Indian Seed Industry
State of Indian Agriculture:
Indian agriculture has come a long way since the Green Revolution of the late 1960s. India presents an interesting scenario: both GDP and food grain production in the country have risen faster than the growth in population over the last 50 years. But now the situation is becoming alarming as the agricultural growth has been static in recent years. The enormity of the problem is indicated by the fact that the during the 10 year period 1997-98 to 2006-07, our food grain production has grown at an average annual rate of only 1%. Interestingly, while the nation rejoices at the recovery in food grain production at 241.6 million tons in 2010-11 with 6.6% growth, the fact remains that it is only marginal increase over the production of 233.88 million tons in 2008-09. The total demand estimate for food grains will touch 280 million tons by 2020. To achieve the forgoing amount of production a growth rate of 4% in agricultural sector has to be maintained over next 15 years. It is very important that the economic growth fosters social equity. For this the agricultural growth should be in the forefront of our national GDP growth.
Therefore the focus of the Second Green Revolution or the so called “Evergreen Revolution” is on ensuring food and nutritional security to the Indian populace especially below poverty line population which constitutes around 28% of the Indian population. With practically no more land to farm and some depletion of the agricultural land, this miracle is not easy to achieve. Science and technology have to play a big role. High productive seeds, private sector involvement and expenditure on long stalled irrigation schemes are the keys to achieving higher production. Hence a Second Green Revolution that maximizes productivity and generates income and employment opportunities for the rural population is need of hour. As the most critical of all farm inputs in agricultural production, SEED holds the key for increased productivity. Coupled with biotechnology and other crop improvement technologies, seeds offer tremendous opportunity for improving the productivity of Indian Agriculture.
Indian Seed Industry Current Status and Future Growth:
Indian seed Industry is one of the most mature and vibrant one in the world currently occupying the 6th position with nearly 9000 Crore turnover. During the past 5 years the Indian Seed Industry has been growing at a CAGR of 12% compared to global growth of 6-7%. In value terms the major growth has come from the increased adoption of Bt cotton hybrids, single cross corn hybrids and hybrid vegetables. The volume growth has mainly come through increased Seed Replacement Rate in crops like Paddy and Wheat. Indian seed industry is undergoing wide ranging transformation including increased role of private seed companies, entry of MNCs, joint ventures of Indian companies with multinational seed companies and consolidations.
- Though there may not be significant increase in the market size of Hybrid Cotton, the value additions like Herbicide tolerance will significantly improve the market value.
- Adoption of high value single cross maize hybrid seed is growing fast.
- With the IPR in place through PPV&FR Act more private bred open pollinated varieties in rice, wheat and soybean will be available to the farmers.
- The Seed Replacement Rates will improve with the raising farming income and profitability.
- New Biotech traits will further boost the Seed Market Value.
This growth is expected as a result of many drivers, some of which have been addressed below. All the drivers should work in tandem to achieve the goal. They are interlinked and not exclusive. For example, the improvement in SRR will happen through technology up gradation and extension work and the government policies will be crucial in achieving this growth.
The Growth Divers:-
1. Inherent strength of India-
India is blessed with 2nd largest arable land, 15 major agro-climatic zones in the world and 46 soil types out of total 60 types of soil in the world. This diversity gives us opportunity to conduct breeding and evaluation research for most parts of the world. More importantly, the Indian farmer is innovative and quick adopter of new technologies. The example of adoption of Bt cotton is quoted worldwide. The inherent strength of the country is a combination of values, culture and traditions apart from physical properties. This has been demonstrated to the whole world by attaining self sufficiency in food grain production through the Green Revolution.
2. Improvement in Seed Replacement Rates (SRR)-
While the seed replacement among hybrids in crops like Cotton, Sunflower, Bajra, and Jowar is 100%, the SRR in OPVs is suboptimal in Indian Agriculture. The growth in SRR for some crops is shown below (fig-2). To achieve the future growth, the industry along with public extension system needs to improve the SRR from current status by 2 to 17% depending on the crop.
The situation is more complicated if we see the variation between the States. (Table-1)
1. Showing SRR in different Crops and States
The immediate need is to improve SRR in food crops like Paddy, Wheat and Pulses. The private Industry has entered into this area with significant R&D investments after PPV & FR Act enactment, and we can see the growing market for proprietary varieties in these crops. Maize is another crop where the SRR is very low in certain agro-climatic zones like Rajastan the state with largest maize area. Suitable hybrids for this region shall see steep growth in SRR.
3. New Technologies :
Seed is the basic carrier of technologies to improve productivity. The whole world was amazed to see at the rate of adoption of Bt cotton. Here the new technology means any innovation in seed which the farmer finds good value for money. It can be a biotech trait and/or new hybrid/ variety and/or value addition to seed. Apart from Public investments in R&D, there has been spurt of major investments by private sector in Biotech/Breeding Research. The private industry is also sponsoring research in the National and International research institutions either individually or through consortium platform. We can expect hybrids in rice with wider adaptability with fine grain quality. This will push the growth of seed industry in a very significant way. Biotech traits on several important crops are ready for launch at various stages of regulatory process. Some of them are listed below
List of GM Crops under development in India
Herbicide Tolerance – Next GM after Bt
Taking the new agronomic practices to the farmers is a challenge. One cannot expect every useful information to have Bt cotton effect. Therefore it is essential to reach the farmers and train them to practice the cultivation in more effective and profitable way. The existing extension network of the public system is handicapped with lack of knowledge upgradation. Perhaps the best way forward is to have a PPP extension model with private sector participation either individually or thru the input associations like NSAI, FAI etc. Some companies have already signed agreements with the state governments to partner in their extension work. This needs to be expanded across the country.
5. Increase in vegetable seed market size-
With the increase in the Income there is change in the lifestyle and habits of Indian population to consume more fruits and vegetables. Area and production is increasing due to demand generated by higher incomes. This would create more demand for hybrid vegetable seed. GM traits will add further value e.g. Bt Brinjal. The current vegetable seed market size of about ` 900 Crores is likely to double in next 3-4 years
6. Effect of PPV&FR Act
With the protection given under PPV & FR Act, the private sector’s participation has increased in R & D of OP varieties particularly in Rice and wheat. It has also facilitated larger participation of production and supply of improved seed by the private sector. New varieties combined with proper extension shall have significant effect on the growth of Seed Industry due to increased SRR.
7. Geographical expansion
Companies are exploring opportunities in the export markets in Asian countries such as Bangladesh, Pakistan, Srilanka, Myanmar, Indonesia, and Malaysia and African countries like Tanzania, Ghana, Ethiopia, Nigeria, Sudan and Kenya. The limited availability of hybrid seeds in these countries and the potential adaptability of Indian crop germplasm offer a huge opportunity to the Indian seed players. With minimum incremental R&D cost, business expansion can be done in these countries. More than 80 Indian companies have invested Rs. 11300 Crores in East Africa for food grain production & plantation crops. These companies are looking for better seed from India. But before going to foreign lands, we should take the seed to the regions within the country where the Seed Industry is almost non-existent like North Eastern States.
8. Policy support from Government
Green Revolution in late 60s became possible because of unflinching public and political support and policy backing for new technology. The country again needs similar support from all quarters, particularly in policy backing in the following areas
- Enabling environment to encourage R&D, Seed production and distribution
- The following recommendations of the stakeholders’ interface on GM food crops” held in New Delhi in May 2011 should be positively considered
- BRAI – Biotechnology Regulatory Authority of India (BRAI) should be made operational soon.
- Regulatory system needs to be efficient and fool proof without slowing down the release process
- Transparent procedures for testing, clearance and monitoring GM Crops
- Fiscal Incentives like Tax exemptions, Credit on soft terms, Duty free import of equipment for R&D and processing
- Infrastructure building in PPP through nationwide mission mode approach like TUFS
Recently Seed Industry has become very attractive for the investors. Indian investors are eagerly looking for many IPOs from Seed Industry. As the Govt. allows FDI in selected agri- sectors including seed production, private equity Firms such as Blackstone and Summit partners have taken stakes in Nuziveedu and Krishidhan Seeds respectively. The capital infusion will facilitate infrastructure development that is required for faster growth of Indian Seed Industry.
These above drivers will have to be simultaneously activated to achieve the set goal. The prospects of growth are in the safe hands of young entrepreneurs / professional who are now managing the Indian Seed Industry. Their enthusiasm is evident by the numbers of their active participation in the National and International events like APSA Congress, ISF, and ISC etc.