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Challenges to overcome

By GovernanceToday
In Environment & Ecology
March 7, 2016

Agrochemical sector in India faces multiple bottlenecks that is hampering the industry’s growth

AgrochemicalAgrochemical industry has transformed the agricultural landscape in India, benefitting the farming community in terms of better yields and crop performance. It is the onset of the agro chemicals era that helped India graduate from a food deficient to a food surplus country. The contribution of the agrochemical industry to economic growth of the country over the past two decades can therefore not be undermined.

However, despite its important role and the impressive growth posted by it, the sector faces certain challenges and bottlenecks. The sector is expected to grow at a rate of 8 per cent per annum to become Rs 180 billion strong by fiscal 2017-18. But in an agriculture-dominated country, this figure can and should be dramatically higher. Less penetration and low level of awareness among the end consumers is impacting the growth of the sector. Taking awareness to the last farmer, countering misinformation campaigns, and improving local research and development are challenges that the industry needs to overcome if it has to realize its potential. More help from the government in ensuring irrigation and credit to farmers, and a sagacious approach on the part of the industry would also help propel the growth of the sector.

Let’s take a look at the challenges the agrochemical industry faces and how they can be overcome for a brighter future:

Heavy dependence on Monsoon

The agricultural sector’s heavy dependence on monsoon rains brings a lot of unpredictability to the sector. Every year, as farmers pin their hopes on meteorological predictions, so does the agrochemical industry. Normal monsoons imply a healthy season and healthy demand. For a country which has almost 60 per cent of its population dependent on agriculture, we need better irrigation mechanisms to reduce farmers’ dependence on monsoon rains. With depleting groundwater resources, India needs better alternatives to improve artificial irrigation in the farming belt. We look forward to the government and local administration to draft special programs to increase irrigation coverage for rain dependent farmers.

Lack of awareness

Despite agrochemicals being used in India for many years now, we are yet to achieve 50 per cent penetration. Small farmers in remote and tribal belts still practice subsistence agriculture, selling whatever little output is left in the local markets. In the wake of increase in population and loss of land for infrastructural and housing projects, the agricultural holdings continue to decrease in size. In such circumstances it becomes imperative to educate the last farmer about the importance of using agrochemicals and using them judiciously. A better penetration will not only increase individual farmer’s output but work well to increase food production to meet the collective demands of our burgeoning population. It will serve the industry well too. As an agrochemical company we take a lead in organizing awareness programs and the benefits of agrochemicals to all farmers.

Greater emphasis on the need for local R&D

Much like the pharmaceutical sector, India’s agro chemical industry too has thrived on making generic agrochemicals rather than investing in Research & Development to produce new molecules that can be patented. The latter approach requires making substantial investments that will not have immediate or short term gains but fundamental long term benefits for the industry. Indian companies have mostly chosen to market generic agrochemicals to make money. In recent years, however, there is an increasing realization that the Indian chemical industry is forsaking long term gains by adopting a myopic view by failing to pump in money into research activity. The demand for agro chemicals, relatively moderate at the moment, is increasing. So is the need to create products that benefit the local farmers and suit their agricultural conditions. A second green revolution is something that the farm sector needs badly and this second revolution can only come riding upon a wave of indigenous research and innovation. New patented molecules will also add to India’s intellectual property and in turn bring substantial gains for farmers and companies in the long run. However, foresight is crucial here. Indian companies should be ready to make long term investments and willing to withstand longer gestation periods for R&D to reap fruits. The right approach is to strike a balance between marketing generic agrochemicals and inventing new. Time is ripe for the Indian industry to take a new plunge and graduate to the next level.

Dealing with misinformation

Even as the unit per hectare use of agrochemicals remains much less in India as compared to the developed countries, there is an increasing misinformation campaign against agrochemicals. The truth is we need the use of agrochemicals to increase our yields and to be able to continue to feed out population. Certainly, we do not want to return to the pre Green revolution time of scarcity. What we need to correct is the perception that agrochemicals per se are harmful. What is harmful is their use not as per the prescribed dosage and methods. Today many companies, including Insecticides India are actively working with farmers and our users to ensure they indulge in the right and judicious usage of agrochemicals to keep our foods safe and sufficient. Awareness and education is the only solution to disproportionate and ill usage of agro chemicals.

Plant location and transportation

This is a micro-level concern which needs to be taken care of when companies are expanding their reach throughout the country. Location of the manufacturing plant is very important to save on the transportation cost from the plants to the depots and clearing and forwarding agents (C&Fs). If the plants are not strategically located, then supplying the products to designated places gets delayed. By way of having plants at strategic locations, not only the supply hiccups can be avoided but also the transportation costs related to raw materials can be brought down relatively. Given that setting up of industrial units is not so easy in India because of various reasons, it remains a challenge for many agrochemical companies to establish their units at strategic locations. IIL’s plants are strategically located at four places and help the company place its products in nearby regions speedily, involving fewer costs.

*The figures have been taken from FICCI’s Agrochemical Industry Report 2013.

Rajesh Aggarwal | The writer is the Managing Director of Insecticides India Limited, a leading agro chemical producer.