GROWING IMPORTANCE AND CHALLENGES FOR AGROCHEMICAL INDUSTRY

Agrochemicals are the chemicals used in agriculture, including chemical fertilizers, herbicides, and insecticides. Most are mixtures of two or more chemicals; active ingredients provide the desired effects, and inert ingredients stabilize or preserve the active ingredients or aid in application.

Developing countries, especially in Asia, have been steadily moving from the direct consumption of grains and other staple crops to vegetables, fruits, meat, dairy and fish. The increase in meat and dairy consumption has also led to greater demand for animal fodder and feed from cereals. China consumed about 250 percent more meat per capita in 2007 than in 1990. India consumed 20 percent more meat, fish and eggs per capita than in 1990.

Some agro-chemicals are extremely hazardous to the health of workers and the general public and also to the environment. However they can be used safely if proper precautions are taken. One main obstacle in achieving safe working conditions is the wide geographical distribution of agricultural workers, who are often considered self employed.

Agro-chemicals are used world-wide to improve or protect crops and livestock. Fertilizers are applied to obtain good yields from crops that are protected from insects and diseases by the timely use of pesticides. Animals are similarly protected from parasites and diseases by veterinary treatment such as vaccination, oral dosing or immersion dipping.

Importance of Agrochemicals

Agrochemicals form the largest and the most diverse group of chemical compounds. Popularly referred to as pesticides they are mainly used for plant protection and improving crop yields. Every year nearly 30% of the potential of food production valued Rs 150bn are lost due to insects, pests, plant pathogens, weeds, rodents, and birds and in storage. Hence the use of pesticides has become extremely necessary. Besides given the large growing population and scarcity of land available for cultivation, pesticides industry has a vital role to play in the agricultural sector.

Key Segments industry would include for insecticides, Fungicides, Herbicides and Bio-pesticides

Effects of the Use of Agrochemicals

The use of certain agrochemicals has also been associated with some important environmental and ecological damages. Excessive use of fertilizers, for example, can lead to the contamination of groundwater with nitrate, rendering it unfit for consumption by humans or livestock.  The use of pesticides can also result in environmental problems since, during many uses of pesticides in agriculture, the exposure of other organisms, including humans, is not well controlled. In addition, there is a widespread, even global contamination of the environment with some types of persistent pesticides, especially with organochlorines such as DDT, dieldrin, and aldrin. The use of some pesticides is also risky for humans. About one million pesticide poisonings occur globally every year, resulting in 20,000 fatalities.

CHALLENGES

High R&D costs since R&D to develop a new agrochemical molecule takes an average of 9 years and approx USD 180 Mn Indian companies typically have not focused on developing newer molecules and will face challenges in building these capabilities, while continuing to remain cost competitive.

Genetically modified seeds possess self-immunity towards natural adversaries which have the potential to negatively impact the business of agrochemicals.

Since, the number of end users is large and widespread, effective distribution via retailers is essential to ensure product availability. Lately, companies have been directly dealing with retailers by cutting the distributor from the value chain thereby reducing distribution costs, educating retailers on product usage and offering competitive prices to farmers.

Support for Integrated Pest Management (IPM) & rising demand for organic farming.

Uses and Application

Important uses and application of Agro- chemicals are as follows:

Pesticides

The word "pesticide" describes a group of agro-chemicals intended to destroy or control pests of all kinds. These are named according to their intended use. For example insecticides are used against insects, herbicides against weed plants and fungicides against fungi, rodenticides against rodents etc.

Commodity chemicals

These are the substances which are manufactured for use in either agriculture or other industries. They may also include by-products of an industrial process or even industrial waste such as dilute caustic or acidic solutions. These substances are generally used in farming and have corrosive action on exposed parts of the human body.

On-farm veterinary products

These are the substances used in the rearing of animals. They can be applied to the skin, or administered orally or by injection by agricultural workers.

Fertilizers

These are the plant nutrients and trace elements applied generally to the soil to promote the growth of crops. Some of them can cause irritation or bums to the skin.

Preservatives

Preservatives are those agro-chemicals that are used for preserving agricultural products either fresh or in processed forms.

MARKET SURVEY

India is the fourth largest producer of agrochemicals globally, after United States, Japan and China. The agrochemicals industry is a significant industry for the Indian economy.  India’s agrochemicals consumption is one of the lowest in the world with per hectare consumption of just 0.58 Kg compared to US (4.5 Kg/ha) and Japan (11 Kg/ha). In India, paddy accounts for the maximum share of pesticide consumption, around 28%, followed by cotton (20%). Indian population is increasing and the per capita size of land decreasing, the use of pesticides in India has to improve further. Currently a small segment, biopesticides market is expected to grow in the future owing to government support and increasing awareness about use of non-toxic, environment friendly pesticides. The Indian agrochemicals market is highly fragmented in nature with over 800 formulators. The competition is fierce with large number of organized sector players and significant share of spurious pesticides. The market has been witnessing mergers and acquisitions with large players buying out small manufacturers.  Key market participants include United Phosphorus Ltd, Bayer Cropscience Ltd, Rallis India Ltd, Gharda Chemicals Ltd, Syngenta India Ltd, BASF India Ltd, etc. Top ten companies control almost 80% of the market share. The market share of large players depends primarily on product portfolio and introduction of new molecules. Strategic alliances with competitors are common to reduce risks and serve a wider customer base.