Agro-chemicals feel heat of poor rains

Written by feBureau | New Delhi | Updated: Oct 5 2012, 06:51am hrs
Poor monsoon until August has hurt the country's fast-expanding agro-chemicals industry, slowing growth by half this fiscal, senior industry and official sources said.

The agro-chemicals market has grown in double digits over the past few years, although this year it may expand by 5% to 7%, Insecticides India (IIL) managing director Rajesh Aggarwal told FE.

Although heavy showers since August have bridged the initial deficit, the impact on crops due to poor rainfall hasn't been fully neutralised. Delayed or no sowing in parts of Gujarat, Tamil Nadu, Karnataka and Maharashtra also dragged down pesticide consumption, said a senior scientist with the state-run Indian Agricultural Research Institute. Monsoon rain deficit this year narrowed down to 8% by late September from 30% in July.

Agarwal said rabi harvest is expected to be good as water reserves have improved following good rains since August and some of the losses may be partly offset in witnter. Still, IILs revenue may expand by around 30% in the current fiscal, compared with the initially expected growth of 40%, he said. The whole industry has been affected due to drought, which is beyond control. But everybody is bullish about the long-term prospects of the market," Aggarwal said. IIL recorded sales over R554 crore in the last fiscal year.

Improving farm incomes and growing awareness about better farm practices have driven up pesticide sales in India over the past few years. The country's pesticide market has been projected to more than double to $5 billion by 2017. It has more than doubled in the past four years, though industry executives say the actual potential is much higher.

Currently, many agro-chemical companies are making products by either using molecules invented outside India or tying up with foreign firms to use patented technology for manufacturing fresh items.

During the last five-year Plan through 2011-12, the government had raised MSPs of various crops in the range of 29% to 107%.