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Bt cotton seed makers face an inventory build-up this year as acreage is seen shrinking by up to 15 per cent with farmers planting more of guar, soyabean and groundnut.
Last year, the cotton area had touched a record high of 121.91 lakh hectares and the scarcity of Bt seeds had led to a scramble among farmers for their preferred brands or hybrids.
“The area is clearly down by 15 per cent in the North, though sowing is yet to pick up in central and southern States,” said Dr M. Ramasami, Chairman and Managing Director, Rasi Seeds Pvt Ltd.
Slack demand
Dr Ramasami expects the lower seed demand to result in an inventory of around one crore packets of 450 gram each, as almost every player has been impacted. At an average price of Rs 1,000 a packet, the inventory costs translates to around Rs 1,000 crore for the industry.
The overall seed production is estimated at 5 crore packets, while sales for the year are expected to be in the range of 3.5-4 crore packets. Rasi Seeds, which claims a market share of 12-13 per cent, has seen about 10 per cent dip in sales so far, Dr Ramasami said.
Estimating a 20 per cent decline in cotton area, mainly in the North, Dr Paresh Verma, Director – Research at Bioseed Research India Pvt Ltd, expects the seed inventory in the year ahead at around 60 lakh packets.
“Sales of most companies have been impacted, but the non-popular or less preferred brands have been hurt more,” Dr Verma said.
However, Dr Verma said sales of Bioseed, an outfit of DCM Shriram Consolidated Ltd, have increased by 47 per cent this year, mainly with demand coming from central and southern States.
Bioseed, which has launched two more Bt hybrids, expects its market share to double to around 10 per cent this year.
Sowing in Gujarat, Maharashtra and Andhra Pradesh will continue for another two months.
Mahyco-Monsanto Biotech has licensed its Bt trait to around 26 seed makers, of which the top six to seven companies control about 85 per cent of the market.
Price volatility
The volatility in cotton prices induced by a flip-flop in the Government’s export policy has prompted farmers to look at other alternatives. However, with a hike in minimum support prices last week, there might be a rebound in interest in some pockets.
The Confederation of Indian Textiles Industry expects a 7-10 per cent decline in area over last year, said Dr D.K. Nair, Secretary-General.
Mr M. Prabhakar Rao, CMD, Nuziveedu Seeds, sought to term the trend in inventory build-up as a company-specific issue. “Some companies may have seen this situation, but we haven’t,” he said, estimating the overall decline in area under cotton at around 5 per cent.
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