Presentation on theme: "Seeds -- a US$ 30 billion global industry"— Presentation transcript:
1Seeds -- a US$ 30 billion global industry 12 top markets constitute 66% of theGlobal seed industryIndia (US$ 1 billion) & China (US$ 2.5 bn.) are in the top 10 marketsIndia has over one sixth of the global populationhigh importance to food self-sufficiencyIndia needs to increase productivity significantly12% of global arable land4% share of global cropsIndia US$ 1 bn marketFigures in US$ mn
2India seeds marketWith a size of US$ 1 bn, India is the eighth largest commercial seed market in the worldArable land is around 136 mn ha which is higher than ChinaHigh growth expected on the back of transition from traditional varieties to high value varieties and hybridsPublic sector – varietal crops like paddy, wheat, pulses – 80% of seed volume; 40% of total value~ 150 companies in Private sector – majority operates as tradersThough India is the fifth largest country in terms of geographic area, it stands second (next only to the US) when it comes to total arable area (area under cultivation of agricultural crops). This puts the potential for seeds in India even ahead of China.While the commercial seeds market in India is estimated at Rs 40 bn, the size of the overall market, including farm-saved seeds is estimated to be in excess of Rs 100 bn.Though the Indian seed market is still dominated by farm-saved seeds, there has been an increased awareness and a gradual switch over to hybrid cultivation (hybrids cannot be retained).Increase in India’s share in world crops can come from improved productivity as growers shift to hybrids.
3Saved seeds account for nearly 85% of the market Seed market structureSaved seeds account for nearly 85% of the marketPrivate sector dominates with a 60% market shareCommercial Seeds 15%Saved Seeds85%Note: Research hybrids are 30% of commercial seed market by valueRising food demand and limited agricultural landShift to commercial seeds which have better technologyGrowth in fresh produce market and in processed food sectorDrivenbyDomestic seeds market is expected to double over the next five years implying a CAGR of 13%. Hybrid seeds will grow much faster given expected conversions from traditional varieties.
4Industry Structure – The Situation Today Seed IndustryPublic SectorPrivate SectorNSCSFCISSCs - 13IPS – 200MNC – 10Public sector – in self-pollinated crops of which wheat & rice account for 60%Private sector mainly in hybrids that are low in volume but high in returnOpportunity lies in converting users of farm-saved seeds and public hybridsIn terms of volume, paddy and wheat offer largest opportunity
7Marketshare by value of Key Hybrid Crops Attractive research hybrid seed segmentsMarketshare by value of Key Hybrid CropsIn terms of value, vegetables is the largest segment, accounting for 17% of the total market. Tomato, Brinjal, Cabbage and Bhindi contribute most to the value in the vegetables segment as these crops have a sizable acreage under hybrids. Other significant segments include cotton, sunflower, followed by Wheat and Paddy. The rationale for vegetables and cotton having a high value share is that these crops are dominated by hybrids in which the replacement rate is high. Seeds business in these high value crops is very profitable as the realizations are much higher and it is for this reason that most seed companies are present in these crop segments.Realisations as against average market prices of seeds of key crops are as under,Crop Average market price Estimates- % Net Realization*Hybrid Cotton 350 Rs/packet (450g) 30Hybrid Bajra 110 Rs/bag(1.5 Kg) 15Hybrid Jowar 120 Rs/bag (3 Kg) 15Hybrid Maize 120 Rs/bag (5 Kg) 7Wheat Rs/bag (40 Kg) <5Research wheat 1400 Rs/bag (20 Kg) 25* After deducting all costs except interest, depreciation, overheadsCotton is the most important segment because of a high percentage of cultivated area under research hybrids.
8Background – The Role of Regulation Seed Act, 1966 – min. quality standards, certification & procedures for evaluating varietiesPublic sector dominated the industry until 19711971 – National Commission on Agriculture recommended breaking of public sector stranglehold – Indian private sector enter the sector1988 – New Seed Policy – entry of MNCs; import of seeds and germplasm allowed for researchSeed Policy is still very restrictive and detrimental to farmers2002 – Comprehensive Seed Policy – to overhaul existing Seed Act – should usher new growth in the liberalised era
9Public & Private Sector Activity Public sector – in self-pollinated crops of which wheat & rice account for 60%Private sector mainly in hybrids that are low in volume but high in returnOpportunity lies in converting users of farm-saved seeds and public hybridsIn terms of volume, paddy and wheat offer largest opportunity
10Indian Agriculture – Challenges Ahead Agriculture growth must keep pace with growing demand; food grain demand growing at %p.a.Efficiency to improve in use or resources –decline in land & water resource base for average farm holdingFertiliser must be used wisely and there should be adequate storage infrastructureAgriculture tech management must become efficient to take advantage of expanding production & marketing opportunitiesTariff and non tariff barriers imposed by developed countriesThrust to high yielding & efficient inputs like seeds
11Types of Seed Produced in India Cereals, Oilseeds, Cotton, VegetableCereals dominate the seed market hybrids in Corn, Sorghum, Pearl millet, SSGMajor opportunities in Wheat and RiceSunflower dominate in oilseeds with opportunities in Brassica (‘00’ and transgenic)2:1 ratio of private to public hybrids in Cotton;Tomato (28%), Cabbage(23%), Brinjal (14%) – major share of hybrids3.12 mn ha under vegetables; Current mkt. value for hybrids INR 200Cr, varietal INR 50Cr