After four years of the introduction of Bt cotton seeds, pricing comes to a critical juncture once again. Having absorbed costs every year, companies engaged in production and distribution of Bt cotton seeds, have sought a 30% increase in prices of seeds in Andhra Pradesh. This amounts to revision of prices to Rs 850 and Rs 1,050 per packet for single and double gene technologies, respectively.
The prices, which are usually fixed by the state government, were at Rs 750 and Rs 925 per packet in 2006 and were further reduced to Rs 650 and Rs 750 per packet in 2008. With the season fast approaching, seed companies across the state are claiming that they would neither be in a position to supply adequate quantity this year nor take up any further production next year due to increases of around 35% in input costs and 31% in labour costs since 2006.
In a memorandum to the state government through the National Seed Association of India (NSAI), the companies hinted that production and supply of Bt cotton seeds might suffer if the proposed increase in prices does not materialise in this cropping season. Incidentally, area under production has come down from 45,000 acres to 15,000 acres owing to increased cost of inputs for seed growers.
Eventually, this could lead to an acute shortage of quality seeds for cotton growing farmers. NSAI has also mooted a government index such as the consumer price index-agricultural, which may be used to adjust prices of Bt cotton seed in future.
The state is also called the seed hub of the country producing more than 75% of total output. Due to price revision, the margins of seed companies are being hit by at least Rs 50-100 per packet. About 46 lakh packets are sold in the state. ?Since companies have invested heavily in research, if prices are not increased, it would lead to extinction of several companies,?? Paresh Verma, director (research), Bioseeds Pvt Ltd, said. He also said that newer technologies such as drought tolerance and herbicide tolerance ones would not become available to farmers as research costs are also increasing.
?We are also in the process of talking to other state governments which had followed AP government in price revision,?? said VN Rao, executive director of Lead Better Seeds Pvt Ltd, a part of Mahyco. The costs of seed of all other crops have increased by an average of 31% but prices of Bt cotton seed have decreased by 16%.
According to Vidyasagar Parchuri, CMD, Vibha Seed group, labour costs in the state have increased from Rs 60 per day in 2006 to Rs 120 per day in 2009 and they account for more than 60% of the total input costs in hybrid cotton seed production.
Revenues from Bt hybrid cotton account for Rs 2,000 crore of the total Rs 7,000-crore seed industry and 90% of cotton area is currently under Bt cotton. About 6.5 lakh agricultural workers are engaged in cotton seed production in the state.