REPORT

ON

Pesticides Industry

Submitted to: Submitted by:

Etali Sarmah Ashok Kumar Ora
Bharat Bhushan Sharma
Manish Singhal
Kamal Bhukkal

Institute of Agri Business Management

S K Rajasthan Agricultural University, Bikaner

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 Contents

S.No. Particulars Page No.

1 Introduction 3
2 Pesticides : Global Perspective 3-6
3 Pesticides industry in India 7
4 Product and Consumption pattern 7-8
5 Import and Export trend 9-10
6 State wise consumption of pesticides 11-12
7 Insecticides market in India 12-13
8 Fungicides market in India 13-14
9 Herbicides market in India 14-15
10 Contemporary issue 15-16
11 Marketing mix of Pesticides Industries 17
12 Safety aspects: Human & Environmental 17-18
13 Integrated pest management 18-19
14 Biopesticides in use 19
15 Govt. Laws and Impacts of WTO 20-22
16 Opportunities in the Indian Market 23-24
17 References 24

2
Introduction

Agriculture is the keystone of the Indian economy. Ensuring food security for more than
1 billion Indian populations with diminishing cultivable land resource is a herculean task.
This necessitates use of high yielding variety of seeds, balance use of fertilizers, judicious
use of quality pesticides along with education to farmers and the use of modern farming
techniques. It is estimated that India approximately loses 18 percent of the crop yield
valued at Rs.900 billion due to pest attack each year. The use of pesticides help to
reduce the crop losses, provide economic benefits to farmers, reduce soil erosion and help
in ensuring food safety & security for the nation.
The Pesticide Management Bill 2008 defines “Pesticide” as, “Any
substance or mixture of substances of chemical or biological origin intended for preventing,
destroying, attracting, repelling, mitigating or controlling any pest including unwanted
species of plants or animal feeds.” Pesticides can be manufactured and sold mainly in two
forms:-

1. Technical
2. Formulations

Technical is the first stage of manufacture where the chemical is concentrated and
unsuitable for direct use. This is then processed with other materials to create
formulations. The conversion from technical grade to formulations adds substantial value to
the product.

Pesticides Industry : Global Perspective

The world pesticide industry is dominated by nine multinational basic
producers from the United States and Western Europe; they account for nearly one-half of the
total output. Monsanto, Bayer, DuPont, Dow agroscience, BASF, in the top ten is AgrEvo,
a joint venture of Hoechst and Schering. Producers in the second tier (annual sales below $1
billion) include Sumitomo, Sandoz, FMC, and Rohm & Haas. Expenditures on herbicides
accounted for the largest portion of total expenditures – more than 40%, followed by
expenditures on insecticides,fungicides and other pesticides respectively.

Production and percentage of different types of Pesticides in World

Types of Pesticides World Market(in million World Market (in %)
dollars)
Herbicides 14,118 44
Insecticides 8,763 28
Fungicides 6,027 19
Other 2,848 9
Total 31,756 100

3
Global Market Of MNCs

Company Sales 2007(US $ milliion)-%market

share

1 Bayer (Germany) $ 7,458m – 19%

2 Syngenta (Switzerland) $ 7,285m – 19%

3 BASF(Germany) $ 4,297m – 11%

4 Dow AgroScience(USA) $ 3,779m – 10%

5 Monsanto(USA) $ 3,599m – 9%

6 DuPont(USA) $ 2,369m – 6%

7 Makhteshim Agan(Israel) $ 1, 895m – 5%

8 Nufarm (Australia) $ 1,470m – 4%

9 Sumitomo Chemical (Japan) $ 1,209m – 3%

10 Arysta Lifescience (Japan) $ 1,035m – 3%

11 Total $ 34,396m – 89%

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Major players of Indian Pesticides industry

Indian Players – 1) Tata Rallis India Ltd.

2) United Phosphorous Ltd.

3) Excel Industries Ltd.

4) P.I. Industries Ltd.

5) Gharda Chemicals Ltd.

Small Scale Firms – 1) Dhanuka Pesticides

2) Bharat Insecticides

3) Hindustan Insecticides Ltd

MNCs Pesticides Products

Companies Insecticides Fungicides Herbicides

Bayer Confidor,Calpso,decis, Antrawl,baycon,eolicur,Mo
Atlantis,basta,
Oberon,libacid nceren topstar,whipsupe
r
BASF vesimol bavastin Pursuite,stamp.
Dupont Avaunt,caesar,lannate,rebord,magi Rubigan,mustar,curzate,koc Algrip,almix,
ster ide brackett,kloben,
Monsanto Yieldgaurd,vistive,seminis Seed treatment products Roundup- ready
interno,leader
Dow Dursban,imiden,success,pride,trace Beam,bengaurd,savior,spen Goal,weedall,clin
agroscience r,nureblle cer cher
Syngenta Actara,proclaim,cigna,metador,peg Amister,ridomil,score,tilet,k Rift,gramoxone,t
asas avach opik
Makhteshi Thionex, seizer, rimon, diazol folpan, magnate, atranex, azoln
m-Agan merpan, nimrod
Arysta orthene® elevate®, Captan everest® , select®
LifeScience
Sumitoma Parmathion, Hakusap, Vegiphon, Sumilex , Powmyl Sumiherb
chemical Mikantop ,Cremar

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Indian pesticides companies products

Companies Insecticides Fungicides Weedicides

Tata rallis Daksh,tatamida,reeva, Contaf,contaf Fateh,tatametri,
asataf,manik,rogor plus,master tata panida
Excel crop care ltd. Endosulfan,chloropyriphos Sulfex80 , glyphosate
,profenphos,imidacholprid sulfex gold
UPL Ustaad, Hunter, Perkill Zeemil ,Rampart Orraza ,Kabbu
PI Industries carena, Kitazin,Sanit Solaro(atrazine),
Rocket(cypermethrin) jUpiter
Gharda chemical Chlorpyrifos,Quinalphos, Carbendazim Dicamba,
ltd. Triazophos Isoproturon
Dhanukha Cypermethrin,monocrotophos Carbendazim Terga super,Nukil
Pesticides
Bharat Insecticides Endosulfan,Malathion Capton ,Mancozeb Isoproturan,
Propanil
Hindustan Endosulfan,Malathion, Mancozeb Butachlor
Insecticdes Monocrotophos

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Pesticides Industry in India

India is one of the most dynamic generic pesticide manufacturers in the world with more
than 60 technical grade pesticides being manufactured indigenously by 125 producers
consisting of large and medium scale enterprises (including about 10 multinational
companies) and more than 500 pesticide formulators spread over the country. The Indian
pesticide industry is ranked second in Asia (behind China) and twelfth globally. India
produces 90,000 metric tons of pesticides a year. In contrary to the world statistics where
herbicide usage dominates the pesticide overall use, in India insecticides dominates the
entire use percentage.

The monsoons have always been a challenge to the Rs 4500 crore Indian Pesticide
market. The Indian Meteorological Department has now declared a deficiency of 29 per
cent in the south-west monsoon in India .This holds very important and far reaching
implications on the agriculture in general and the pesticide industry in particular.
The per hectare consumption of pesticide is low in India at 381 grams when compared to
the world average of 500 grams.

In India, due to the huge presence of off-patent and generic molecules, the pesticide
industry is usually low and medium sized in nature. In the case of off-patent molecules,
the presence of wide distribution, the strong brand image and superior quality
product acts as entry barriers. Due to this nature of the industry, there have been very
little investments in R&D. But with the new patent regime since 2005, the discovery of
new proprietary molecules and entry of MNC players with strong research and
development many new patented products have been launched, for example,
Abamectin, Buprofezin, Imidaclopid etc. This makes the need of the Indian companies
to invest in R&D as a necessity to survive in competition against the big players.

There is also the presence of skewed balance in the crop-wise and state-wise use
of pesticides. It is in the favour of Kharif crops- rice and cotton and states like Andhra
Pradesh, Karnataka and Punjab. The pesticide industry is also highly dependent on the
vagaries of monsoon and the maximum demand for them is in the months of July –
September period.

Demand and Supply

The demand drivers for this industry are the increase in the acreage for commercial crops,
use of high yielding varieties seeds in the key crops like cotton, rice, sugarcane and the
intensive work being done by the government authorities and the industry players. The
continuos extension of new agricultural practices like the use of genetically modified seeds

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like cotton and the use of newer pesticide molecules in the plant protection business keeping
in mind the cost benefit ratio of pesticides use is also changing the demand and supply
dynamics of the pesticide industry.
As cotton is no longer a major pesticide user, its share has dropped to less than 20% from
50%.Now,paddy is the driving factor for the pesticide industry, the crop’s share in pesticide
use has increased up to 40%.But the monsoons this year have also not been favourable due
to which the area under paddy has shrunk considerably- by about 26 per cent. The area
under Kharif paddy has shrunk from 257 lakh hectares in 2008 to 191 lakh hectares.

In 1992, the government formulated the law, which made it obligatory for manufacturers of
basic bulk agrochemicals, called technicals, to sell 50% of their output to the outside
formulation manufacturers After the law was repealed, the formulator were starved of raw
materials which lead to an increase on the number of agrochemical manufacturers which lead
to a huge addition to the capacity.

The overall demand of pesticides in India has been decreasing in terms of volume but at the
same time the value in terms of sales has been increasing over the years .
This can be attributed to the entry of more efficient chemicals with lower dosages and
efficacy at very low concentration.

Production and Demand of Pesticides in India

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Production and Consumption Pattern

Import and Export Trends

In India, the imports are usually the new sophisticated
molecules, which are not manufactured in India. The concerned multinationals go through
the process of registering and importing the new molecule in India if it is a fit for controlling
a specific pest.

In the case of agrochemicals trade India has a healthy surplus on account of abundant
and easy availability of high quality and low cost raw materials and intermediates. The high
quality of Indian products such as cypermethrin, chlorpyriphos etc give India a distinctive
advantage over China. The following table give the product-wise export of some selected
pesticides and insecticides from India.

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 Import and Exports Scenario

Product-wise Export of Selected Pesticides and Insecticides from India

Products 2002-03 2003-04 2004-05 2005-06

Qty. Value Qty. Value Qty. Value Qty. Value
D.D.T. 9 16 958 1456 1763 2103 1204 1445
Malathion 1574 1506 0 0 0 0 0 0
Parathion 53 381 478 891 200 240 413 904
(Methyl)
Dimethoate 105 158 154 324 88 857 148 1796
D.D.V.P. 365 379 345 1077 619 921 455 614
Quinalphos 180 335 86 137 273 449 442 764
Endosulphan 4447 9610 5399 9960 4628 9355 3070 6043
Cypermethrin 7139 26300 6448 23235 7369 23663 10772 41245
Fenthion 2 5 109 694 26 45 174 804
Lindane 64 152 66 333 23 52 60 118
Ziram(Thio 70 65 0 0 0 0 0 0
Barbamate)
Copper- 0 0 5 8 373 298 412 434
Oxychloride
2, 4-D 753 708 713 611 1345 1324 4138 4719
Isoproturon 1201 2163 2033 3233 1988 3562 1078 2041
Aluminium 1000 3345 824 2263 1410 4322 1343 3947
Methyl 3 8 2389 8432 1617 4606 518 2007
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 Bromide
(Quantity in mn tonnes)

State wise Consumption of Pesticides

The pesticide Industry also differs in quantum and sales from one state to other,
depicting the scale of modernization and development in agriculture. The revenue
generated by the crop protection chemicals as per the states is depicted in the graph
below.

Pesticides Industry Scenario in value

The different crop protection chemicals sold in India differs from state to state and further
from crop to crop. Rice is the major crop protection chemical consuming crop followed
after cotton. Introduction of Bt cotton has considerably reduced the pesticide usage in cotton
and hence rice is the main driver for demand of pesticides.

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12The future of GM crops and its implication on pesticide usage is highly debatable at
one hand the pro GM group is advocating to increase its acreage on its promise of
providing in built safety from pests, on the contrary a different school of thought brings
in to picture the chances of resistance and resurgence to get erupted in pests from GM
and again escalating the usage of Pesticides.

The introduction of herbicide tolerant GM crops can still increase the usage
quantity of pesticides in India .The same has been the reason for higher usage of
pesticides in other countries than in India. The glyphosate tolerant crops in USA have
pushed upward the usage of Round- up (glyphosate).

Insecticides Market in India

The chart clearly depicts that the highest use of pesticides is in

Andhra Pradesh followed by Maharashtra, Punjab and Karnataka. Much of this is because
of the cropping pattern and agricultural development in the respective state. A.P. is major
cotton and rice producing centre of India and the maximum insecticide application is in
cotton and rice only, Punjab also enjoys Rice – Wheat cropping system which accounts for
the high insecticide usage. Cotton cultivation further escalates the use of insecticides .With
the advent of Bt technology there has been a shift of insect pest dominance in cotton
ecosystem eg. thrips, mites etc which used to be the minor pests earlier have now become
major pest as the Cry 1 AC gene provides safety from Spodopteran and Lepidopteran
group insects (Boll worms and Cut worms ).

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Insecticide market by State(2006)

Other potential drivers of the insecticide usage are vegetables and high value flowers which
demand very intensive care and safety from insects. Maharashtra and Karnataka being centres
of Floriculture and high value crops drive ahead the pesticide industry .Vegetables as brinjal ,
tomato ,bhendi etc are heavy feeders of pesticides on account of heavy infestation of
borer insects as Helicoverpa armigera and leaf feeding insects as Serpentine leaf miner ,Ash
weevil etc. Fruit crops are also in ample need of insecticide eg: Pomegranate needing
protection against borers, Grapes against Grape weevil etc.

Insecticide Market (2006), Rs26,929 mn by crop

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 Fungicides Market in India
Fungal diseases form an important part of the entire
plant diseases in India and hence fungicides are highly important in controlling fungal
diseases. The classical Bengal famine of rice by epidemic of brown spot disease
Cochliobolus miyabeanus reveals the importance of fungicides in India. It is further
augmented by Irish famine of 1741 caused by early leaf blight of potato.
The major crops consuming fungicides are: rice and potato on grounds of
serious diseases as Rice blast in rice and early and late leaf blight in potato. Grape’s
downy and powdery mildew attract a chunk of fungicides for remedy, vegetables also
attract a lot of fungicides as anthracnose in chilies, mildew diseases etc.
The major crops accounting for maximum revenue from fungicides are depicted in the
graph:

Fungicides Market By Crops Rs.7656 mn(2006)

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Fungicides Market Statewise (2006)

Herbicides Market in India

Unlike the international market, the herbicide market is yet to pick up in

India, but based on international trends it too should be a huge market, creating
opportunities for safer biotechnology generated alternatives to agri-inputs. If in future,
herbicide tolerant GM crops like Round up ready soyabean ( USA) are launched the herbicide
market is expected to catch up and match the international quantum and sales of herbicides .

The existing market of herbicides are concentrated in the rice – wheat cropping system in
North west India ie . “The grain bowl of India ” (Punjab ,haryana,Western UP).

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 Herbicides Market by Rs.8506 mn By crops

Contemporary Issue of Endosulfan

The 27-member EU bloc has been lobbying to ban endosulfan through Stockholm and
Rotterdam Conventions, which work on chemicals, and of which India is a member.
Says a source closely associated with the Indian government, "Every pesticide is dangerous if
used incorrectly. EU wants a ban on endosulfan, as it is a low-priced generic pesticide, and they
want India to push for expensive pesticides which cost a bomb."
The source says that a ban on endosulfan would prove disastrous for millions of farmers who
rely on it. Although organic farming is growing, a vast section of farmers use pesticides.
A litre of endosulfan costs Rs 220, against the Rs 2,000 per litre which imidachloprid (which the
EU is pushing) costs, says Rakesh Kalani, a cotton and wheat farmer from Ramsara district in
Punjab.

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"Some companies sell imidachloprid for Rs 1,000 per litre. Another pesticide coregen costs
about Rs 700 for just 60 ml. Farmers can't afford such expensive pesticides. We have been
using endosulfan for over 15 years and haven't noticed any problems," says Kalani.

According to C S Bedi, chairman of the Tea Research Association, though tea is a small user of
pesticides, endosulfan has been popular among the 1.2-1.4 million directly employed by the
tea industry. "There has been no hazard whatsoever."

Experts say that at the Stockholm Convention, EU bans only those pesticides that are not
manufactured by its members and are unimportant for them.

According to S Ganesan, chairman, international treaties expert committee, Germany, a key

member of the EU, had produced and supplied nearly 50% of the world's consumption of
endosulfan between 1955 and 2006.

"The production of endosulfan stopped in the EU in 2006, and immediately in 2007 EU started
lobbying for a ban. So if endosulfan was dangerous, why did the EU use it for over 50 years?
India has started using it only in the 1980s."

Statistics show that despite having only 8% of the world's agricultural area, EU is the world's
largest producer, user and exporter of pesticides.

In 2007, the global crop pesticides market was $33.19 billion, of which EU alone accounted for
$10.42 billion, while India was $1 billion, according to data by agrochemical industry
consultant Phillips McDougall.

"Despite having 10% of the world's agricultural area, India consumes a fraction of pesticides
and the major chunk is by EU, which wants to maintain its leadership and eliminate
competition from low priced products," says Ganesan.

An observer, who attends the Stockholm Convention, says scientific data submitted by
develping countries and objections raised by India remain on paper.

"Data from India receive step-motherly treatment. All proposals made so far at the
Convention, barring one, have originated from the EU."

According to the submission made by India at the Stockholm Convention in 2009 (a copy of
which is with this newspaper), India has said that the decision taken on the European
Commission's proposal regarding endosulfan suffers from a series of procedural, technical,
legal and ethical improprieties.

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 Marketing Mix of pesticides

Product(Acceptability) - quality and performance of product

Price(Affordability) - Price is really determined by what farmers perceive as the value

of pesticide of a particular type. It is important to understand how farmers value
product as well as how much they are prepared to pay in relation to the benefit they
expect to earn

Place(Availability) - transporting and then making them available to the farmer

Promotion(Awareness) - successful promotion increases sales so that costs are spread

over a larger output

Safety aspects: Human & Environmental

Indiscriminate and injudicious use of chemical pesticides in agriculture has resulted in

several associated adverse effects such as environmental pollution, ecological imbalances,
pesticide residues in food, fruit, vegetables, fodder, soil and water, pest resurgence, human
and animal health hazards, destruction of bio-control agents, development of resistance
in pests etc. Unintended exposure to pesticides can occur during their manufacturing,
formulation and application or from environmental residues resulting from applications.

United Nations Environment Protection reported that nine of the twelve unwanted
persistent organic pollutants (POP’s) are pesticides in agriculture crops and for public
health vector control programme. In order to sell the pesticides responsibly the pesticide
companies have to ensure that they are used as safely as possible. Some of the steps that
can be taken for making a judicious use of pesticides are:

a) Making sure the safety gears are available to the farmers and they are suitable for
the tropical climate.
b) Following the instructions on the pesticide package to ensure the maximum
efficacy with the minimum use possible.
c) Not using the pesticides that have been banned in the
country
d) Carefully disposing the pesticides wastes
e) Making sure the pesticides do not harm a non-target plant or
animal
f) Licensed aircraft pesticide spraying on an area
g) Spraying should be done in the wind direction

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 In order to ensure that the pesticides are used safely both for the human population and
the environment, the Indian government have put in place some regulations.
The major regulations are the Central Insecticides Act 1968, Prevention of Food
Adulteration Act 1954 and the Pesticide Management Bill 2008.

The Central Insecticides Act 1968(Act 46 of 1968, as amended by Acts 46 of 1972, 24 0f

1977 and 23 of 2000), this Act was made to regulate the import, manufacture, storage,
transport, distribution and use of pesticides with a view to prevent risk to human beings,
animals and the environment. Through this act, a Central Insecticides Board has been set
up to advice the state and central governments on technical matters and for
including insecticides into the Schedule of the Act.

Prevention of Food Adulteration Act, 1954 governs the production and use of insecticides
in India. This Act and its Rules lay down standards for different food articles as well as
provisions for their storage, distribution and sales. The Maximum Residual Limits (MRLs)
for different pesticides are regulated through this PFA Act.MRL is the maximum
concentration for a possible residue on crop or food commodity resulting from the use
of pesticides and is expressed in mg/kg of the commodity. The status of the
pesticides registered in India is as follows:

a) Number of pesticides registered in 181

India
b) Pesticides for which MRLs have 71
been fixed under PFA act, 1954
c) Pesticides for which MRLs yet to be 32
fixed
d) Pesticides for which registration 24
data has been submitted but MRLs
not fixed
e) Pesticides for which no data is 8
available

For certain banned pesticides - Still no data is

available

Integrated Pest Management

India has marched ahead to a comfortable position in terms of food security, however, the
increasing population continues to stress us to do a lot more and prop up the agricultural
production for meeting the ever increasing demands while keeping environment clean
and healthy. In spite of dramatic advances in pest control technologies, largely based on
chemical pesticides over the last half century, pests have become increasingly serious
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constraints in agricultural production. Simultaneously, the problems of pest resistance and
resurgence and minor pests becoming major ones are increasing.

The only amicable solution before the plant protection community is Integrated Pest
Management (IPM). IPM is a systems approach involving the use of cultural practices,
crop husbandry, resistant varieties, and biological and chemical control strategies.

IPM is a broad ecological pest control approach aiming at best mix of all
known pest control measures to keep the pest population below economic threshold level
(ETL). It is an economically justified and sustainable system of crop protection that leads to
maximum productivity with the least possible adverse impact on the total environment. In
crop production technology IPM is a schedule of practices which starts from fiel selection
till harvest of a crop. The major components in this approach are cultural, mechanical,
biological and chemical methods of insect pests, diseases, weeds and rodent control in a
compatible manner. IPM is more complex and too knowledge intensive for the farmers
than the routine chemical sprays followed by them, often available on credit basis. IPM
was promoted as an alternative pest control strategy in India as early as in 1960's but
there were few IPM technologies available to be transferred to farmers. Now the
situation has improved considerably, as the farmers are growing increasingly
responsive to scientific experts advocating the need of IPM.
Biopesticides and GM Seeds
With the advent of the Integrated Pest Management (IPM) technique, the use of bio
pesticides and Genetically Modified (GM) seeds has increased. Globally, GM seeds are
used mainly for commercial crops like cotton, maize, soybean and canola. In India, Bt
cotton is widely used and the acreage stood at 6.20 mn ha for 2007, a growth of 63% over
the previous year. Use of GM seeds may diminish the use of insecticides but the use of
herbicides may improve.
The Registered Bio pesticides India are:-
Category Biopesticide
Antagonistic fungi & Trichoderma spp.
bacteria Pseudomonas spp.,Gliocladium spp.
Baculovirus Nuclear Polyhedrosis Virus (NPV)
Bacteria Bacillus thuringiensis (Bt)
Plant origin/Botanical Azaderechtin (Neem based product)
pesticides Cymbopogan spp.
Pyrethrum sp.
Entomogenous fungi Beauveria bussiana
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 Govt. Laws and impacts of WTO
1) Improving the quality of pesticides available to Indian farmers and introduce new, safe and
efficacious pesticides.
2) More effective regulation of import, manufacture, export, sale, transport, distribution
and use of pesticides, to prevent risk to human beings, animals or environment.
3) Detailed categorization of offences and punishments for greater deterrence to
violators.
4) De-licensing of retail sale of household insecticides.
5) Timely disposal of time-barred pesticides in an environmentally safe manner.
6) The Bill prohibits the manufacture, import and export of misbranded, spurious or sub-
standard pesticides and any pesticide that contravenes the law. It lists a number of penalties
for offences such as use of pesticide in contravention of the law and sale of misbranded or
sub-standard pesticide.
7) A pesticide cannot be sold, stocked or used if it is not registered

Impacts of WTO
1. Access to foreign market
2. Increased exports
3. Research collaborations with established Foreign players

WTO rules undermine national policy-making to reduce pesticide use

The most direct impact of the WTO trade regime on pesticide use is that its various
agreements provide avenues by which national, state and local environmental and public
health policies can be challenged by member nations. In some cases this means that such
protective policies may be overturned; in other cases, it means that protective policies may
simply never be enacted for fear of challenge . one basis on which environmental and social
protections can be challenged is that WTO rules restrict policies based on how products are
produced. These rules make it extremely difficult to create WTO-legal policies that favor
products produced in a way that is conducive to environmental, worker, consumer or human
rights protections.(3) For example, WTO rules generally prohibit: policies that favor
importation of agricultural products produced without use of certain chemicals; eco-labeling
and other Right-to-Know policies(4); and principle-based government purchasing. Policies that
make such distinctions face the prospect of challenge by member nations representing
companies who seek market access without restrictions on, or identification of, how they
produce their products.

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Another ground for challenge is that WTO rules require environmental policy to be the "least
trade-restrictive" policy option. In other words, policies intended to protect the environment
must demonstrate that there are no alternatives that are more favorable to unrestricted
trade.(5) While in principle a policy could be deemed least trade-restrictive, all challenged
policies are subject to the interpretations of WTO dispute panels. To date, these panels have
never ruled an environmental measure to be the least trade-restrictive policy option.(6) The
agreement requiring least trade-restriction also opens national law-making to formal input by
opposing WTO member nations.(7) It thus involves significant administrative costs to nations
pursuing protective legislation and raises important issues of national sovereignty.

Challenge to a protective policy is also possible because WTO rules set weak international
safety and environmental standards. WTO agreements require nations to base their standards
on existing international standards and meet onerous justifications if it exceeds them.(8) In
other words, the idea is not to bring member nations into compliance with safety standards,
but rather to open nations to challenge if they surpass them. Moreover, because international
agreement on standards is difficult to achieve, such standards tend toward a lowest common-
denominator effect, or "downward harmonization."

The WTO empowers the Codex Alimentarius, a food industry-dominated body, to set food
safety standards. Codex has a decidedly non-precautionary approach to regulation, in which
practices and chemicals are effectively presumed safe until proven otherwise. Scientists from
the U.S. Environmental Working Group found that of 3,285 pesticide/crop combinations for
which Codex has standards, 1,539 are illegal in the United States.(9) For example, Codex allows
residues of DDT on grain, meat and dairy.(10) Codex compliance issues have stalled the
implementation of the U.S. Environmental Protection Agency (EPA) ban on the probable
carcinogenic fungicide folpet(11) and have led to the amendment of federal food-safety
regulatory acts.(12) The EPA has also delayed action on another probable carcinogenic
pesticide, procymidone, residues of which were found in wine imported from Europe.(13)

In addition to these avenues of challenge, it's worth noting that WTO agreements limit
governments' ability to regulate foreign investment.(14) For example, conditioning investment
in ways that are favorable to environmental, labor, cultural and other policy goals is now more
difficult. Moreover, expansion of these provisions is on the horizon. Of particular concern are
efforts to bring to the WTO investor rights that are similar to those extended by the North
American Free Trade Agreement (NAFTA). This raises the prospect of granting companies the
right to sue governments over policy that impacts their profitability. For example, under
NAFTA, the Canadian corporation Methanex is essentially suing the U.S. for economic losses
associated with a California ban on the toxic gasoline additive MTBE.(15) It is not hard to
imagine the extraordinary impact on pesticide policy if nations worldwide are prohibited from
establishing the conditions of foreign investment and NAFTA-style investor rights are extended
globally.

WTO rules undermine international agreements that reduce pesticide use

A less direct but potentially far-reaching impact of the WTO on pesticide use has to do with
multilateral (i.e., many-nation) environmental agreements (MEAs). MEAs often contain
provisions that arguably contradict WTO rules. Which are supreme? What happens, for

22
example, if there is a WTO challenge of a nation's compliance with the Montreal Protocol on
Substances that Deplete the Ozone Layer, which phases out use of the extremely hazardous
pesticide methyl bromide? Unfortunately, unlike WTO agreements, MEAs are essentially
voluntary, with few or no enforcement provisions. This suggests, in effect, that they take a
back seat to WTO dictates, even if they contain explicit supremacy language. Furthermore, this
potential conflict of jurisdiction has caused some parties to demand language asserting the
supremacy of WTO rules. For example, negotiations are underway to create an international
treaty to phase out the use of 12 persistent organic pollutants (POPs), perhaps the world's
most toxic substances, nine of which are pesticides (see News Note: POPs Negotiations Slow in
Bonn). Some parties are demanding a clause asserting the supremacy of obligations under
international agreements such as the WTO.(16)

WTO rules foster an industrial agricultural model that is at the heart of pesticide use

Another important WTO impact on pesticide use is its fostering of the industrial agricultural
system, a system resulting in the sale of more than US$30 billion of pesticides a year.(17)

Industrial agriculture depends fundamentally on chemical pesticides. Industrial farming tends

toward large-scale, capital-intensive farms specializing in single crops. Such monocultures,
with no or minimal crop rotations, preclude beneficial crop interactions, lead to the loss of soil
organisms and beneficial insects, and disrupt other complimentary relationships on the farm,
such as the production of manure by livestock. These factors create crop vulnerability to
insects, weeds and disease and thus require high levels of pesticide use. Worse, such pesticide
use causes accelerated development of pest resistance, necessitating use of more or stronger
pesticides.(18)

The industrial agricultural system also leaves farmers few alternatives to such pesticide-
intensive farming. Concentration in the food industry leaves growers with distorted markets
for their products and generally results in low prices. Concentration in the agricultural inputs
industry exposes growers to high priced input costs. This low-prices, high-costs squeeze
pressures farmers to get bigger and to adopt whatever techniques and tools that promise to
raise yields. The inputs industry, of course, offers and promotes those inputs that best serve
their profitability. This locks growers into the modern, pesticide-intensive model.(19)

Unfortunately, WTO agreements promote industrial agriculture globally, in several ways. First,
measures that eliminate trade restrictions in agriculture are devastating to small-scale
producers -- those potentially with the least pesticide dependence. WTO agreements that
reduce or eliminate tariffs, import controls, price supports and family farm support programs
result in opening markets to cheap exports with which small farmers cannot compete.(20) In
other words, liberalizing trade intensifies the price squeeze by making farmers face global
prices, but local costs. At the same time, trade rules do not prevent subsidies of exports and
foreign investment, practices which greatly foster larger-scale, highly pesticide-dependent
agriculture.(21) More than ever, small and family farmers must "get big or get out."

The WTO also furthers industrial agriculture by requiring that all member nations essentially
adopt a U.S.-style system of copyrights, trademarks, and patents - including patents on certain
forms of life.(22) Such a global system of intellectual property rights increases big agribusiness'

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ability to control the range and prices of agricultural inputs and technologies. These new
intellectual property rights may have previously inconceivable impacts on pesticide use. For
example, the patenting of products based on traditional natural pesticides, such as those
based on the neem tree,(23) raises the specter of commercial barriers to adoption of
sustainable pest-management products.

Oppournities in the Indian market

India has raised the level of its export competency with a consistent quality and supply
record and possession of a vast unexplored market. Chemicals manufacturers have
targeted product awareness campaigns at Indian farmers, as the country’s affordability
has increased with the cultivation of high- value crops. The per capita consumption of
pesticides in India is still very low compared to the developed countries and
manufacturers need a smart get to market strategy to achieve better reach and
acceptance of products. The demand will also be driven by the rising food grain demand
and increasing awareness about pesticide usage among the farmer community.

Such favorable market factors have sustained and even consistently increased the
profitability of manufacturers despite the rising prices of raw materials. The herbicides and
the fungicides segments are growing much faster than the insecticides segment, which has
slowed down considerably because of the introduction of new plant varieties with lower
pest infestations. Synthetic chemicals will continue to rule the roost in the chemical
pesticide market, since the development of eco-friendly pesticides and new approaches
such as organic farming and integrated pest management (IPM) will take more than a
decade to gain a foothold in the chemical pesticide market. The Indian market appears
lucrative for all types of manufacturers.

To maintain their market share, chemicals manufacturers have to align their

products with the agriculture cycle and provide holistic solutions with innovative
products. Process improvisation is expected to improve profit margins and help the
company gain a greater influence on the export market. The future of the industry lies with
companies that can provide solutions for the entire gamut of the food supply chain
management by integrating crop production with protection. Understanding the end-user
needs and working more strongly on the backward as well as vertical integration is the need
of the hour. Controlling major inputs, setting up efficient distribution services, and
adopting international practices relating to crop management will enable Indian companies
to carve a niche for themselves.

The market shares are almost equally divided between both multinationals and Indian
companies. While the multinationals benefit from their improvised products, the Indian
companies leverage their strong distribution set up. Indian companies still trail their foreign
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counterparts in R&D because of the level of investments required and the demanding
regulatory framework. In this scenario, the rapid rates of mergers and acquisitions are
likely to persist for a few more years. However, post 2014, it will become crucial for Indian
companies to shed their generic manufacturer image and venture into new molecular
discovery as well as optimize the registration procedures. The recent monsoons may affect
the income of the industry. According to an article in Business Standard, August 07, 2009, the
Pest industry may take a 15% hit if the monsoon fails to revive, but the monsoons have
always been a challenge for the Indian pesticide industry so this industry is here to stay in
the business of crop protection .

References
• Agriculture today 2009
• MANAGE Report
• www.businessstandard.com
• www.cime.com
• www.croplifeindia.com
• www.indiastat.com
• www.businessline.com
• www.etcgroup.com

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