India Domestic Agrochemical Market Undergoing Vigorous Development

 

Diversified agriculture and changing agrochemical market 
 

India is a predominantly agrarian country, nearly 62% of the labor force rely on agriculture as their principal means of livelihood. The sector has remained backbone of the Indian economy and presently accounts for about 15% of the country's GDP. 
 

India is a vast country with superior natural conditions and diversified crops. The major crops grown in the country are rice, wheat, millets, pulses, sugarcane followed by cotton, soybean, vegetables, fruits, horticulture and plantations crops. India is the largest producer in the world for pulses, tea and jute, and second largest producer for wheat, rice, groundnut, potatoes, fruits and vegetables, as well as sugarcane. 
 

Every region in India has its unique aspects, which distinguishes it from the others. Variations in crops and cropping patterns, climatic conditions, economic health of the region, and others are some of several factors which influence the associated diseases and pests, products sold, price sensitivities, and more for that particular region. North India comprises Punjab, Haryana, Rajasthan and UP. More than 70% of North India region is irrigated. Rice, wheat, cotton and potato are the major crops. West region comprises Maharashtra, Gujrat, Madhya Pradesh and Chhattisgarh. Cotton, soybean, onion, rice and horticulture crops are the major crops. More than 50 % area is rain fed in west region. South India comprises of AP, Telangana, Karnataka, Tamil Nadu and Kerala. Rice, cotton, chillies, pulses and plantations are the major crops. And rice is the major crop in Eastern India, which includes Bihar, Jharkhand, Odisha and West Bengal. 
 

Over the year, consumption of agrochemicals has primarily been on cotton and rice. The damage to the crop has been majorly by lepidopterous pests, shoot, fruit borers and sucking pests. 

The Indian crop protection market is dominated by Insecticides, which account for almost 60% of domestic market, followed by fungicides, 18% and herbicides, 16%. From the conventional commonly used pesticides, the shift has been towards crop specific agrochemicals for both pests and disease control; however the latest trend indicates decline in insecticide use and increase in the use of fungicide and herbicide inching towards the global trend. 
 

The major applications are found in rice and cotton crops. 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 for herbicides. Increasing labor costs and labor shortage are key growth drivers for herbicides. Shift from cash crops to fruits and vegetables and government support for exports of fruits and vegetables are key growth drivers for fungicides. 
 

India consumes over 57,350 MT of technical grade pesticides annually. Glyphosate, imidachloprid, cartap, triazophos, acetamiprid are the major agrochemicals used by farmers.

Build distribution network for deeper connection with farmers 
 

It can be felt that during the interviews, these companies have common view on the importance of building an extensive distribution network. Rishi Nair, Chief Manager of Marketing in Zuari Agri Sciences, told AgroPages that, “In India, a dispersed and fragmented farmer base across the country necessitates having a wide distribution network to reach out to end customers and establish deep customer relationships. A Pan India presence reduces volume and revenue volatility risks.” 
 

Zuari is present in almost every part of the country, barring a few areas, including Gujarat, Rajasthan and the north east. Initiatives like JaiKisaan Junctions (Company Owned Retail stores) and Jai Kisaan Toll Free helplines (Hello Jaikisaan) across certain key geographies tend to serve the end customer directly. 
 

Crystal Crop Protection is a 1,200 Cr Company, ranking among the top five agrochemical companies in India. The company has a deep market penetration catering to more than 7,000 channel partners, reaching 30,000 retailers and more than 400,000 Indian farmers. Crystal is conducting an intense farmers training program, customized for different regions and categories of farmers, which seeks to directly connect with them on a regular basis. 
 

“About 800 farm- crop advisors, well known as Crystal Doctors, are engaged in sharing focused and in depth knowledge by means of demonstrations, trainings, feedback and testimonials. Crystal Doctors are our custodians for customized farm solutions.” Abhishek added. 
 

Agarwal introduced that, “Dhanuka Agritech Limited is one of the leading agrochemical companies with pan India presence from last 35 year, operating in all 15 agro climatic regions. Our Company has a very robust distribution network which keeping in view our reach in the rural market so as to serve the farmer more effectively. We have dedicated over 8,000 direct distributors operating through over 80,000 dealer/retailers spread all across the country. These dealers are being evaluated periodically for their sales performance, financial discipline and technical competence to serve the farmer for increasing their produce by judicial use of agrochemical.” 
 

“We have a dedicated team 1500 field personnel known as Dhanuka doctors (DD), who not only demonstrate the efficacy of the product but also guide them with best agricultural practices and use of latest technology. We also undertake training of distributer through agricultural universities for diploma courses for safe and judicious use of agrochemicals. We are the pioneering corporate entity to initiate this programme,” added Agarwal. 
 

Krishi Rasayan Group has six manufacturing units spread throughout various geographical zones of the country. Apart from the dealer’s network, Krishi has its own separate sales and development team interacting directly with farmers. “Though India is a huge country, our sales people, at present, are located every 50 kms and continuously interact with farmers and give demonstration of our products to them, to demonstrate the efficacy and advantage of using our products,” said Atul. 
 

Gharda Chemicals has strong presence pan India especially in North, West & South India. N P Nair told AgroPages that they has about 10500 direct dealers/distributors pan India and a very strong experienced field force of more than 2000 field staff. 
 

HPM is serving India through its 5000 distributor channel, 45000 retail outlets, 20 warehouses to support supply in 20 provinces through its own offices supported by more than 600 staffs in 7 lac villages; on an average 100 units is sold every minute in India. To reach to end-users, HPM has developed a team of more than 300 persons who are technically sound about the use. The company also supports farmers with many technical sessions through its technical representative and conducting seminars with different professionals to motivate the farmer. “Indian farmers, even though not much formally educated, but quite literate and flexible to adopt the use of any new technology for the farm growth,” Ashok explained. 
 

Competition & advantages 
 

India is the fourth largest global producer of agrochemicals after the US, Japan and China. The market is dominated by both MNCs and leading Indian corporate who have worked over the years to establish their brands image. In India, the top ten companies control almost 75-80% of the domestic market share. 
 

On the other hand, the market is highly competitive and cost sensitive. “Although the market size is close to Rs 16000 Cr, the Indian market is competitive, yet fragmented.” Abhishek opined. 
 

“Through passage of time, many newly registered agrochemical companies have increased and many new entrepreneurs are involved in technology transfer and different chemical and biological inputs are introduced which has developed a healthy competition with veteran companies.” Ashok holds a more optimistic view of the competition. 
 

“Apart from the large multinationals, there are many regional players, besides the established national companies in India. Also, prices of the same products vary by 40%, in the sense that regional players sell at a very low price. The challenge is to be a national player and sell products on par with multinationals in quality, by matching the prices,” Atul emphasized. 
 

In answering the question “what are your views on the advantages of local companies comparing with multinationals?”, all the interviewees deemed better understanding of farmer’s need is their biggest advantage. 
 

Atul said that, “the advantage of local companies is that they are attuned to the requirements of local farmers, which change from area to area, and crop patterns, language and food habits they change every 100 Kms. Therefore, it becomes a big challenge for outsiders to understand the culture, so local companies have a huge advantage helping them to penetrate rural markets, particularly in the area they are based.” 
 

Rishi thought that local expertise, understanding of the market and its variability and ability to customize products, as per end customer requirements, are some of the advantages of a local company. 
 

Agarwal believes that consolidation and merger of companies would also have effect in India and only those companies which are focusing on creating brand demand and providing solutions would be able to sustain. “Dhanuka has advantage of having strategic technical collaborations with several leading US, Japanese and European innovative companies which gives us the edge to introduce new molecules keeping in view the market demand,” Agarwal added. 
 

India is a high potential market for Agrochemicals. Agrochemicals are expected to be one of the 15 fastest growing industries in India in the 2014- 2018 period, growing at a rate of 6-8% YoY. 
 

However, some problems are also revealed. A major concern, which adversely strikes established players, is the spurious pesticide market. According to a study done by FICCI (Federation of Indian Chambers of Commerce & Industry), the spurious market devours almost 30% of the total agrochemical market and is growing at a rate of 20%. Also, Plant growth regulator (PGR) market, which has shown manifold growth in the last few years, is currently not under any regulatory ambit. This invites an influx of spurious and fake products marketed as PGRs.

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