1.1 agrochemical industry

79 Pages·2016·2.32 MB·English

1.1 AGROCHEMICAL INDUSTRY
1.1.1 Agriculture: An overview:
Agriculture is defined as the backbone of Indian economy. Agriculture accounts for 22
percent of India’s GDP, approximately 60-70% per cent of the population is working in
agriculture. Village farming and modern agriculture are two major components of Indian
economy. In world output, India ranks first in production of milk, fruits, cashew nuts,
coconuts and tea; second in wheat, sugar, vegetables and third in tobacco and rice. Although
India has the second largest area of arable land in the world, its agricultural output,
particularly in wheat and rice does not reflect its great potential, with rapid population growth
and industrialization being contributing factors in low agricultural production vis-à-vis
production potential.
Agriculture sector need to be on boom if the country like India wants to feed its
increasing population but it cannot be possible without solving the problems of pests, which
makes the crop hell. Economically advanced countries have plenty of good wholesome food
due to a scientific approach to agriculture which includes the use of pesticides.
Pests are an ecological problem and therefore our control strategies must be ecologically
sound. Modern agriculture is a combination of two approaches i.e. prevention and cure or the
removal of the cause and human intervention is necessary, whether it be pulling out weeds by
hand, use of pesticides or genetic engineering. Control methods evolve over time as
knowledge and techniques improve. Without the use of pesticides, the production and quality
of food would be severely jeopardized with estimates that food supplies would immediately
fall to 30 to 40% due to the ravages of pests.
Agricultural chemicals are vital to our welfare and the protection of the health of our
families and pets. Unless and until, better, more efficient and more cost effective means of
pest control are developed, pesticides will remain a major weapon in our constant battle
against pests. Indian growers need to be aware about latest development in this sector.

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The pesticides industry has grown rapidly during the last two decades. The companies like
Syngenta, Bayer, Indofil, BASF, TATA Rallis, DOW, UPL, Monsanto, Sumitomo
chemicals has undergone structural changes from producing low value products to one
producing high value specialty products. Competition is getting bigger day by day.
With the global focus of the pesticide industry shifting towards India, all agro companies
will have to pool in their resources to meet the working capital needs in the years ahead. Quite
clearly, the future will belong to players with strong in house research and development teams
that can develop innovative formulations, backed by a highly motivated sales network.

1.1.2 Global market of pesticides and agro industry:-
The global market of pesticides and agro industry is very huge ~$44 billion. Globally,
due to higher productivity, decline in the green movement, tight regulations and better crop
management, the pesticide industry is not growing very rapidly. In fact, it is stagnant or
slightly declining. In India, the agro industry has grown significantly over the last 30-40 years
from a mere Rs.400 Cr. to over Rs. 8,000 Cr. today.
The Indian Agrochemical industry is the fourth largest in the world only after the
US, Japan and China and has undergone many changes over the years. Insecticides account
for the largest share of the Indian crop protection market - 65%. Fungicides - 15%,
Herbicides - 16% and Bio-pesticides and others - 4%. The consumption pattern is: paddy
pesticides - 28%, cotton pesticides - 20% and others 52%. Exports account for over 47% of
total Indian agrochemicals industry turnover.
In India 60%-70% of the population lives on agro income. Nearly, one-third of our
GDP is agro based. We earn a very significant part of foreign exchange. The agrochemical
industry can play a very important and a very vital role. Our agro industry management is
something we should debate about, with over Rs.1, 40, 000 Cr. of food grains wasted in
transportation after production. We can always compare global numbers on the use of
pesticides in India - about 600 grams per hectare versus 7 kg. In USA and 13 kg in China,
this shows lack of pesticide usage or technology in terms of crop management.

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1.1.3 Introduction of Agrochemical:-
Agrochemicals are used to improve crop performance, yield or control pests, etc.
Agrochemicals are substances manufactured through chemical or biochemical processes
containing the active ingredient in a definite concentration along with other materials which
improve its performance and increase safety. For application, these are diluted with water in
recommended doses and applied on seeds, soil, irrigation water and crops to prevent the
damages from pests.
1.1.4 There are broadly 5 categories of crop protection products:-
1. Insecticides: - Insecticides protect crops by killing insects or preventing their attack.
Insecticides may attack a particular type of insect or could be broad spectrum insecticides.
Insecticides are used to manage the pest population below the economic threshold level. E.g.
Chlorpyrifos is used to control insect pests in crops such as cotton, corn almonds etc.
2. Fungicides:-They are used to prevent the deterioration of crops due to fungi infestation.
Fungicides are classified as protectants or eradicants. Protectant fungicides prevent or inhibit
fungal growth and may have to be applied at regular intervals. Eradicant fungicides kill the
pests on application. E.g. Anilazine is used to control fungal attack on lawns and turfs,
cereals, coffee and various vegetables and other crops.
3. Herbicides:- Herbicides or weedicides are used to prevent the growth of unwanted
plants in a crop field. Herbicides could be selective, which kill the unwanted plants without
any harm to the crop, or non-selective which kill all the plants. E.g. Glufosinate ammonium, a
broad-spectrum contact herbicide, is used to control weeds after the crop emerges or for total
vegetation control on land not used for cultivation.
4. Bio pesticides:- These are derived from natural substances like plants, animals, bacteria
and certain minerals and control pests by nontoxic mechanisms. Bio-pesticides are considered
eco friendly and easy to use. They could be classified as microbial pesticides, plant
incorporated protestants and biological pesticides. They are of low volume and high effect
formulations and require lesser dosages as compared to chemical pesticides. A growth area
for bio-pesticides is in the area of seed treatment and soil amendments. Example of bio
pesticides includes Bacillus subtilis which is used as soil inoculant in horticulture and
agriculture.
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Table No.1.1.1 Sales and Market share of Pesticide firms
Agrochemical Sales 2014 Market Share
Company
(US$ million) (%)
Bayer (Germany) $7,468m 18%
Syngenta (Switzerland) $7,285m 20%
BASF (Germany) $4,297m 12%
Dow Agro Sciences (USA) $3,779m 10%
Monsanto (USA) $3,599m 7%
DuPont (USA) $2,369m 6%
Makhteshim Agan (Israel) $1,895m 5%
Nufarm (Australia) $1,470m 4%
Sumitomo Chemical $1,209m 3%
Arysta Life science (Japan) $1,035m 3%
Source-Agro World Crop Protection News, August 2014
The top 10 companies control 89% of the global agrochemical market. The worldwide
market for agrochemicals was US$38.6 billion in 2007 - up 8.4% over the previous year.
The top 6 companies accounted for $28.8 billion, or 75% of the total market.
Bayer is the world's biggest agrochemical company is also the world's seventh biggest seed
company.
Syngenta also world's second largest agrochemical company and third largest seed company.
Monsanto: the world's biggest seed company is the world's fifth largest agrochemical
company And DuPont: the world's second biggest seed company is also the world's sixth
largest agrochemical company. All these companies are gene giants.

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1.1.6 World Consumption Overview:
Table No. 1.1.2 World Pesticide Consumption:
Country Pesticide Consumption kg/ha
India 0.48
USA 4.5
Germany 3
Japan 10.7
Taiwan 17
South Korea 6.6
Italy 13.4
Hungary 12.6
China 2.25
Source-Global pesticide consumption and pollution
In the India pesticide consumption is very less (0.38kg/ha) than that of the developed
countries like South Korea (16.6Kg/ha), Italy (13.4kg/ha), Hungary (12.6Kg/ha). Pesticide
Industry has the vast potential to grow in India.
1.1.7 Indian Scenario:
The pesticides/agrochemicals industry (PAC) is a moderately important sector of the
Indian economy. The PAC industry primarily consists of insecticides, herbicides and
fungicides. 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. India is the 4th
largest producer of agrochemicals after USA, Japan and China. The agrochemicals market in
India is Rs. 45,000 million or US$978 million.
 Total pesticides market in India in 2012 was around USD 3.66 bn including exports.
 In FY12, overall industry witnessed a price increase of 11-13%.
 There are 3 types of pesticides – insecticides, herbicides and fungicides used
worldwide.
 However, use of herbicides and fungicides is also increasing rapidly.
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1.1.8 Major facts related to Pesticide industry in India:
 There are 226 pesticide products currently registered in India.
 95% of these pesticides have been originally registered by multinationals.
 Pesticide usage in India extends to 16.7 mn hectares.
 More than 60 technical grade pesticides are manufactured indigenously.
 India is the 4th largest producer of agrochemicals after USA, Japan and China.
 MNCs play an important role in introducing newer molecules in the country.

1.1.9 Performance of Top Pesticides Companies in India:
Table No: 1.1.3 Performances of Top Pesticides Companies in India:
Income/Rs.
Sales/Rs. Cr PBDIT/Income/ (%) PAT/Income (%)
Cr
2012 2013 2012 2013
United
675.6 659.3 12.9 19.8 0.9 11.7
Phosphorous
Bayer 390.1 385.5 8.1 10.9 2.1 5.5
Rallis India 229.5 206.8 13.5 20.6 7.5 11.5
Meghmani
210.7 204.7 16.4 18.5 8.8 11.8
Organic
Dhanuka 224.6 196.0 24.8 21.2 11.3 10.5
Source- Industry and Economic Update Chemicals and Fertilizers, March 2013
The pesticide industry grew by 40% in PBDIT and a 150% net profit growth during 2013.
The growth came after three consecutive quarters of decline and is also broad-based. The
industry’s sales were higher by 10% during this quarter compared to the same period a year
ago. The industry suffered a 3% fall in sales during the previous quarter. Raw material cost,
the highest cost component was down by 11%. This along with rise in other expenses pushed
up the PBDIT by 40%.

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1.1.10 Pesticide Market by Consumption:
Pesticide consumption in India is one of the lowest in the world with per hectare
consumption of less than one kg compared to US (4.5 kg/ha) and Japan (11 kg/ha).
Consumption could be low for the following reasons:
 Lack of awareness among the farmers about different types of pesticides available and
their impact on environment
 Pesticide is the last input in agricultural cropping operation; hence, farmers generally
have no surplus money left and start using them only after the pest attack.
 Consumption is mainly driven by cotton and paddy crops.
 In India pesticide use is extended to approximately 16.7 mn hectares, which is just 9% of
the total cultivable land.
 Insecticide accounts for largest share in consumption in India followed by herbicide and
fungicide, unlike high herbicide and fungicide usage globally. This is probably because
India‘s tropical climate is conducive for the propagation of insects.
Fig No: 1.1.2 Pesticide Market by Consumption (2013):
Source: ppqs.gov.in/IpmPesticides_Cont.htm

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Fig No.1.1.33 SSttaattee wwiissee sshhaarree iinn ppeessttiicciiddee ccoonnssuummppttiioonn (2014):
SSStttaaattteee wwwiiissseee AAAgggrrroooccchhheeemmmiiicccaaalllsss CCCooonnnsssuuummmppptttiiiooonnn
Others
AP
15%
West bengal 24%
5%
Haryana
5%
Tamil Nadu
Maharastra
5%
13%
Gujarat
7%
Punjab
11%
KKaarrnnaattaakkaa MP &
77%% Chattisgarh
8%

Source: Indiastat (2016)

1.1.11 CCoonnssuummppttiioonn ooff ppesticide compare to other countries::
Fig-No.1.1.4 Coonnssuummppttiioonn ooff ppeessttiicciiddeess

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aann ooppppoorrttuunniittyy ffoorr aaggrroocchheemmiiccaallss iinndduussttrryy.
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formulators.

1.1.12 Import scenario:
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Germany.
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nnoott tthhee aaccttiivvee iinnggrreeddiieenntt ooff ppeessttiicciiddee..
Fig No: 1.1.55 IImmppoorrttss ooff PPeessttiicciiddeess::

SSoouurrccee:: MMiinniissttrryy ooff CCoommmmeerrccee EEXXIIMM ddaattaa
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the year 2010 iinnccrreeaassee uupp ttoo 2222..3 INR bn in year 2014.

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