Bayer CropScience AG, a subsidiary of 6.4-billion euro Bayer AG, is betting big on the Indian market for crop protection solutions with newer active ingredients, though the country has been hit by uneven rainfall this season. As a long-term strategy, the company hopes the prices of agricultural raw materials to remain at a significantly higher level than it was a few years ago. This calls for a general awareness on second green revolution in agriculture.

With the demand for farm produce in India is expected to increase to 66 billion euro from 48 billion by 2018, the company is aligning its growth strategy and is accelerating the extension of its biotech and seed business. Following a record year in 2008, the company intends to more than triple its sales in this segment to around 1.4 euro billion by 2018.

Announcing this to the media, Friedrich Berschauer, chairman of Bayer CropScience AG?s board of management, said the company is planning to invest 3.5 billion euro in research and infrastructure for its biotech and seed business within 2018. However, this does not include possible acquisitions.

According to Berschauer, the company is seeking to further strengthen its role as a leading supplier of innovative technologies in all business segments, to grow its portfolio strategically, and to expand its business sustainability. The growth strategy revolves around three elements – chemical crop protection, plant traits, and high-quality seed. “We are developing from a classical supplier of crop protection products into a supplier of integrated solutions for farmers which comprise not only products but technologies and services as well,” Berschauer explained.

According to the company?s research pipeline, it has set the goal of bringing to market about 10 new crop protection active substances, with a combined peak sales potential in excess of euro 1.25 billion, between 2008 and 2012. Following the successful launch of the insecticide Spirotetramat and the herbicide Pyrasulfotole in 2008, the company has achieved a further milestone this year with the grant of regulatory approval for the new herbicide Thiencarbazone-methyl in combination with the Safener Cyprosulfamide. Three fungicides – Fluopyram, Bixafen and Isotianil – are scheduled for launch in 2010 and 2011. In addition, three further products, among them a biological pest-control one, are at an advanced stage of development.

With four core crops, namely canola, rice, cotton and vegetables, the company plans to expand the portfolio on a regional basis in the coming years and to include further crops. The company has begun research into improved cereal varieties. The objective is to increase yields and to make plants more resistant to adverse weather conditions. The company?s research activities are also focusing increasingly on soybeans. Bayer CropScience is currently investing the equivalent of roughly 27% of sales in the development of new bioscience products.

“We are currently active in about one quarter of the seed and plant trait market,” Joachim Schneider, head of the business operations unit BioScience, said. Sales are planned to increase from 452 million euro in 2008 to around 1.4 billion euro by 2018. Currency-adjusted sales of the Bayer subgroup grew 4.8% to 3,972 million euro from 3,782 million in the first six months of 2009 despite unfavourable weather conditions in some of the major growing regions.

Good development in the first six months of 2009 was followed by a more modest start to the third quarter. Lower selling prices for wheat and corn, unfavourable weather conditions in Europe and the subcontinent, India in particular, and the relatively late start of the season in Argentina as well as a decreasing demand in the US – all impacted on the company?s business. “Against this background, we have to consider our target of retaining a margin forecast of a clean EBITDA margin of 25% for the full year as ambitious”, explained Berschauer.

?(Travel for the story was sponsored by the company)