Fertilizingroots ofindustry

Fertilizing the roots of the industry

3:24 PM, 12th November 2018
R G Agarwal, Chairman, Dhanuka Agritech Limited
R G Agarwal, Chairman, Dhanuka Agritech Limited.

In an interview, R G Agarwal, Chairman, Dhanuka Agritech Limited with Chemical Today magazine speaks about the country’s agrochemicals market and talks at length regarding the changes needed in the system to boost the domestic and global outreach of the industry.

By Shivani Mody

Trends in agricultural inputs.

In agricultural GDP, India has become second in the world after surpassing US and for this, the credit goes to our farmers who without much support, could achieve this position.

In our country, 10-30 percent crop loss is answered in Parliament against questions. The loss is mostly due to pest and diseases and on an average around Rs 5 lakh worth of crops can be saved. Currently, our domestic consumption is around 2.5 billion dollars and similar may be in export. At present, the trend is that more pesticides are being used in our country. And due to shortage of labour, the usage of herbicides is increasing. Globally, herbicides and fungicides hold the maximum usage. In India, fungicides are also witnessing increased usage due to the occurrence of new varieties of fungus and diseases. We are into Plant Growth Regulators (PGR) business which has a great potential in the country in the coming years.

Future demands in agro raw material market.

The demand for raw material has been increasing as the supply has been hit due to the closure of various factories in China. Prices of raw material imports have increased. Given the good monsoon this year and favourable farmer policies like increased MSP, the demand for pesticides is expected to increase and so will the demand for raw materials. At the same time, the ‘Make in India ‘initiative has motivated companies to manufacture the raw materials required for making technical-grade pesticides in the country itself.

Taking advantage of the market dynamics given the Chinese market conditions.

Greater environmental controls in China came into force with the new “Environmental Protection Tax Law” on 1 January, 2018. It has led many companies to either shut down or invest heavily on environment equipment and machinery to comply with the new code. This has directly affected the price of certain materials and led to acute shortage of certain technical-grade materials. Due to this, the price of generic formulations has gone up, affecting profit margins of Indian manufacturers. As China is the largest global supplier of technical products and their intermediates and a key exporter of these products to India, any restrictions or changes in the market will affect the production chain in India. However, with the support of government policies and a good market environment, Indian companies are trying to seize the market opportunities. This will encourage raw material production in India, making it self-sufficient in the long run.

India’s export potential in agrochemicals.

India is the fourth largest global producer of pesticides, and currently exports constitute almost 50 percent of the industry’s turnover. Globally, it is the thirteenth largest exporter of pesticides. The major exports from India are to Brazil, the US, France and the Netherlands. Acephate is a major pesticide exported to Brazil and Mancozeb is exported to various African and Latin American countries. India mostly exports ‘off-patent’ products. Interestingly, pesticides worth $4.1 billion are expected to go off-patent by 2020. This provides significant export opportunities for Indian players. Globally, in regulated markets, patented products constitute about 20-22 percent of the total pesticide market, which is expected to decrease to around 13-15 percent by 2020 because of the patent cliff. The Indian crop protection industry is dominated by generic products, with more than 80 percent of molecules being non-patented.

Impact of raw material cost on agrochemical business.

Prices of key raw materials such as phosphoric acid, ammonia and natural gas have increased and are likely to exert pressure on agrochemical companies’ margins unless the government increases the subsidy. Otherwise, companies will be compelled to raise prices of the products and pass it to consumers.

Company’s future business plans.

Dhanuka Agritech is one of the leading agro-chemical companies in India. The company has a pan-India presence through its marketing offices in all major states in India. It also has four manufacturing units in the country. With a network of more than 7,500 distributors and 1,500 skilled employees, it is selling its products to approx. 80,000 retailers across India and reaching out to more than 10 million farmers.

Currently, the company has technical tie-ups with four American and six Japanese companies and is among the top five companies in India, in brand sales. We also reach out to farmers at the grassroots level and educate them about the use of latest technologies through seminars featuring experts on the subject. We have also launched a national-level ‘Dhanuka Innovative Agriculture Award’ this year to encourage innovative and progressive farmers and related organizations. In its first edition, over 4,600 nominations have been received from across India. We are all set to announce the winners.

Research and innovation focus.

The company keeps adding new products every year through its collaborations and is continuously on the lookout to bring the latest technology to Indian Farmers. This year we have launched one 93 (nine three) molecule. Other products are basically a relaunch of those products, which have already been introduced by other companies as this is a common molecule. The 93 (nine three) molecule, which has been launched by us is a fostor from Otsuka Chemicals India Japan. It is a miticide for sericulture and tea garden farming. The other products introduced by us will start getting momentum from this fiscal year onwards. Moreover, we have plans to launch 2 nine three molecules this year one of which is fungicide for grapes plantation and another is herbicide for rice.

Specialty and generic products market share.

Our specialty products revenue is around 50 percent and generic products is around 50 percent. The demand for new technology is increasing – as the pest have developed resistance to old generation molecules and our company has a tie-up with Japan and American companies, through which we are bringing new products in the country.

It is an entirely different field and fertilizer usage is also double in China than our country. Unfortunately in our country due to defective policy of subsidy, imbalanced use of NPK fertilizer was done and more focus was on urea. Earlier Government policy was having more subsidy on nitrogenous fertilizers. Now the Prime Minister of India is promoting Soil Health Card and advising farmers that they should use fertilizers based upon recommendation in the Soil Health Card.

Impact of government guidelines on agrochemicals industry.

The current government, with its pro-farmer policies, is very supportive and is working towards the improvement of the agriculture sector. Its guidelines for agrochemical companies are focused on producing high-quality crop protection chemicals. Besides, the export guidelines have been also relaxed as companies with firm export orders can now register online. However, there is a need for data protection provisions in the Insecticides Act to encourage R&D in crop protection products and combat the menace of spurious pesticides. With high wastage or loss of food annually on the field itself, currently reckoned at 40 percent of food production of which 20 percent is attributed to pest, it is imperative to devise a workable solution.

Challenges faced by agrochemicals manufacturers.

Efforts must be made to develop and improve the production capabilities of generic and new products within the country so that our dependency on exports are reduced. There must also be a focus on the research and development of technologies for manufacturing new technical grade pesticides. India still depends on imported post-patent molecules, instead of manufacturing them locally. CIB and RC need to think deeper about framing guidelines and should frame more technology-friendly guidelines to introduce new products in the Indian market. Further, the GST on pesticides should be reduced from 18 per cent to 5 per cent like on fertilizers and other agriculture products, for making it available at affordable rates to farmers.

The cost of research of a new molecule is around Rs 2000 crore and spans over a period of 10 years. This is the reason of consolidation in the industry for merger of Dow and DuPont, Bayer, Monsanto, FMC, Cheminova, Sumitomo, Excel and Syngenta is taken over by ChemChina. Today registration of new molecule in our country takes 6-8 years’ time while as per Insecticides Act, the time prescribed is one year and can be extended to 1 ½ year. Government should look into it and reduce the duration for production of new technology.

The other issue is over data protection. India cannot live in isolation and we have to be part of global economy. For the new products registered in the country, data protection is must so that there is investment in R&D and this system is accepted globally. This is an accepted norm of giving protection to intellectual property rights and we cannot be aloof from this.

© Chemical Today magazine

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