sachin centad seed southasia

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South Asian Conference on Trade and Development entitled

“Harnessing Gains from Trade: Domestic Challenges and Beyond”

December 20, 2007The Claridges Hotel, New Delhi

Changing Structure of Indian Seed Industry:Policy Prospects and Emerging Lessons

Sachin Chat ur vedi



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* Overview of Policy Evolution

* Global Seed Industry Dynamics

* Impact through New Technologies andIPR Regime

* Implications for Stakeholders

* Which way to go!

Structure of the Presentation



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Overview of Policy Regime

• In Fifties to Seventies the focus was on improvementin the quality of inputs for fostering agriculturalproduction

• Eighties and Nineties issues like productivity

stagnation, nutritional deficiencies, and environmentalimplications are being addressed.

• Initially a major policy attention was paid to theavailability of quality seeds in all the crops for which

financial support/subsidies were invoked.

• Since the First Five Year Plan and especially during thevarious phases of the National Seed Projects (NSPs)/WB Projects

, a decent seed production system evolvedboth in the public sector and in the private domain as

well.



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• It seemed quality seeds supply stabilised however in latesixties and early seventies policy went through variousphases and restricted growth of seed market especially ofquality seeds in different crops particularly vegetables, etc.

• As part of this several institutional efforts like NSC, State

Farms Corporation of India (SFCI) and several State SeedCorporations (SSCs) came up.

• However, the low seed replacement rate in most crops andthe narrow focus of the public sector led to the launching ofthe New Policy on Seed Development (NPSD) in 1988.

• Gradually the situation started changing with the use ofhybrid seeds in cotton, and to some extent in corn, millet,rice, sunflower, and vegetables, which have expanded in amajor way.



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Economic Benefits from National Seed Projects

Source: World Bank, 1978

1250 jobs

158%1.35 Mn farmfamily

US $ 17.5M/Year

NSP-II

800 jobs65%3 Mn. farmfamily

US $ 145M/Year

NSP-I

SSC/SSCA

Rate ofReturn ofProject

EmploymentEnhancedValue ofOutput



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• Global seed industry benefited from agriculturebiotechnology and introduction of new products whichalso led to

unprecedented takeovers and acquisitions.

• As a result, firms with comparative advantage in

agriculture biotechnology research such as Monsanto,DuPont, Syngenta, Bayer, Dow, BASF, etc. have a pre-dominant share in the global seed market.

• During the 1996-2000 period 75 per cent of over 4200agriculture biotechnology related patents were owned

by private industry.

• The number of Plant Patents, Plant Variety ProtectionCertificates (PVPCs) and Utility Patents issued over thelast 5 years have risen exponentially.

Global Seed Industry



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Land O’ Lakes (US) 5%

Sakata (Japan)

4%

Taikii (Japan) 3% DLF-Trifolium (Denmark)

3% Delta & Pine Land (US) 3%

DuPont/Pioneer (US) 24%

Monsanto (US) 26%

Bayer Crop Science (Germany)

4%

KWS AG (Germany) 6%

Groupe Limagrain (France) 10%

Syngenta (Switzerland) 12%

Sale of Seeds by different Companies during the Year 2005,US $ Million



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• Monsanto became world’s largest seed company by taking over

- Seminis for $ 1.5 billion. (World’s largest vegetable seedcompany)

- Emergent Genetics for $300 million (3rd largest cotton seedcompany US)

• Monsanto typically divides its R&D investment into three categories:

• one-third to drive discovery of new products;• one-third devoted to improving current products;

• and one-third to providing ongoing support to the company’scommercial organisation.

• The Company has a focused and integrated approach to R&D.

• Its research team has launched 10 commercial biotechnology trait

products since 1996.

Consolidation : Case Study of Monsanto



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Consolidation in the Global Seed Sector:Case of Monsanto

59%63.5%97%91%Per cent Share

6.314.146.4109Area underMonsanto(Million Acre)

10.622.247.7119.5Global Coverage(Million Acre)

GM CanolaGM CottonGM MaizeGM Soybean

Global Share of Monsanto



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• Majority foreign equity holding upto 51 percent equity allowed for trading companiesprimarily engaged in export activities.

• Automatic permission was proposed forforeign technology agreements in highpriority industries.

• The 1991 Industrial Policy also proposed toamend the MRTP Act to remove thethreshold limits of assets in respect of MRTPcompanies and dominant undertakings .

Policy Framework



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Details of Joint Ventures and FDI in IndianSeed Industry

133.4918212557Total

Amount in millionUS $

Total JointVentures

FinancialTechnicalYear

• New Destination

• Wave of New Technology

• Moving away from floriculture



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Major Joint Venture Partners, 1 991 - 1 997

Others

5%

EU

53%

US

15%Asia

27%



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Major Joint Venture Partners, 1 998- 2005

EU29%

Others

13% US

34%

Asia

24%



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India’s Imports of Seeds, 1 991 -2005, (US $ Million)

7.36

18.2514.59

22.06

28.04

36.05

46.3449.96

0

10

20

30

40

50

60

1991 1995 1998 2001 2002 2003 2004 2005



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India’s Exports of Seeds, 1 991-2005, (US $ Million)

49.65

168.28

252.62

129.89150.13137.88

567.32536.31

0

100

200

300

400

500

600

1991 1995 1998 2001 2002 2003 2004 2005



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Seed Companies with Institutional BiosafetyCommittees (IBCs)

Source: DBT, 2006.

2Delhi

4Gujarat

1Tamil Nadu

13Maharashtra

6Karnataka3Haryana

17Andhra Pradesh

No. of IBCsState



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Number of Firms and Public InstitutesImporting Research Seeds

Source: Based on Personal Communication with NBPGR, 2006 and Khetarpal (2004).

1 8121228932172856149Total

141854740567Others(misc.)

241740440003Pulses

61329250000Fruits

61246136Cotton

92125192321Oilseeds

225112464Sunflower

4131364579145Vegetables

06350101Pearl millet

3313120438Sorghum836132530492013Maize

3636532923971Rice

55640000Barley

272310242000Wheat

20052001199619912005200119961991Cereals

Public InstitutesNumber of FirmsCrop



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Transgenic Planting Material Imported(11.12.1997-31.3.2006)

Source: Based on Personal Communication with NBPGR, 2006.

Total no. 7642

Germany43Wheat

Canada3Tobacco

USA359Soybean

USA10Potato

Belgium, Germany, The Philippines,Singapore, Switzerland, UK, USA,Vietnam

6898PaddyUSA, South Africa50Maize

China, USA46Cotton

Australia, Scotland34Chickpea

Australia, Belgium199Brassica spp.

SourceNo. ofSamples

Crops



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• Growing concentration should be addressed through various

policy mixes.• In the seed sector it is found that the idea of cluster

formation is too narrowly focused in its geographical coverage.

• Unlike in the industrial sector, in agriculture one should have a

different approach for clusters. Though generally the clusterscome up with a highly localised concentration of specialisedskills and knowledge but over concentration of seed productionwould have high costs in terms of environment and the supplysystem. It is all the more desirable, given the huge size of

India and its emerging seed requirement.• As of now 90 per cent of vegetable seed comes from

Rannabennur in Karnataka; 80 per cent of cotton comes fromNadiad in Andhra Pradesh. Similarly, 90 per cent of pearlmillet comes from Andhra Pradesh again. This is not a very

viable situation.

Policy Lessons: Seed Clusters



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Harmonising Policies across States• As agriculture is a state subject sometimes seed companies face

completely different policy regime sin different states.

• The variations range from packaging guidelines to the insistence forsigning MoUs for seed replacement in case of dispute with

consumers. In some cases the policy changes are so rapid that thefirm finds it difficult to cope up.

• There is an urgent need to make provisions for adequate protectionof intellectual property so that demands like samples of parentalseeds and hybrids for DNA fingerprinting are not resisted by the

industry as has happened in state of Andhra Pradesh.• In states like Madhya Pradesh an undertaking is taken for

compensation against under performance of seeds. This practice hasbeen done away in states like Andhra Pradesh.

Policy Lessons



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Raising Entry- Exit Barriers: Industry for Self Regulation

• There are almost no barriers for entry and exit in the seed industry. Thefly-by-night operators exploit farmers and create confusion in the industryand among the regulatory authorities.

• With the advent of biotechnology, the seed industry is likely to get polarisedon lines of high technology and low technology products.

• Rapidly evolving and costly agricultural biotechnology innovations and stillexpensive regulatory regime may pose entry barriers especially for smallerfirms.

• The material transfer agreements and intellectual property rights may alsoplay respective roles in limiting entry into the agricultural biotechnologysector. However, these would become effective once the enforcement

related institutional setting up takes a shape.• In India, the setting up of PVFRA is a rather recent phenomenon. Its counter

part at the state level has yet to come up. Till then IPR violations leading tothe production of spurious seeds may well be imagined. Unlike the pesticideor fertiliser markets there are no barriers in the seed sector. Though theSeed policy 2002 proposes to implement some measures but one needs to

look into their effectiveness and enforcement.

Policy Lessons



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• There is a need to rechannel the subsidy or assistance being given tostate governments on various counts.

• The support in 1999-2000 was Rs. 1.9 billion. Out of this the keyrecipient states were Andhra Pradesh (11 per cent), Gujarat (7 percent), Madhya Pradesh (9 per cent), Maharashtra (8 per cent), andRajasthan (9 per cent). The others all were below 5 per cent.

• In 2000-01, this amount remained almost same at Rs. 4.3 billion.

• Apart from this assistance, the state governments make availabletheir own resources as well to support the seed sector.

• The support should be more effective in the sense that producer and

farmers may have a wider choice. This would also help in ensuringaccess to high technology products even by farmers who otherwisefind it a constraint.

• Karnataka, has increased the seed subsidy but the farmers mayselect the seed company of their choice.

Policy Lessons: Reorient Seed Subsidies



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Enhancing Role of Private Sector in Extension• Information on seeds is disseminated to farmers by

agricultural extension personnel, State AgriculturalUniversities, Krishi Vigyan Kendras, etc. through leaflets,pamphlets, radio and television programmes, articles innewspapers and periodicals, distribution of seed minikits,field demonstrations, awareness campaigns, KrishakGoshthis, Rythu Bazars, Kisan Melas and AgricultureExhibitions, etc.

Policy Recommendations



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• The post Green Revolution R&D system in the agriculture sector ispassing through a phase in which the private sector is delivering manymore products than their counterpart in the public system.

• A viable and strong public private partnership with well-defined publicpolicy objectives may well help in advancing the technology frontier

but may also facilitate access to technology products by the farmersof all categories.

• It is important to place inputs such as seeds in the larger context ofthe agriculture innovation system in which rising input costs, whichhave emerged as a major challenge for the adoption of newtechnologies.

• The recent controversy on Bt cotton seeds, in India, is a case in point.Since greater R&D resources are required for high technologyproducts coupled with a strong IPR regime, it is not difficult toimagine the entry of higher priced products in market.

Policy Lessons: Increasing KnowledgeIntensity



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• New Industrial Policy (NIP) facilitated the growth ofIndian private seed industry.

• No accurate data but the share of private sectorexpanded and that of the public sector declined inseveral crops.

• Public sector seed companies confined to certifiedseeds of high volume, low value segment.

• Policy regime in the Nineties increased foreigninvestment and the entry of major TNCs in terrainshitherto unknown to them.

• With new technology the private sector has enteredin large volume low value crops as well.

sachin centad seed southasia

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