Developments & Opportunities in

Indian
Agri-Inputs Industry

KR Venkatadri
Chief Operating Officer

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 Importance of Agriculture in India Changing Scenario…
Reduction in arable land
 About 75% people are living in rural areas
(ha) This has put immense pressure on
and are still dependent on Agriculture. the current available arable land
 About 43% of India’s geographical area is for the food and nutritional needs
of the population
used for agricultural activity.
 Agriculture continues to play a major role
in Indian Economy.
 Provides food to more than 1 billion Decreasing farm sizes
people While the average size of
landholding is decreasing (also
 Produces 51 major crops fragmenting) the number of
operational holdings is increasing
 Contributes to 1/6th of the Export
leading to no.of challenges.
Earnings
Source: FICCI report, Rallis Internal Analysis

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 CAGR of Increase in Area Under all Crops
12.0% 10% 10%
10.0% #CAGR of last 33 years from 1981 to 2014-15
8.0%
6.0% 4%
2%
4.0% 1.5% 1.5% 2% 1.4% 1.3% 2% 1.0% 0.6%
2.0% 0.2% 0.1%
0.0%

…..Paving a New Era of Growth Opportunities

• India ranks Second in fruits and vegetables production in the world, after
China.
T RE NDS I N FO O D G RA I N S A N D HO RT I C ULT URE
• The area under cultivation of fruits stood at 6.110 million hectares while PRO DUC T I O N
vegetables were cultivated at 9.542 million hectares.
Food grains Horticulture
• India is the largest producer of Ginger and Okra amongst vegetables

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•

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India ranks Second in production of potatoes, onions, cauliflowers,

MILLION TONNES

192
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167
brinjal, Cabbages, etc.
• Amongst fruits, the country ranks First in production of Bananas
(22.94%), Papayas (44.03%) and Mangoes (including mango steens and
guavas) (37.57%).
• During 2015-16, India exported fruits and vegetables worth Rs. 8,391.41
crores which comprised of fruits worth Rs. 3,524.50 crores and vegetables
worth Rs. 4,866.91 crores. FY 4
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 F&V Segment & Opportunities
Observations:
 Highest increase in Acreages & Production has happened in Flowers, Fruits & vegetables after Soybean.
 Contribution of fresh & processed Fruits & Vegetables in overall export is 2nd highest after Cereals.
 The growth of Horticulture production is higher than that of Foodgrain production over last 10 years
 However, the increase in Productivity (Yield/Acre) of F&V compared to other crops is very low: Vegetables (2.5%),
Fruits (1%)

Losses due to High Infestation of

Low Penetration of Safer Molecules
Pest & Diseases

Still Considered as a Secondary

Low Usage of Agrochemicals
crop

Limited to Domestic Focus Knowledge Dissemination- PoP

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World Food Production needs (2020 and beyond)
 Global Population will reach USD 9 Billion by 2050 requiring twice the food to be produced
from constant land area
 Need for productivity and increasing pressure on profit is putting pressure on sustainability
If world were to produce 2.5 times of current food, this is how the contributors will be

Productivity should
be increased to 60%
to grow enough food
for projected Global
population in 2050

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More production from less land can be accomplished only with combination of...

Quality Seeds Quality Inputs Farm Practices

 Improved quality seeds

 Increased input
 Improved Seed replacement
efficiency- Nutrients and  Improved farming
ratio: Shift from farm saved
water practices -
seeds to hybrids – increase
mechanization, land
productivity
 Increased Agrochemicals preparation, crop care
usage for crop protection and harvesting.
 Combination traits to mitigate
multiple stress factors : e.g.
 Increased nitrogen use  Increased pre & Post
resilience to climate change
efficiency with reduced harvest care
carbon footprint
 Combining planting materials
with “Traits” and technologies
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 Agribusiness Opportunities in India

2) Leveraging Trends in
1) Provide Food Security 3) Value addition in Agriculture
Agriculture

 Improving Productivity  Eliminating Wastages

 Labour shortage  Post harvest /
 Seeds
 Inputs : Herbicides, New Warehousing / Cold
 Nutrients
Technologies, etc chains
 Crop Protection
 Equipments  Processing
 Technology

 Value enhancement
 Water Stress  Grading, Sorting,
 Go for upside farming
 Seeds / Bio tech Branding
 Corporate farming
 Irrigation  Processing
 Area specific
 Precision Agriculture  Retailing
 Exporting

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Indian Seed Market- Size

Farm saved seed:75% /Commercial Seed:25%

Public bred hybrids:11%,OP Varieties:61%,Proprietary hybrid:21% of market value 11
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 Hybrid Seed Industry in India
Market size(USD Bn) Product Segmentation
1.5 12% 3%
1.29
1.11
0.86 17% 50%
1
0.65 18%
0.5 0.39

0
Cotton Corn/Maize Vegetable Others Paddy
FY 09 FY 10 FY 11 FY 12 FY 13

• Hybrid Seed Industry expected to reach INR 153 • BT Cotton contributed 50% of hybrid seed market
billion by FY2018 growing at a CAGR of 17% from followed by Maize
FY2014-FY2018
• Vegetables were the 3rd largest contributor and
• Single dominant factor for the growth of Hybrid play a major role due to their higher productivity,
Seed Industry is technological up gradation in shorter maturity cycle, and higher realizable value
Biotechnological methods and transgenic seeds resulting in higher income to farmers
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 Indian Seed Market :Growth over years and growth drivers
Regulatory • Enactment of suitable legislations
• Market liberalization to increase availability of quality seeds
framework • Relaxation of norms for export to overseas country

• Sharing of germplasm and breeder seeds of public-breeder varieties

Research and • Investment by public /private players
Technology • Acceptance and commercialization of new seed technology,GM traits, use of
biotechnology

• Technical and financial assistances in the early stages of development from foreign
Foreign aid agencies-USAID
Investment • Entry of multinational corporations into Indian seed business through equity
participation

• Public-private partnerships
• Special schemes for upgrading quality of farm saved seed and improving Seed
Environment Replacement Rate
• Introduction of the Seed Technology subject at graduate and Post graduate level

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 Yield improvement potential percentage for Losses caused by diff. pests in India
Crop Production

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Per hectare yield in India lower than the rest of the world:
Yield Comparison
Tonnes/ha

Source: FICCI report, Industry reports Rallis Internal Analysis

As workforce in agriculture in India reduces, all stakeholders need to look at increasing

yields to be able to meet growing demand which will require better farming practices

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Per capita consumption of Agrochemicals is Lowest in India
(Kg/Ha)

Consumption of crop protection products in India is amongst the lowest in the world.
Source: FICCI report, Industry reports Rallis Internal Analysis
Some of the important reasons for low consumption-
 Low purchasing power of farmers
 Lack of awareness among farmers
 Limited reach and lower accessibility of products
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 Indian Crop Protection Market (USD Bn)  The Indian CP industry is estimated at USD
4.25Bn in FY14 and is expected to grow at
a CAGR of 12% to reach USD 7.5Bn by
FY19.

 The exports currently constitute almost 50%

of industry and are expected to grow at a
CAGR of 16% to reach USD 4.2Bn by FY19,
resulting in 60% share.

 Domestic market on the other hand would

however grow at 8% CAGR, as it is
predominantly monsoon dependent, to
reach USD 3.3Bn by FY19.
Source: FICCI report, Industry reports Rallis Internal Analysis

Globally, India is fourth largest producer of crop protection

chemicals, after United States, Japan and China
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 India in Contract Manufacturing
 Asia share in the global chemical industry is at 45% share.

 With Asia’s growing contribution to the global chemical industry, China and India
emerge as one of the focus destination.

 Make in India concept mooted by Government of India along with initiatives by Indian
industry bodies would result in Indian chemical industry to grow at 11% p.a.

 High end use demand, improved export competitiveness could lead to a growth rate of
15% and size of USD 290 billion by 2017. (Global industry is 6%)

 India has tremendous potential yet to be leveraged.

Opportunity for Manufacturers

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 CIB RC 371
Registration Committee (RC) has proposed the following policy change to reduce imports and
give thrust to indigenous manufacturing
 Molecules registered under indigenous manufacturing category, no certificate of registration of that molecule for
imports shall be granted

 Those companies possessing manufacturing Certificate for Indigenous manufacturing of that pesticides shall not be
permitted for import category registration

 To improve local manufacturing facilities and guidelines shall be relaxed in favor of local manufacturers

 Imports permits (Certificate of Registration) does not containing validity period shall need to be notified and shall
be examined again

Expected Outcome
• Reduction in illegal imports
• Stability in generics prices
• Increases in branded sales
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Impact of change in Regulation on Seed Industry

• 2015 – 16 the MRP of Bt Cotton is ₹ 930 / packet

 ₹184 – Trait Fee

• 2016 – 17 the MRP has been reduced to ₹ 800 / packet

 ₹49 – Trait Fee
 Trait fee to be reduced by 10% every year till it becomes Zero.

Expected Outcomes
End user is benefited
 Concern for the new technology innovators
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Impact of change in Regulation on Pesticide Industry

• As per RC 371 Bio-stimulants have to be included under CIB or

PMB
 Genuine Bio-stimulant manufacturers will approach CIB or PMB for
approval
 Spurious Bio-stimulant manufacturers will be forced to exit creating a
vacuum for Pesticide players
 Increased Pesticide consumption(currently Bio-stimulants are being
recommended for multiple pest)

Expected Outcomes
This will fuel the demand of quality pesticides
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Impact of Union Budget on Industry
Key Highlights

• Increased agriculture credit

• Digitization of PACS
• Increased coverage of Fasal Bhima Yojna
• Extra budget allocation to have focus on micro irrigation
• Thrust on rural employment & MGNREGA

Impact

• Enhanced purchasing capacity of the farmer

• Real time & accurate data
• Protect farmers and their incomes against production and price risks
• Assured crop acreages
• Labour scarcity – leading to farm mechanization
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 Shift from Agriculture to Agribusiness
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 India’s consumption basket is expected to move
towards premium foods

Consumption has been shifting

from plant based proteins such
as cereals pulses, to animal-
based protein such as milk and
meat.

Expected increasing demand of

Milk & Meat and Fruits and
Vegetables

Changing consumption is leading to change in agricultural production

Data source: McKinsey Survey
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 Production has shifted from
food grains to high value crops
Cereals and pulses are likely to
grow at 2 per cent per annum,
lower than the overall growth,
while milk (3 per cent per
annum), meat (including
seafood, at 5 per cent per
annum), and fruits and
vegetables (4 per cent per
annum) will contribute to the
overall agricultural growth.

Indians are expected to consume 90 kg of

fruit in 2030 as compared to 62 kg in 2010.
Data source: RBI – Handbook of Statistics, McKinsey Survey
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 Food Processing and Exports

Share of processing
40% 35% Less than 10% of agri produce
30% 26% undergoes processing in India.
20%

With government support and SME

10% 6%
2%

to increase, post processing in rural

0%
Milk Poultry Fruits & Veg Marine
markets expected to rise.

Agricultural Exports – Unfulfilled potential

 India ranks 3rd in agricultural production in the world, but ranks 10th in exports

With government interventions and private investments increasing in this space, will led to more
exports.

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 Changing Needs and Trends in Agriculture
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 How the Farmer needs would change in next 5 years in India
Information on Whom to Timely supply
Crops, Pest/Disease, connect in case of products at
Soil, Market Rates of problems right prices
Current
Needs
Information on farm
Collaborate with Get market
implements,
friends and information and
Insurance &
peers market linkages
Financial Services

• Require Predictive Information for preventive actions

• Require information at finger tips
Future
• Information, services and products should be personalized
Needs
• Doorstep delivery of products and services
• Ability to collaborate globally
Agro Industry globally is moving from Product Industry to Service Industry 31
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 Factors Aiding the Shift

 Trends in India
 Thrust on modernization
 Digital Bharat - Rapid penetration of internet
 Exponential growth of smartphones in rural
 Increased mobile literacy
 Reduction in cost of sensors and satellite image procurement
 Countries like USA, Canada, etc. have majorly moved to Precision Agriculture -
India to follow suit

Trends are showing Agriculture Going Digital towards Precision Agriculture

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 Precision Farming

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 Summary of Opportunities in Indian Agri -Input Industry

• Agriculture productivity should be increased to 60% to grow

Agri Productivity enough food for projected Global population in 2050

• Hybrid Seed Industry expected to reach INR 153 billion by

Seed Industry FY2018 growing at a CAGR of 17% from FY2014-FY2018

• Indian CP industry is estimated at USD 4.25Bn in FY14 and is

Crop Protection expected to grow at a CAGR of 12% to reach USD 7.5Bn by FY19

• India exported fruits and vegetables worth Rs. 8,391.41 crores

Fruits and Vegetables 2015-16

• Less than 10% of Agri produce undergoes processing huge

Agri business opportunity for growth

• Precision farming growth with a CAGR of 13.4% from 2013-2018

Precision agriculture
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