Chapter 1 THE INDUSTRY AND ORGANIZATION PROFILE

88 Pages·2016·2.07 MB·English

by  Parvez Vahora

Chapter 1
THE INDUSTRY AND ORGANIZATION
PROFILE

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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.
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, CLSL 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
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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 higherproductivity, decline in the green movement, tight regulations and better crop
management, thepesticide industry is not growing very rapidly. In fact, it is stagnant or
slightly declining. In India, theagro 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 andChina and has undergone many changes over the years. Insecticides account
for the largest share ofthe Indian crop protection market - 65%. Fungicides - 15%, Herbicides
- 16% and Bio-pesticides andothers - 4%. The consumption pattern is: paddy pesticides -
28%, cotton pesticides - 20% and others52%. 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.inUSA and 13 kg in China,
which shows lack of pesticide usage or technology in terms of crop management.

1.1.3 Introduction of Agrochemical:-
Agrochemicals are used to improve crop performance, yield or control pests, etc.
Agrochemicals aresubstances 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.
1.1.4There are broadly 5 categories of crop protection products:-

1. Plant Growth Regulator (PGR): Plant growth regulators function as chemical
messengers for intercellular communication. There are currently five recognized groups of
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plant hormones: auxins, gibberellins, cytokinins, abscisic acid (ABA) and ethylene. They
work together coordinating the growth and development of cells.

Plant Growth Regulators
Plant growth regulators (also called plant hormones) are numerous chemical substances that
profoundly influence the growth and differentiation of plant cells, tissues and organs. Plant
growth regulators function as chemical messengers for intercellular communication . There
are currently five recognized groups of plant hormones: auxins, gibberellins, cytokinins,
abscisicacid (ABA) and ethylene. They work together coordinating the growth and
development of cells. Ethylene is mainly involved in abscission and flower secscence in
plants and is rarely used in plant tissue culture. In addition to the five principal growth
regulators, two other groups sometimes appear to be active in regulating plant growth, the
brassinosteroids and polyamines.
Auxins: Auxins stimulate cell el ongation and influence a host of other developmental
responses, such as root initiation, vascular differentiation, tropic responses, apical dominance
and the development of auxiliary buds, flowers and fruits. Auxins are synthesized in the stem
and root apices and transported through the plant axis. The principal auxin in plants is indole-
3-acetic acid (IAA). Several other indole derivatives, all as precursors to IAA, are known to
express auxin activity, probably by converting to IAA in the tissue. Auxins in plant tissue
culture are used to induce callus from explants , and cause root and shoot morphogenesis.
Auxins are often most effective in eliciting their effects when combined with cytokinins.
Cytokinins: Cytokinins are able to stimulate cell division and induce shoot bud formation in
tissue culture. They usually act as antagonists to auxins. (Cytokinins are N6 substituted
derivatives of the nitrogenous purine base adenine.) Cytokinins most used in tissue culture
include zeatin, adenine, 6-(g,g-dimethylallylamino)purine (2 iP) and kinetin. Cytoknins often
inhibit embryogenesis and root induction.
Gibberellins: The main effect of gibberellins in plants is to cause stem elongation and
flowering. They are also prominently involved in mobilization of endosperm reserves during
early embryo growth and seed germination. Gibberellins are an extensive chemical family
based on the ent-gibberellane structure. There exit over 80 different gibberellin compounds in
plants but only giberrellic acid (GA3) and GA4+7 are often used in plant tissue culture. In
tissue culture, gibberellins are used to induce organogenesis, particularly adventitious root
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formation.
AbscisicAcid:Abscisic acid (ABA) in plants is a terpenoids involved primarily in regulating
seed germination, inducing storage protein synthesis and modulating water stress. In plant
tissue culture, it is used to help somatic embryogenesis, particularly during maturation and
germination.
Ethylene: Ethylene is a simple gaseous hydrocarbon with the chemical structure H2C=CH2.
Ethylene is apparently not required for normal vegetative growth. However, it can have a
significant impact on development of root and shoots. Usually, ethylene is not used in plant
tissue culture.
2.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.
3.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 inhibitfungal growth and may have to be applied at regular intervals. Eradicant
fungicides kill the pestson application. E.g. Anilazine is used to control fungal attack on
lawns and turfs, cereals, coffeeand various vegetables and other crops.
4. 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.
5. 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
ecofriendly and easy to use. They could be classified as microbial pesticides, plant
incorporated protectants 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.
6. Others (Nematocides, Rodenticides etc):-Fumigants and rodenticides are used to prevent
theattack of pests during storage of crops. Plant growth regulators control or modify the plant
growthprocess and are most commonly used in cotton, rice and fruits. As per Govt. of India,
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crop losses due to non-usage of pesticides were 28% of the yield amounting to ~ Rs. 90,000
Cr per annum (2002 estimated). It is estimated that the present food grain production can
jump from 3 Trillion to 4 Trillion by using crop protection products. Therefore, right usage of
crop protection chemicals is essential in increasing agricultural production by preventing crop
losses before and after harvesting.
1.1.5 Major Global Players in the Agrochemical Industry:
Fig.: 1.1: Major Global Players in the Agrochemical Industry

Table.1.1 Sales and Market share of Pesticide firms
Company Agrochemical Sales 2011 Market Share
(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%
MakhteshimAgan (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 2011
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
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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.

1.1.6 World Consumption Overview:
Table. 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
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 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
1.1.8Major 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: 1.3 Performances of Top Pesticides Companies in India:
Income/Rs.Cr Sales/Rs.Cr PBDIT/Income/ (%) PAT/Income
(%)
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%.
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:
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 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.: 1.2 Pesticide Market by Consumption:

Source: ppqs.gov.in/IpmPesticides_Cont.htm

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Fig..1.3 State wise share in pesticide consumption

1.4 Production and Consumption of Pesticide:
Fig.: 1.4Productions and Consumption of Pesticide:

Source: Ministry of Chemicals and Petrochemicals
 India is dominated by generic producers. Even if they produce patented products,
these companies still have to go through the complex and time consuming registration
process when they launch their products.
 Currently, there are 226 pesticide products registered in India. Pesticides produced in
India can be broadly divided into two categories technical grade and formulated.
Technical grade pesticides are highly toxic and contain hazardous material whereas
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