The total area under cultivation during 1998 approximates to 170 m ha. In the year 1998, wheat was grown on ~ 26.0 m ha, rice on ~ 42.0 m ha, pulses on ~ 26.0 m ha, cotton on ~ 9.00 m ha, groundnuts on ~ 8.0 m ha, soybean on ~ 6.0 m ha and sugarcane on ~ 4.0 m ha. Other important crops mainly cash crops are jute, tea, tobacco, cotton, sunflower, coffee, rubber, oilseed rape, vegetables, and fruits.

    The total market size of the Indian Agrochemical during 1998 was ~ Rs. 3000 crores which is a growth of about 16% over 1997. Insecticides are the largest product sector contributing to 75% of the total market. Currently around 129 insecticides are approved for use on crops. The key crop outlets for insecticides are cotton and rice, which account for 48% and 28% respectively of the total value of insecticide sales. Monocrotophos, Chlorpyrifos, Quinalphos, Endosulfan, Cypermethrin and Fenvalerate are overall leaders.

    The use of fungicides is not well developed and accounted for 11% of the total market. The fungicide market is dominated by Sulphur products, copper sulphate and copper oxychloride. The leading organic fungicide is Mancozeb, Carbendazim, Metalaxyl, Sulphur and Copper oxychloride. Rice is estimated to have accounted for about 58% of fungicide sales and fruits and vegetables for a further 20%.

Overall the leading crop sector in India is that of  cotton, which represented
41% of the total market, followed by rice with 31% share, fruits & vegetables 15% and cereals 6% share.

By Region

Total world market = $ 30,200 million
(2.6% increase over 1996)

North America ~ 34.5%
West Europe ~ 24.4%
East Asia ~ 17.6%
Latin America ~ 15.0%
East Europe ~ 3.2%
Rest ~ 5.3%

By Product Class

Insecticides: 32%
Herbicides: 47%
Fungicides: 21%

 

Usage

The land may be divided into three topographical zones: the towering Himalayas in the north, the fertile, densely populated Indo-Gangetic alluvial plain in the north-central section, and the southern peninsula, dominated by the uplands of the Deccan plateau.

Indian soils fall into three main groups: alluvial, red and black.

	Alluvial soils (the most common type) are found on the great plain, the northern and central highlands and the coastal tracts and deltas. They are productive and contribute most to the agricultural economy.
	Red soils occur in the southern Deccan plateau and the north east mountains. Fertility varies but they suit a range of crops when adequately irrigated.
	Black soils are found in central western India. Due to their water-retention and the climatic conditions of their location they are very suitable for cotton.

   Cropping pattern is dictated by the monsoons, there being two main cropping seasons. Kharif, the wet summer/autumn after the SW monsoon, supports a wide range of crops including rice, cotton, vegetables, pulses, sorghum, corn and groundnuts. The Rabi season (dry winter/spring) supports wheat, sugar cane, vegetables and pulses. In the south east of India there are winter rains with the SE monsoon.

The cultivated area is now over ~180 mn ha. Increases in irrigated area to over 70 mn ha and improved cultural practises have led to dramatic increases in yield in certain crops, notably wheat, rice and cotton. Slower progress has been made in improving yields of pulses and oil seeds which provide the main proteins and edible oils for the country. These crops are largely confined to poorer land and are monsoon dependent.

    Away from the main river basins with river-fed systems much of India's irrigation is rainfall dependent, hence the critical importance of a good monsoon for the agricultural economy. The ultimate potential irrigated area is put at 114 mn ha.

    Crop rotation is common, the systems varying according to the crops, irrigation availability, environment and custom. Good irrigation allows double or continuous cropping which benefits production but can increase the problems of pest attack.

Farming infrastructure

    Indian farms are small, and getting smaller as land is divided within families. However, there is some amalgamation of working units as family members move away to work.
     
Traditionally in a village of 1,000 families perhaps 200 families (usually of one caste) would own 95% of the land. Of the remainder a few would be tradesmen and the rest labourers working for a wage or a share of the crop. On smaller holdings subsistence only is possible. This system shows only slow change, hence rural discontent in  some areas and movement of people to the cities.

Main Crops

Grower Profitability

Currently the most profitable crops, in descending order, are:

    Vegetables
    Cotton
    Soybeans
    Fruits
    Oil seeds
    Plantation crops
    Cereals

It is on these crops that pesticide use is increasing.

    However, the real situation is much more complex since topography and climate dictate that not all crops can be grown in all areas and suitable markets may not be available. Over large areas of India farmers are forced to rely on subsistence crops.

    Returns to the farmer can vary as prices fluctuate. At present guaranteed minimum prices for both wheat and rice are good.

With 73% of the population considered rural and agriculture providing a quarter of GNP, this is an important part of the Indian economy.

    Small farm holdings and poor irrigation have limited development in some areas but in others growth has been impressive eg., the wheat/rice areas of Punjab and cotton in Andhra Pradesh. This development is necessary to keep pace with a population expected to be 996 mn by the end of the decade. Agriculture remains one of the least invested sectors. A government target of 15% priority sector lending to agriculture has not been achieved.

    An important effect of the economic liberalisation policy has been a freeing of produce prices, farmers are getting better retums for their crops, at the expense of middlemen rather than the consumer, and rural incomes are rising. However, despite six years of liberalisation agriculture is still controlled by government dictates. Food grain trade is largely carried out under government directives.

Measures include:

	relaxing physical controls on key crop trading such as edible oils and cotton
	allowing domestic futures trading for ginned and baled cotton and jute goods, and setting up a global castor oil futures exchange
	reduction of customs duty on imports of vegetable and animal fats and oils from 40 to 30%.

There is a healthy export trade in agricultural produce which nets over US $2 bn annually. Export crops are prime targets for pesticide use, especially products with a minimum residue potential.

    In India where potential annual losses due to pests approach >Rs. 5000 crores, pest control is a necessity, not a choice. The pesticide industry remains dependent on the monsoon because a large part of the cultivated land does not have assured irrigation. However, India is amongst the top ten consumers of pesticides in the world.

Main crops

Cotton

The 8 mn ha of cotton remains the biggest outlet for insecticides with greatest use in and around the southern state of Andhra Pradesh where improved varieties need protection from a range of pests. Prices have been good until 1996 and there has been some increase in area grown.

Cotton is a strategic crop and is purchased by the government under the Monopoly Procurement Scheme. Exports are restricted in order to supply and support the indigenous cotton textile industry which is responsible for 8% of India's export earnings.

In the late 1980s cotton growers derived great benefit from low priced pyrethroids leading to gross overuse and the attendant problem of reduced efficacy. First Bemisia tabaci and then Heliothis
spp became serious problems. However, combined efforts of government and industry in the form of PEG India (Pyrethoid Efficacy Group), now reformed as IRAC, seem to be containing the problem with improved farmer training etc.

Cotton pest levels were low in 1996. Whitefly (Bemisia tabaci) was a problem in the north. Heliothis spp infestations were low in south/central India due to cyclonic rains. In fact, Heliothis spp has not been a serious problem for the last three years. Jassids have become a serious pest.

Between 12 to 15 sprays per season are accepted practice in central and southern India with six to ten being normal in the Punjab. Use of tank mixtures is common in cotton with farmers not always understanding the logic of product choice (he may mix two or three pyrethroids). Considerable education is being conducted in this area and the registration of the first preformulated insecticide mixtures would gradually ease the problem.

Grapes Although the area is small a considerable export business in fresh grapes has developed. Fungicide use has grown well, particularly the more sophisticated products.

Oil seeds Oil seed crops occupy a tenth of India's cultivated land and make up 15% of the worlds' total area grown. Castor and linseed are used for industrial oils but the remainder are essential edible oils for the Indian diet, namely groundnuts, soybeans, sunflower, safflower, niger, sesame, rapeseed and mustard.
Low yields have required the annual importation of up to Rs 10 mn of oil but technical initiatives by the government have been successful in improving output. Sunflower is increasing, satisfying a need for unsaturated fats, while in some limited areas soybeans have become a very profitable crop when organised for processing by initiatives of the Oil Growers Federation.
Growing global demand for animal feed composed only of vegetable protein is expected to fuel a rise in Indian oilmeal exports, particularly of soyabeans.

Pulses

Wheat, cotton and rice have taken the best irrigated land, forcing pulses on to poorer soils. Productivity has only recently started to keep pace with demand for what is the main source of protein for most Indians. Shortages have started to push up prices. Weeds, insects and diseases are limiting production of pulses, more so than in oil seeds, but the grower needs an assured income before he will commit to a large pesticide spend. Use of insecticides is growing.

Main pulses for human consumption are pigeon peas, chick peas, black and green gram (Phaseolus mungo), and lentils.

Rice

Rice is grown throughout the year in the traditional areas of the south and east. In northern India it is a summer crop, often followed by wheat. Low yields relative to labour input can make it expensive to produce, but not in Punjab and Haryana where yields are 50% higher than the country average. These two states consume 80% of rice herbicides, primarily butachlor but with anilophos becoming popular. Sulphonyl-ureas can be expected soon. Mixtures are needed for effective control.

Hybrid varieties are beginning to make a mark with the promise of improved yields and returns. These will lead to increased pesticide use. Rice can be categorised into three classes: upland, middle and lowland.

Rice yields are constrained by many factors but insects, weeds and  diseases are important to the extent that farmers spend over US $120 mn a year to control them.

Stem borers remain the number one insect pest because bree mg for resistance has not been very successful.

Brown plant hopper is increasing across southern and central India. Prediction of outbreaks is proving difficult, but there has been some success with resistant varieties.

Major Pests in Rice

Gall midge used to be the second most important insect but now only occurs in certain endemic areas. Breeding for resistance has been quite successful and there is a reasonably accurate method of forecasting attack.

The govemment extension services are very active in promoting IPM in rice. Although not registered it is estimated that 500,000 litres of pyrethroids are used in rice, being very effective against leaf eating caterpillars and grain sucking bugs.

Tea

Although two-thirds of production goes to satisfy domestic needs exports are important and tea is one of the first crops to have fallen foul of intemational residue requirements. A number of commonly used acaricides have given problems and need to be replaced on export crops.

Vegetables

The 7 mn ha of vegetables grown in India are fragmented but certainly around centres of population they are becoming increasingly profitable with growers prepared to spend on pesticides, fertilisers and growth promoters to enhance yield and quality. The Indian middle classes, of which there are a considerable number, now have surplus cash and can spend it on the better things in life which include quality food.

Export trade is increasing with important benefits to areas within reasonable distances of airports. As well as vegetables there is a developing export trade in cut flowers.

Wheat

Wheat growing has been a major success of Indian agriculture with ~26 mn ha now cultivated. Production has increased steadily since the 1960s with the acceptance of High Yielding Varieties (HYVs) and their associated improved agronomic practices eg., improved irrigation and fertiliser use. This was only made possible by an enthusiastic research and extension service and by farmers being receptive to new ideas.

Wheat is a winter crop across northern India and the northern part of the central highlands. In the well farmed and irrigated areas of Punjab, Haryana and western Uttar Pradesh yields are impressive. In general, the high yielding wheat areas (Punjab, Haryana and western Uttar Pradesh) have Phalaris minor, Avena spp, Lolium temulentum and Chenopodium album as their main weeds. In other areas Phalaris minoris still found but broad-leaved weeds become more important, particularly Chenopodium album, Anagallis arvensis, Melilotus indica and Melilotus alba. However, these are not areas of major herbicide use.

Of the three main species in the wheat crop (Phalaris minor, Avena fatua and Chenopodium spp) Phalaris is the most important and may affect up to 90% of the northern wheat area 50% is thought to be seriously infested. This weed is most prevalent on the heavier soils with a rice/wheat rotation.

Avena fatua (wild oat) flourishes on lighter soils where wheat altemates with cotton, corn, pulses etc. In Punjab 15 - 20% of the area is infested, particularly in the region of Ludhiana. In Haryana there are infestations in the SW of the state while serious infestations are found in western Uttar Pradesh.

Chenopodium spp is endemic in all states. With the introduction of HYVs the broad-leaved weed problem generally decreased since these varieties are drilled three weeks later than indigenous varieties (2nd week of November). This is because the HYVs require lower temperatures, and this, together with the dry soil, inhibits weed germination.

A thriving herbicide market has developed, mainly based on IPU and 2,4-D. IPU works well against Phalaris minor and broadleaved weeds and application rates are low and economical. However, resistance of Phalaris to IPU is reported and has a high profile with a joint industry/government panel studying the problem, testing products and recommending solutions.

Future growth is likely to be in mixtures and a number of new molecules are poised to enter the market, eg., specific grass killers and dicot killers.

Twenty per cent of the wheat is treated for termites with phorate and carbofuran and now with chlorpyrifos seed dressing.

Traditionally most agrochemicals have been manufactured domestically although importation is becoming easier.

    The large, diverse and seasonal nature of the market and the many customers mean that an extensive dealer and retailer network has developed. The major producers try to motivate this network with large field forces. However, the retailers remain powerful since they are the main point of contact with the farmer and are active in providing credit and so can dictate product choice.

    From prime supplier the usual mark-up is:

    Some of the local companies are adopting aggressive marketing strategies. By dealing directly with retailers, they save the distributor margin and are able to sell at very competitive enduser prices.

    Pesticide packs in India are obliged to carry the Maximum Retail Price (MRP) but this bears little relationship to actual selling price to the farmer since prices are discounted for early selling and to clear stocks late season. MRPs have been kept artificially high (to make the discounts look better) but could soon be reduced if the budget proposal to levy an excise on MRPs is implemented. Wth commodity products retailers will work for very slender margins (possibly a few rupees a litre rather than the expected 10 - 15%) and rely on product volume and turnover for profit.

As reported in 1994 the Indian authorities have reviewed 31 pesticides.

A number of active ingredients have been banned:

    Heptachlor
    DBCP
    Toxaphene
    PCNB
    Nitrofen
    Paraquat-dimethyl-sulphate
    PCP
    Tetradifon
    Aldrin.

Others can only be used in specific circumstances:

    DDT
    HCH
    Dieldrin
    Chlordane
   Chlorobenzilate
    Sodium-cyanide
    Captafol
    Lindane
    Parathion-m
    PMA
    EDB.

    Of significance to the pesticide industry is that DDT has already , dropped from agricultural use and that Iindane/BHC should be phased out during 1997. The govemment expert committee will continue to review WHO Hazard Class 1 a compounds (those with oral LD5Os below 20 mg/kg). These include monocrotophos, phosphamidon, parathion-m, endosulfan, phorate and dicrotophos, some of the biggest products used in cotton. Rapid restriction is unlikely but regulatory pressure on these products will increase in the future, especially as alternatives become established.

    The registration process continues to take between four to five years. Me-Too registrations are becoming more difficult to obtain as the authorities try to tighten up the system and remove registration loop-holes.

Following an excellent year in 1995 with 16% growth in sales the industry was optimistic at the start of 1996. However, the active part of the season came to a premature end in November with a third cyclone in Andhra Pradesh. The heavy rains reduced pest numbers, especially Heliothis spp, resulting in a drop in insecticide use. Andhra Pradesh is the major cotton market in the country and normally accounts for 25% of Indian pesticide consumption. Other problems included an unseasonably cold June and July in the north and low pest levels in Karnataka. The net result was reduced demand for insecticides, leading to:

	High product inventories in the range of 15-20% at the years end, against targets of 5%.
	Reduced sales of major products, such as cypermethrin and fenvalerate, with farmers being hit by low prices for their cotton, chillies and rice. Conversely, sales of some nonpyrethroid insecticides held up well, for example monocrotophos, chlorpyrifos and endosulfan.
	Reduced prices of major molecules. The effect has been to lower pyrethroid prices at the start of the 1997 season eg trade cypermethrin prices dropped from US $32 to US $25/kg.
	Increased credit and credit periods ranging from 90-120 days, this at a time when interest rates are 20%.
	Profitability of a number of companies has been hit but branded products were not affected to the same extent as their generic counterparts.

Reasons for perceived future growth are:

	Crop prices have firmed and farmer incomes are rising.
	Aggressive marketing by a number of local companies who have installed modern backward integrated plant. Their sales efforts with low cost product at retailer level is expanding the market.
	Although cotton remains the main outlet agrochemical use increases as profitable markets develop in other crops such as vegetables, fruits, oil seeds (particularly sunflower and soya) and pulses.
	A number of new molecules from the multinationals will reach the market.
	An increasingly affluent middle-class can afford quality produce.
	The growing economy sucks labour into industry and particularly encourages herbicide use.

   The total irrigated area continues to rise, assured irrigation  means that farmers can afford, and will risk, higher inputs.

India is the second largest producer of agrochemicals in Asia after Japan but the industry must contend with a number of problems.

Low capacity utilisation

The 124,000 mn tonnes installed capacity much exceeds needs of 85,000 mn  tonnes. This under-utilisation is blamed on the seasonality of demand, on unreliable power and intermediate supply, and recently on cheap Chinese imports, although this is a declining problem. Also some of the capacity is for redundant materials no longer suitable for use.

Expensive finance

Borrowed money is now expensive (20% APR) in India. Cash tied up in outstanding debts or excessive stocks can soon cause cash flow problems in overstretched companies. Some smaller operations have gone out of business and a number of companies are in a period of consolidation.

High inventory

Seasonal demand and poor management leads to high inventory costs. An end of season rush to clear stocks leads to price cutting.

Working capital intensive

This is a result of high inventory and also because the industry thrives on credit sales. Retailers do not put up their own money but buy on credit from companies. In tum farmers pay retailers,, at harvest, the result is a string of high debtor days. It is common for retailers to milk cash from their agrochemical businesses into other operations.

Undisciplined marketing

Many Indian manufacturers look at the market from a chemists point of view and produce a product if they have the skills to make it without due consideration of its full market need and potential. The end result is often over capacity, price cutting and market degradation.

Low profit margins

Margins are squeezed between commodity prices discounted because of over-capacity and high working capital and inventory costs. Companies able to offer novel products or who are active in less crowded sectors will be in a strong position.

Crop imbalance

Agrochemical consumption is concentrated in cotton, wheat, rice, vegetables, tea, soybeans and some fruits. There is little use in crops such as oil seeds and pulses which suffer heavy losses. Further effort will be needed by the agrochemical industry to grow these sectors.

Regional imbalance

The two main insecticide consuming states are Andhra Pradesh and Kamataka while most herbicide use is in the northern states of Punjab and Haryana. Improved irrigation is key to more even use over the country.

Environmental pressures

There has been some justifiable criticism of pesticide pollution and handling but recent action by the authorities points in the right direction, for example by restricting or banning certain products and by reducing the number of small, poorly qualified formulators who can operate. The industry has in place programmes to educate both farmers and the public on pesticide need, use and safety.

The Indian pesticide market is largely served by commodity products. Local science has not provided new molecules and international companies have recently been slow with new introductions. This is due to a lack of patent protection, punitive import duties, and the need to manufacture active ingredients within the country. This policy made it difficult to recoup development costs.

    A number of companies have become financially overstretched; large carryover stocks, outstanding credit and the high cost of borrowing are causing liquidity problems.

    Overall profitability is reducing and lack of working capital affects both large and small companies. Successful companies are those with:

	efficient backward integration.
	cost effective manufacturing processes.
	solid working capital management.
	production of both technical and formulated materials with the ability to sell a large part of the production as branded material.

    Indian companies are active exporters, but exported material tends to have low profitability.

    The present policy of economic liberalisation will eventually have a major impact through a number of important changes:

	Reduction in import tariffs, these have already reduced from 115% to 50% and hopefully they will settle at 35% for finished product, 20 - 25% for intermediates and 10 - 15% for raw materials.
	It is no longer necessary to manufacture significant new products in India.
	The pesticide industry is now a delicensed category. A licence is no longer necessary to build a plant which effectively means no limit on capacity. Also removed is the need to supply part of a plants' output to independent formulators. This will strengthen the hand of the larger companies and should improve quality.
	Although delicensed any new facility has to meet stringent new requirements on environmental contamination and pollution control administered by the Pollution Control Board.
	Surplus domestic capacity means Indian companies look to export markets, and realise that to compete in these markets they must `play the game'. Quality will also become more important as they seek credibility.
	Crop prices have been deregulated and farm incomes will rise, as the grower gets a more equitable share of market price. The farmer will be better able to afford inputs and improve crop yield and quality. There remains a floor price for commodities. Farm income is not taxed at present, this may change in the future.

        1. Survey of Indian Agriculture 1999 - The Hindu
        2. Pestology Annual 1999
        3.Wood Mackenzie-India 1998
        4. Agrochemicals and Pesticides - Chemical Business July 1999