India's hybrid seeds new growth area in agrochemicals

The India’s agro-chemical industry seems to be putting more focus on breeding of hybrid seeds, from developing of pesticides, herbicides, weedicides, etc.

The diversion has slowed growth of the agro-chemical sector and multiplied the hybrid seed segment in India.

A study by East India Securities, an equity research entity, estimates India’s Rs 10,000-crore seed industry growth at 12-13 per cent annually, of which the commercial seed segment accounts for 25 per cent of the total market. The Rs 21,000-crore agro-chemical industry has seen slower growth in recent years.

“The basic objective for a change in the focus is to switch the basic genome, to bring in a new wave of genetically modified organisms(GMO). This has helped chemical companies to offset their decline in turnover from agro-chemicals, to compensate with an increase in the seeds business. Their vast research knowledge, technical pool and resources have helped the companies to bring revolutionary products in the seeds industry,” said Santosh Nair, chief executive officer, Camson Biotechnologies Ltd. In times to come, Camson feels the seeds business is going to get very competitive.

“There has been a shift in the business model from agro-chemicals to seed. As agro-chemicals are the last component that goes into a farmer’s investment chain, it faces a lot of uncertainty. The largest advantage for selling seed is considerable pricing power to the company. Farmers have to buy new seeds every season,” said Sageraj Baria, an analyst with East India Securities.

Developing a new molecule takes about 10 years and Rs 1,000 crore. The unorganised sector controls almost half the market share, meaning a high risk of fake products.

Observing the need, Rallis India, a biotech company from Tata Group, acquired Metahelix, a seed research and marketing company, some years earlier. The aim was to capitalise on the seeds opportunity. The company’s non-agro-chemical revenue rose to 11 per cent in 2013 from zero in 2009, it says; this is likely to further rise to 14 per cent by 2015.

“In a short span of time, Metahelix has smartly ramped up its market presence. This year itself, it has further registered an over-50 per cent growth, with profits. It has a leading presence in hybrid paddy, corn and millets. The introduction of biotech seeds does provide a solution against pests through the seeds route and leads to avoidance of use of chemicals, as had happened when Bt (genetically modified) cotton seeds were introduced. Over time, though, nature’s phenomena leads to emergence of other pests. With its presence now in both agro-chemicals and seeds, the Rallis portfolio is balanced, to provide solutions to the farmers in either segment,” said V Shankar, managing director, Rallis India.

Rallis has grown by 21 per cent in the first nine months of the current financial year.

Joerg Rehbein, head of Bayer CropScience, Indian Subcontinent, said: “We continue to broaden our hybrid seed portfolio in rice, cotton, vegetables and mustard, to address the challenges in agriculture and the growing demands of consumers. We are also developing agronomic traits to better manage diseases, insects and abiotic stress (e.g submergence and salinity tolerance for rice).

For more information regarding India seed market visit India Seed Industry Outlook to FY’2018