The Hindu Business Line : `India may emerge as seed production hub'

The forecast
The seed sector is seen as a major driver of agriculture sector in the country.
Seed companies were currently spending around five per cent of their turnover on research and development.
Firms were expected to churn out more products with shorter life cycles in the future.

Chennai , Nov. 23

India can become a hub of seed production for South-East Asian region and will also be able to supply African countries, Rabobank International has said in a study.

"The case for India emerging as a production hub is backed by the fact that the country has built up sufficient expertise and resources in both the private and public domain to become a strong ally in early stage contract research or late stage seed multiplication," the bank said in a market overview and outlook on Indian seed industry.

The trends

Stating that the cottonseed market was expected to be converted into a full-fledged Bt cotton market by 2008-09, the bank, dwelling on trends that will help shape future, said germplasm and varietal traits would continue to be key determinants of product performance.

"After cotton, hybrid rice, mustard and soyabean may be the next crops to drive industry growth," the outlook said.

An increase in replacement ration could give depth to the industry and it would help increase the size of seed sector and volumes in the mass market segment.

"Development, higher penetration and renewed focus are anticipated in States including Bihar, Uttar Pradesh, Madhya Pradesh and Orissa," it said.

Even if the Indian market reaches a point of saturation, the neighbouring markets such as Pakistan, Bangladesh, Sri Lanka, Thailand and Malaysia could become attractive destinations for export of seed for crops, including cotton, sunflower, sorghum, pearl millet and vegetables. "Access to these markets could help sustain the growth of Indian seed companies," the bank said.

Future growth

The seed sector is seen as a major driver of agriculture sector in the country and is expected to realise future growth due to increased seed replacement rate, higher conversion, wider use of proprietary hybrids, increased farmer awareness of new methods and introduction of technologically advances products that offer improved biotic and abiotic traits.

Stating that seed companies were currently spending around five per cent of their turnover on research and development, the outlook said the firms were expected to churn out more products with shorter life cycles in the future.

"This will keep R&D costs a high level. Companies may decide to work in alliance with biotech companies for R&D of new products," it said.

The private sector in the seed industry was highly fragmented with an estimated 300 players and the top 10 companies account for 25 per cent of the total volume. An estimated 250 companies operate as trading firms and these generate an average turnover of Rs 5 crore annually.

The commercial seed market in the country accounts for 25 per cent of the total market potential and the remaining 75 per cent is dominated by vareital seeds that farmers retain from prominent food and commercial crops.

The public sector, led by National Seeds Corporation Ltd and 13 other State seed corporations, supplies high volume and low value seeds of improved varieties of cereals, pulses and oilseeds, the outlook said.