India is the fourth largest global producer of agrochemicals after the USA, Japan and China with 50% of the demand coming from domestic consumption and the balance from exports. As per various industry reports, the demand for agrochemicals is expected to grow on the back of rising population leading to increased food demand. To meet the food and nutrition needs of a growing population, the country needs a sustainable approach that puts thrust on increasing productivity against a background of lower yields and decreasing farm sizes. This requires a push from all stakeholders—farmers, the government and the industry collectively so that the changing needs of the nation are met. It is also to be noted that approximately 25% of the global crop output is lost due to attack by pests, weeds and many diseases. Here, agrochemical companies like Rallis India Ltd play a major role in enhancing productivity and protection of crop post harvest. Insecticides are a large part of agrochemicals with a 60% market share, whereas herbicides hold a 16% market share. Yield crops in India are quite low compared to other developing countries which use better farming practices. Similarly, consumption of crop protection products in India is quite low and offers opportunities for increased usage to drive up farm productivity. The current year’s budget allocation and initiatives aspire to double agriculture income in five years. The Union Budget 2018-19 has proposed to increase the MSP for Kharif crops to 1.5 times the producers’ costs and hence prospects for Rallis India have improved considerably on the back of more demand for agricultural inputs like seeds, fertilisers and agrochemicals in the future. The government has also put sincere efforts to support the sector by increasing funds for irrigation, crop insurance and credit facilities to help farmers deal with weather related risks, income security, increased production and also deal with post harvest challenges. Sales of companies like Rallis India will be driven by growth in a judicious use of agrochemicals and export opportunities. Challenges such as non-genuine products and focus on research and development need to be addressed on priority. It is imperative for Indian farmers to adopt efficient practices, seed treatment, biotechnology and integrated pest management to reduce wastage and attain self sufficiency in agricultural inputs. Food inflation has been a persistent problem for the Indian economy where demand patterns in the food category have been more predictable, but estimating the supply has been bit of a challenge. Consumers often see more price volatility in perishable goods like potato, tomato and onions. But in recent times, staples like oil seeds and pulses have also shown sharp price variations
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.