push for expensive pesticides which cost a bomb."

The source says that a ban on endosulfan would prove disastrous for millions of farmers who

rely on it. Although organic farming is growing, a vast section of farmers use pesticides.

A litre of endosulfan costs Rs 220, against the Rs 2,000 per litre which imidachloprid (which the

EU is pushing) costs, says Rakesh Kalani, a cotton and wheat farmer from Ramsara district in

Punjab.

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"Some companies sell imidachloprid for Rs 1,000 per litre. Another pesticide coregen costs

about Rs 700 for just 60 ml. Farmers can't afford such expensive pesticides. We have been

using endosulfan for over 15 years and haven't noticed any problems," says Kalani.

According to C S Bedi, chairman of the Tea Research Association, though tea is a small user of

pesticides, endosulfan has been popular among the 1.2-1.4 million directly employed by the

tea industry. "There has been no hazard whatsoever."

Experts say that at the Stockholm Convention, EU bans only those pesticides that are not

manufactured by its members and are unimportant for them.

According to S Ganesan, chairman, international treaties expert committee, Germany, a key

member of the EU, had produced and supplied nearly 50% of the world's consumption of

endosulfan between 1955 and 2006.

"The production of endosulfan stopped in the EU in 2006, and immediately in 2007 EU started

lobbying for a ban. So if endosulfan was dangerous, why did the EU use it for over 50 years?

India has started using it only in the 1980s."

Statistics show that despite having only 8% of the world's agricultural area, EU is the world's

largest producer, user and exporter of pesticides.

In 2007, the global crop pesticides market was $33.19 billion, of which EU alone accounted for

$10.42 billion, while India was $1 billion, according to data by agrochemical industry

consultant Phillips McDougall.

"Despite having 10% of the world's agricultural area, India consumes a fraction of pesticides

and the major chunk is by EU, which wants to maintain its leadership and eliminate

competition from low priced products," says Ganesan.

An observer, who attends the Stockholm Convention, says scientific data submitted by

develping countries and objections raised by India remain on paper.

"Data from India receive step-motherly treatment. All proposals made so far at the

Convention, barring one, have originated from the EU."

According to the submission made by India at the Stockholm Convention in 2009 (a copy of

which is with this newspaper), India has said that the decision taken on the European

Commission's proposal regarding endosulfan suffers from a series of procedural, technical,

legal and ethical improprieties.

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Marketing Mix of pesticides

Product(Acceptability) - quality and performance of product

Price(Affordability) - Price is really determined by what farmers perceive as the value

of pesticide of a particular type. It is important to understand how farmers value

product as well as how much they are prepared to pay in relation to the benefit they

expect to earn

Place(Availability) - transporting and then making them available to the farmer

Promotion(Awareness) - successful promotion increases sales so that costs are spread

over a larger output

Safety aspects: Human & Environmental

Indiscriminate and injudicious use of chemical pesticides in agriculture has resulted in

several associated adverse effects such as environmental pollution, ecological imbalances,

pesticide residues in food, fruit, vegetables, fodder, soil and water, pest resurgence, human

and animal health hazards, destruction of bio-control agents, development of resistance

in pests etc. Unintended exposure to pesticides can occur during their manufacturing,

formulation and application or from environmental residues resulting from applications.

United Nations Environment Protection reported that nine of the twelve unwanted

persistent organic pollutants (POP’s) are pesticides in agriculture crops and for public

health vector control programme. In order to sell the pesticides responsibly the pesticide

companies have to ensure that they are used as safely as possible. Some of the steps that

can be taken for making a judicious use of pesticides are:

a) Making sure the safety gears are available to the farmers and they are suitable for

the tropical climate.

b) Following the instructions on the pesticide package to ensure the maximum

efficacy with the minimum use possible.

c) Not using the pesticides that have been banned in the

country

d) Carefully disposing the pesticides wastes

e) Making sure the pesticides do not harm a non-target plant or

animal

f) Licensed aircraft pesticide spraying on an area

g) Spraying should be done in the wind direction

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In order to ensure that the pesticides are used safely both for the human population and

the environment, the Indian government have put in place some regulations.

The major regulations are the Central Insecticides Act 1968, Prevention of Food

Adulteration Act 1954 and the Pesticide Management Bill 2008.

The Central Insecticides Act 1968(Act 46 of 1968, as amended by Acts 46 of 1972, 24 0f

1977 and 23 of 2000), this Act was made to regulate the import, manufacture, storage,

transport, distribution and use of pesticides with a view to prevent risk to human beings,

animals and the environment. Through this act, a Central Insecticides Board has been set

up to advice the state and central governments on technical matters and for

including insecticides into the Schedule of the Act.

Prevention of Food Adulteration Act, 1954 governs the production and use of insecticides

in India. This Act and its Rules lay down standards for different food articles as well as

provisions for their storage, distribution and sales. The Maximum Residual Limits (MRLs)

for different pesticides are regulated through this PFA Act.MRL is the maximum

concentration for a possible residue on crop or food commodity resulting from the use

of pesticides and is expressed in mg/kg of the commodity. The status of the

pesticides registered in India is as follows:

a) Number of pesticides registered in

India

181

b) Pesticides for which MRLs have

been fixed under PFA act, 1954

71

c) Pesticides for which MRLs yet to be

fixed

32

d) Pesticides for which registration

data has been submitted but MRLs

not fixed

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e) Pesticides for which no data is

available

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For certain banned pesticides - Still no data is

available

Integrated Pest Management

India has marched ahead to a comfortable position in terms of food security, however, the

increasing population continues to stress us to do a lot more and prop up the agricultural

production for meeting the ever increasing demands while keeping environment clean

and healthy. In spite of dramatic advances in pest control technologies, largely based on

chemical pesticides over the last half century, pests have become increasingly serious

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constraints in agricultural production. Simultaneously, the problems of pest resistance and

resurgence and minor pests becoming major ones are increasing.

The only amicable solution before the plant protection community is Integrated Pest

Management (IPM). IPM is a systems approach involving the use of cultural practices,

crop husbandry, resistant varieties, and biological and chemical control strategies.

IPM is a broad ecological pest control approach aiming at best mix of all

known pest control measures to keep the pest population below economic threshold level

(ETL). It is an economically justified and sustainable system of crop protection that leads to

maximum productivity with the least possible adverse impact on the total environment. In

crop production technology IPM is a schedule of practices which starts from fiel selection

till harvest of a crop. The major components in this approach are cultural, mechanical,

biological and chemical methods of insect pests, diseases, weeds and rodent control in a

compatible manner. IPM is more complex and too knowledge intensive for the farmers

than the routine chemical sprays followed by them, often available on credit basis. IPM

was promoted as an alternative pest control strategy in India as early as in 1960's but

there were few IPM technologies available to be transferred to farmers. Now the

situation has improved considerably, as the farmers are growing increasingly

responsive to scientific experts advocating the need of IPM.

Biopesticides and GM Seeds

With the advent of the Integrated Pest Management (IPM) technique, the use of bio

pesticides and Genetically Modified (GM) seeds has increased. Globally, GM seeds are

used mainly for commercial crops like cotton, maize, soybean and canola. In India, Bt

cotton is widely used and the acreage stood at 6.20 mn ha for 2007, a growth of 63% over

the previous year. Use of GM seeds may diminish the use of insecticides but the use of

herbicides may improve.

The Registered Bio pesticides India are:-

Category Biopesticide Antagonistic fungi & bacteria

Trichoderma spp.

Pseudomonas spp.,Gliocladium spp. Baculovirus Nuclear Polyhedrosis Virus (NPV)

Bacteria Bacillus thuringiensis (Bt) Plant origin/Botanical

pesticides

Azaderechtin (Neem based product)

Cymbopogan spp.

Pyrethrum sp.

Entomogenous fungi Beauveria bussiana

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Govt. Laws and impacts of WTO

1) Improving the quality of pesticides available to Indian farmers and introduce new, safe and

efficacious pesticides.

2) More effective regulation of import, manufacture, export, sale, transport, distribution

and use of pesticides, to prevent risk to human beings, animals or environment.

3) Detailed categorization of offences and punishments for greater deterrence to

violators.

4) De-licensing of retail sale of household insecticides.

5) Timely disposal of time-barred pesticides in an environmentally safe manner.

6) The Bill prohibits the manufacture, import and export of misbranded, spurious or sub-

standard pesticides and any pesticide that contravenes the law. It lists a number of penalties

for offences such as use of pesticide in contravention of the law and sale of misbranded or

sub-standard pesticide.

7) A pesticide cannot be sold, stocked or used if it is not registered

Impacts of WTO

1. Access to foreign market

2. Increased exports

3. Research collaborations with established Foreign players

WTO rules undermine national policy-making to reduce pesticide use

The most direct impact of the WTO trade regime on pesticide use is that its various agreements provide avenues by which national, state and local environmental and public health policies can be challenged by member nations. In some cases this means that such protective policies may be overturned; in other cases, it means that protective policies may simply never be enacted for fear of challenge . one basis on which environmental and social protections can be challenged is that WTO rules restrict policies based on how products are produced. These rules make it extremely difficult to create WTO-legal policies that favor products produced in a way that is conducive to environmental, worker, consumer or human rights protections.(3) For example, WTO rules generally prohibit: policies that favor importation of agricultural products produced without use of certain chemicals; eco-labeling and other Right-to-Know policies(4); and principle-based government purchasing. Policies that make such distinctions face the prospect of challenge by member nations representing companies who seek market access without restrictions on, or identification of, how they produce their products.

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Another ground for challenge is that WTO rules require environmental policy to be the "least trade-restrictive" policy option. In other words, policies intended to protect the environment must demonstrate that there are no alternatives that are more favorable to unrestricted trade.(5) While in principle a policy could be deemed least trade-restrictive, all challenged policies are subject to the interpretations of WTO dispute panels. To date, these panels have never ruled an environmental measure to be the least trade-restrictive policy option.(6) The agreement requiring least trade-restriction also opens national law-making to formal input by opposing WTO member nations.(7) It thus involves significant administrative costs to nations pursuing protective legislation and raises important issues of national sovereignty.

Challenge to a protective policy is also possible because WTO rules set weak international safety and environmental standards. WTO agreements require nations to base their standards on existing international standards and meet onerous justifications if it exceeds them.(8) In other words, the idea is not to bring member nations into compliance with safety standards, but rather to open nations to challenge if they surpass them. Moreover, because international agreement on standards is difficult to achieve, such standards tend toward a lowest common-denominator effect, or "downward harmonization."

The WTO empowers the Codex Alimentarius, a food industry-dominated body, to set food safety standards. Codex has a decidedly non-precautionary approach to regulation, in which practices and chemicals are effectively presumed safe until proven otherwise. Scientists from the U.S. Environmental Working Group found that of 3,285 pesticide/crop combinations for which Codex has standards, 1,539 are illegal in the United States.(9) For example, Codex allows residues of DDT on grain, meat and dairy.(10) Codex compliance issues have stalled the implementation of the U.S. Environmental Protection Agency (EPA) ban on the probable carcinogenic fungicide folpet(11) and have led to the amendment of federal food-safety regulatory acts.(12) The EPA has also delayed action on another probable carcinogenic pesticide, procymidone, residues of which were found in wine imported from Europe.(13)

In addition to these avenues of challenge, it's worth noting that WTO agreements limit governments' ability to regulate foreign investment.(14) For example, conditioning investment in ways that are favorable to environmental, labor, cultural and other policy goals is now more difficult. Moreover, expansion of these provisions is on the horizon. Of particular concern are efforts to bring to the WTO investor rights that are similar to those extended by the North American Free Trade Agreement (NAFTA). This raises the prospect of granting companies the right to sue governments over policy that impacts their profitability. For example, under NAFTA, the Canadian corporation Methanex is essentially suing the U.S. for economic losses associated with a California ban on the toxic gasoline additive MTBE.(15) It is not hard to imagine the extraordinary impact on pesticide policy if nations worldwide are prohibited from establishing the conditions of foreign investment and NAFTA-style investor rights are extended globally.

WTO rules undermine international agreements that reduce pesticide use

A less direct but potentially far-reaching impact of the WTO on pesticide use has to do with multilateral (i.e., many-nation) environmental agreements (MEAs). MEAs often contain provisions that arguably contradict WTO rules. Which are supreme? What happens, for

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example, if there is a WTO challenge of a nation's compliance with the Montreal Protocol on Substances that Deplete the Ozone Layer, which phases out use of the extremely hazardous pesticide methyl bromide? Unfortunately, unlike WTO agreements, MEAs are essentially voluntary, with few or no enforcement provisions. This suggests, in effect, that they take a back seat to WTO dictates, even if they contain explicit supremacy language. Furthermore, this potential conflict of jurisdiction has caused some parties to demand language asserting the supremacy of WTO rules. For example, negotiations are underway to create an international treaty to phase out the use of 12 persistent organic pollutants (POPs), perhaps the world's most toxic substances, nine of which are pesticides (see News Note: POPs Negotiations Slow in Bonn). Some parties are demanding a clause asserting the supremacy of obligations under international agreements such as the WTO.(16)

WTO rules foster an industrial agricultural model that is at the heart of pesticide use

Another important WTO impact on pesticide use is its fostering of the industrial agricultural system, a system resulting in the sale of more than US$30 billion of pesticides a year.(17)

Industrial agriculture depends fundamentally on chemical pesticides. Industrial farming tends toward large-scale, capital-intensive farms specializing in single crops. Such monocultures, with no or minimal crop rotations, preclude beneficial crop interactions, lead to the loss of soil organisms and beneficial insects, and disrupt other complimentary relationships on the farm, such as the production of manure by livestock. These factors create crop vulnerability to insects, weeds and disease and thus require high levels of pesticide use. Worse, such pesticide use causes accelerated development of pest resistance, necessitating use of more or stronger pesticides.(18)

The industrial agricultural system also leaves farmers few alternatives to such pesticide-intensive farming. Concentration in the food industry leaves growers with distorted markets for their products and generally results in low prices. Concentration in the agricultural inputs industry exposes growers to high priced input costs. This low-prices, high-costs squeeze pressures farmers to get bigger and to adopt whatever techniques and tools that promise to raise yields. The inputs industry, of course, offers and promotes those inputs that best serve their profitability. This locks growers into the modern, pesticide-intensive model.(19)

Unfortunately, WTO agreements promote industrial agriculture globally, in several ways. First, measures that eliminate trade restrictions in agriculture are devastating to small-scale producers -- those potentially with the least pesticide dependence. WTO agreements that reduce or eliminate tariffs, import controls, price supports and family farm support programs result in opening markets to cheap exports with which small farmers cannot compete.(20) In other words, liberalizing trade intensifies the price squeeze by making farmers face global prices, but local costs. At the same time, trade rules do not prevent subsidies of exports and foreign investment, practices which greatly foster larger-scale, highly pesticide-dependent agriculture.(21) More than ever, small and family farmers must "get big or get out."

The WTO also furthers industrial agriculture by requiring that all member nations essentially adopt a U.S.-style system of copyrights, trademarks, and patents - including patents on certain forms of life.(22) Such a global system of intellectual property rights increases big agribusiness'

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ability to control the range and prices of agricultural inputs and technologies. These new intellectual property rights may have previously inconceivable impacts on pesticide use. For example, the patenting of products based on traditional natural pesticides, such as those based on the neem tree,(23) raises the specter of commercial barriers to adoption of sustainable pest-management products.

Oppournities in the Indian market

India has raised the level of its export competency with a consistent quality and supply

record and possession of a vast unexplored market. Chemicals manufacturers have

targeted product awareness campaigns at Indian farmers, as the country’s affordability

has increased with the cultivation of high- value crops. The per capita consumption of

pesticides in India is still very low compared to the developed countries and

manufacturers need a smart get to market strategy to achieve better reach and

acceptance of products. The demand will also be driven by the rising food grain demand

and increasing awareness about pesticide usage among the farmer community.

Such favorable market factors have sustained and even consistently increased the

profitability of manufacturers despite the rising prices of raw materials. The herbicides and

the fungicides segments are growing much faster than the insecticides segment, which has

slowed down considerably because of the introduction of new plant varieties with lower

pest infestations. Synthetic chemicals will continue to rule the roost in the chemical

pesticide market, since the development of eco-friendly pesticides and new approaches

such as organic farming and integrated pest management (IPM) will take more than a

decade to gain a foothold in the chemical pesticide market. The Indian market appears

lucrative for all types of manufacturers. To maintain their market share, chemicals manufacturers have to align their

products with the agriculture cycle and provide holistic solutions with innovative

products. Process improvisation is expected to improve profit margins and help the

company gain a greater influence on the export market. The future of the industry lies with

companies that can provide solutions for the entire gamut of the food supply chain

management by integrating crop production with protection. Understanding the end-user

needs and working more strongly on the backward as well as vertical integration is the need

of the hour. Controlling major inputs, setting up efficient distribution services, and

adopting international practices relating to crop management will enable Indian companies

to carve a niche for themselves.

The market shares are almost equally divided between both multinationals and Indian

companies. While the multinationals benefit from their improvised products, the Indian

companies leverage their strong distribution set up. Indian companies still trail their foreign

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counterparts in R&D because of the level of investments required and the demanding

regulatory framework. In this scenario, the rapid rates of mergers and acquisitions are

likely to persist for a few more years. However, post 2014, it will become crucial for Indian

companies to shed their generic manufacturer image and venture into new molecular

discovery as well as optimize the registration procedures. The recent monsoons may affect

the income of the industry. According to an article in Business Standard, August 07, 2009, the

Pest industry may take a 15% hit if the monsoon fails to revive, but the monsoons have

always been a challenge for the Indian pesticide industry so this industry is here to stay in

the business of crop protection .

References

• Agriculture today 2009

• MANAGE Report

• www.businessstandard.com

• www.cime.com

• www.croplifeindia.com

• www.indiastat.com

• www.businessline.com

• www.etcgroup.com

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