A

Report on

Seed Industry

Institute of Agri Business ManagementRajasthan Agricultural University

Bikaner, Rajasthan

Submitted to - Submitted By-Dr.(Mrs.) Madhu Sharma Harshit Chittora Associate Professor MBA (AB) 1st year

Contents –

1. Introduction

2. Historical perspective

3. Structure of Seed Industry

I. Major global players (2004-05)

II. World's Top 10 Seed Companies – 2006

III. Key Indian Seed players

IV. Major Player in Vegetable Seed

4. Seed Industry in India: Poised for a leap

5. Seed supply chain

I. Demand & Supply of Seed in India

II. Employment generation

III. Seed Replacement Rate

6. Seed Policies and Regulation

7. Context for Research

8. Seed Pricing

9. Seed Industry and GATT/WTO/TRIPS

10. Market Structure and Regulation

11. Relevance and need for biotechnology

12. Need for transgenics

13. Conclusion

2

Introduction

SEED is the most important input component for productive agriculture. In the

significant advances that India made in agriculture in the last four decades, the role of

the seed sector has been substantial. The expansion of seed industry has occurred in

parallel with growth in agricultural productivity. Given the fact that sustained growth

to cope with increasing demand would depend more and more on the pace of

development and adoption of innovative technologies, the seed would continue to be a

vital component for decades to come. The organized seed industry of the country is

just forty years old. Yet, its growth has been phenomenal. India is one of the few

countries where the seed sector is already reasonably advanced. The private seed

industry is no more confined to just production and marketing of seed. It has as well

acquired technological strength to cater to the varietal needs of tomorrow. The Indian

seed industry is currently valued around Rs 2500 crores ($ 500 million) and is

proposed2 to be around 3750 crores ($ 750 million) by 2002. There are about 150

organized seed companies in India today. Several companies have Government of

=India (DSIR) recognized research and development departments and have produced

and released a large number of varieties and hybrids in several crops. The contribution

of private research in terms of value is steadily increasing. The share of research

hybrids in total turnover of crops like pearl millet, sorghum-sudan grass, sunflower,

maize, sorghum and cotton was about 70% in 1997–98 compared to 46% in 1990–91.

Private R&D’s real investment in research has quadrupled between 1986 and 1998.

Subsidiaries and joint ventures with multinational companies

account for 30% of all private seed industry research3. A study made over nine private

seed companies indicates that the amount spent on R&D ranged from 0.78% (0.49

crores) to 15.08% (22.62 crores) (Companies Annual Reports 1998–99). Some of the

companies initiated the work on development of transgenic crops. In March 2002 the

first transgenic hybrid cotton seed was allowed for commercial cultivation in the

farmer’s field. This article provides a historical perspective to the development of

seed industry in India, its current statusand future. Besides, some suggestions are also

provided for improvement and modification in the regulatory procedures, particularly

in case of transgenic crops.

3

Historical perspective

The National Seed Corporation was established in 1963. The Government of India

enacted the Seeds Act in 1966 to regulate the growing seed industry4. The sixties

were the most eventful times for Indian agriculture, not only because of introduction

of high-yielding cereals, particularly wheat and rice but also for many other positive

developments related to seed such as, constitution of Seed Review Team, enactment

of Seeds Act, 1966 and formation of National Commission on Agriculture. This was

the period, during which the private sector significantly stepped into the seed

business. The Seeds Act stipulated that seeds should conform to a minimum stipulated

level of physical and genetic purity and assured percentage germination either by

compulsory labelling or voluntary certification. Further, the Act provided a system for

seed quality control through independent State Seed Certification Agencies which

were placed under the control of state departments of agriculture. The eighties

witnessed two more important policy developments for the seed industry, viz.

granting of permission to MRTP/FERA companies for investment in the seed sector in

1987 and the introduction of ‘New Policy’ on seed development in 1988 (ref. 5). The

1991 Industrial Policy made a radical departure from the earlier policy on foreign

investment. Under this policy seed production was identified as a ‘high priority

industry’. The New Policy on Seed Development greatly liberalized import of

vegetable and flower seeds in general and seeds of other commodities in a restricted

manner and also encouraged multinational seed companies to enter the seed business.

More than 24 companies initiated research and development activities and have made

substantial commitments for investment on research and development in response to

this policy initiative. The investments are expected to increase with increasing

volumes of seeds of proprietary hybrids and preparedness of farmers to pay higher

price for quality seed. A draft Seeds Act 2001 is being finalized on the basis of the

recommendations of Seed Policy Review Group. It would replace the existing Seeds

Act of 1966 and Seed (Control) Order of 1983. The proposed legislation features

establishment of National Seeds Board (NSB) and compulsory registration of any

seed with the board before sowing or planting could be done for commercial

purposes.

4

Structure of Seed Industry

The most important characteristic, if it can be called that, of the seed industry is its

heterogeneity in many dimensions. The product segments correspond to all the major

field crops and vegetables. With respect to product type, a major distinction is

between hybrids and open-pollinated varieties. Seeds of varieties can be reproduced

for many generations with little deterioration in quality. As a result, beyond the initial

purchase, farmers can multiply their own seed. This is not a viable strategy with

hybrids because they suffer noticeable declines in yields in subsequent generations.

As a result, hybrid seed tend to be repeatedly purchased. The major cereals of rice and

wheat are principally open-pollinated varieties.5 Hybrids dominate in coarse cereals

consisting of sorghum, pearl millet and maize. Hybrids are also important in cotton

and oilseeds.

In terms of organization, the seed industry consists of a large public sector and a

growing private sector. The public sector consists of the National Seed Corporation,

the State Farm Corporation of India and 13 State Seed Corporations. These

corporations multiply and market varieties bred by the public sector institutions, i.e.,

the research institutes financed by the Indian Council for Agricultural Research

(ICAR) and the State Agricultural Universities.

There are no firm estimates of the number of private seed firms. Estimates vary from

200 to 500. Private seed firms are heterogeneous with respect to size, research

capacity and product segments. Plant breeding research is found in the larger firms.

Unlike the public sector, where research is separate from seed production and

marketing, these functions are integrated in the private firms. The other striking

difference is in product types. The private sector focuses largely on hybrid seed. It is

therefore unimportant in the product segments of wheat and rice except as a seller of

public varieties and hybrids.6 On the other hand, the private sector is a major player in

the hybrid seed markets of vegetables, sorghum, oilseeds (e.g., sunflower), maize,

cotton and pearl millet. In terms of ownership, private firms are closely held and not

listed in the stock exchanges although some of the large firms have sold equity to

foreign seed companies. Foreign firms maintain a presence through equity stakes in

Indian firms, technical alliances or through wholly owned subsidiaries.

Seed firms, whether in the private or public sector, outsource the production of seeds

to contract growers. These growers are supplied with the foundation seed that is used

5

to produce commercial seed. The seed industry is one of the earliest examples of

contract farming in India.

For the cereal crops of rice and wheat, the principal source of seeds is not the seed

industry whether private or public but the farmers themselves. Seed saved from the

preceding crop supplies nearly 90% of requirements in these crops.7 In some cases, a

large farmer or groups of farmers specialize in growing seeds and supply to

neighbouring areas. In the case of sorghum, maize and sunflower, the proportions of

seed supplied by the commercial seed industry ranges between 25% and 43% (see the

estimates of Chopra and Thimmaiah quoted in Shiva and Crompton, 1998).

The value of the seed market is estimated to be close to $ 1 billion

(www.worldseed2003.com/invitation.htm). The seed industry was probably half this

size in the early part of the 1990s (Shiva and Crompton, 1998). It has therefore grown

rapidly in the last decade. Estimates of the share of the private sector range from 60%

to 70% (Shiva and Crompton, 1998). Because the private sector sells high value

hybrids, their share in value is greater than their share in volumes.

Major global players (2004-05)

6

The World's Top 10 Seed Companies - 2006

Based on 2006 Seed Revenues

Company2006 seed salesUS $ millions

1. Monsanto (US) $4,0282. Dupont (US) $2,7813. Syngenta (Switzerland) $1,7434. Groupe Limagrain (France) $1,0355. Land O' Lakes (US) $7566. KWS AG (Germany) $6157. Bayer Crop Science (Germany) $4308. Delta & Pine Land (US) (acquisition by Monsanto pending) $4189. Sakata (Japan) $40110. DLF-Trifolium (Denmark) $352

Source: ETC Group

Based on 2006 revenues, the top 10 seed corporations account for 55% of the

commercial seed market worldwide.

Key Indian Seed players

7

Major Player in Vegetable Seed

Concentration Trend Continues: According to estimates provided by industry

analysts, Context Network, the value of the overall commercial seed market was

$22,900 million in 2006 (includes seeds purchased from public breeding programs).1

By contrast, just two years ago, ETC Group reported that the top 10 accounted for

49% of the worldwide market. In 1996 - one decade ago - the top 10 seed companies

accounted for 37% of the worldwide market - and Monsanto did not even appear on

the list.

The market share of the top 10 seed companies is even greater when looking at the

proprietary (patented?) seed market. According to Context Network, the global

proprietary seed market was worth $19,600 million in 2006.

• In 2006, the top 10 companies account for $12,559 million - or 64% of the

total proprietary seed market.

• Monsanto - the world's largest seed company - accounts for more than one-

fifth of the global proprietary seed market.

8

Percentage

16%

11%

7%

7%7%7%5%4%

36%

Indo American

Mahyco

Namdhari

Novartis

Century

Pahuja

Sungrow

Nath

Others

• The top 3 companies - Monsanto, Dupont and Syngenta - account for $8,552

million - or 44% of the total proprietary seed market.

• The top 4 companies account for $9,587 million - or almost half (49%) - of the

total proprietary seed market.

Seed Industry in India: Poised for a leap

Seeds form the fundamental and crucial input for sustained growth in farm

production, often stimulating the use of new methods, machinery and yield-enhancing

agro-inputs. The role of the seed sector is not only to ensure adequacy in seed quality

but also to ensure varietal diversity. Today, the Indian seed programme boasts one of

the biggest seed markets in the world, with annual sales at around US $920 million.

Of this, domestic off take accounts for US $900 million and sales in the global market

account for the remaining US $20 million.

The New Policy on Seed Development (NPSD), established in 1988 with the

objective of augmenting productivity and output quality, stimulated major growth in

the industry as it attracted a lot of investment in seed business from major domestic

seed companies. Given the growth of the seed sector in recent years, India has the

potential to become the foremost player in the seed export business in the developing

world with prospective markets in Asia, Africa and South America.

Public Sector: Like many agriculturally developed Asian nations, India has sizeable

public and private sector seed businesses. Giant public sector players include the

National Seeds Corporation (NSC), the State Farms Corporation of India (SFCI) and

the thirteen State Seed Corporations (SSCs). NSC was the first public sector

organization, established in 1963, and remained virtually the only agency for seed

production for around 13 years. Its role extended to several developmental

programmes including training, quality control and extension activities in seeds. This

was followed by the setting up of the SSCs under two consecutive plan periods,

supported by the World Bank, and these largely adopted the role of the NSC in the

Indian States. These corporations engage principally in production and marketing of

seeds of high yielding and hybrid varieties developed by the public sector.

Private Sector: Although private seed companies such as Poacha and Sutton have

been established since the pre-independence era, accelerated growth of the private

sector began only after the introduction of the new seed policy in 1988 which ushered

in a liberal business climate. Currently there are over 200 private seed companies,

9

together with a few multinational companies, and these tend to focus on low volume,

high value crops with the principal effort being placed on creating hybrids for

oilseeds, maize, cotton and vegetable crops.

The private sector accounts for 70% of the market in terms of market turnover

whereas the public sector has the greater share in terms of volume sales.

Global Initiatives: India today has a critical mass and level of growth that it could

use not only to cater to the growing domestic requirement but also to make a

concerted effort for global trade under provisions of GATT and WTO. Furthermore,

India is endowed with second largest area of farmland, and the largest area of irrigated

land, in the world and, with its huge germplasm diversity, its seed industry is well

placed to serve both domestic and international markets.

10

Public v/s Private ownership

41%

33%

13%

13%

public sector

large medium

small medium

unorganized

Seed supply chain

Demand & Supply of Seed in India

Meet only 12% of the total seed used for sowing each year.

Large area is sown with the farmers' save seed.

SRR (Seed Replacement Rate) is very low.

Certified production was 0.298 LT in 1981-82 and in 2002-03, it was 9.3 lakh

quintal

There is almost a plateau in seed production and distribution in India and they

grew with insignificant growth rate of less than 1% per annum during nineties.

India is Ist in the world to develop hybrids in many crops but area coverage

under hybrids is low due to seed supply deficit e.g. cotton (3.45%), maize

(7.90%), sunflower (8.54%), sorghum (17.81%), pearlmillet (26.79%).

Govt. of India

SSC, NSC, SFCISAI, etc.

ICAR

ICAR Inst.SAU, etc

Agencies

Agencies

Distributor

Foundation seed toCertified seed

Certified seedProduction

Certified seed

Distribution

Foundation seed

Production

Lifting

Allocation forProduction

Allotment of Breeder seed

Allotment for Production Production of

Breeder Seed

Production of Breeder Seed

Indent of Breeder seed

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Share of hybrids in total seed produced in the country is not encouraging e.g.

cotton (23%), maize (59.6%), sorghum (77.6%), castor (75%), pearlmillet

(60.6%) and sunflower (29.6%).

Employment generation

CROP

(hybrid)

Hybrid seed production

(Tons)

Area

(Acres)

Man days

(days/acre)

Crop Duration

(Days)

%

Contrib-ution

Cotton 6000 20000 1200 200 82.56

Maize 65000 36000 40 110 4.95

Millet 18000 35000 40 110 4.82

Sunflower 6000 13933 60 110 2.72

Sorghum 18000 20,000 40 110 2.75

Paddy 4000 8000 80 135 2.20

Seed Replacement Rate

Crops Seed Replacement Rate

Wheat : 13%

Paddy : 19.16%

Maize : 24.41%

Jowar : 26.71%

Bajra : 51.02%

Gram : 7.09%

Urd : 20.48%

Moong : 19.48%

Arhar : 13.60%

Groundnut : 5.5%

Rapeseed and mustard: 66.96%

12

Soybean : 5.58%

Sunflower : 19.61%

Cotton : 37.25%

Jute : 68.49%

13

Presently Indian seed industry is governed by the following Acts:

- Seed Act 1966

- Seed Rules 1968

- Seed Control Order 1983

- Essential Commodities Act 1955

- Package Commodities order 1975

- Standrads of Weights and Measures Act 1976

- Consumer Protection Act 1986

- Export Regulations and Quarantine

- Plants, Fruits and Seeds (Regulation of import into India) Order 1989

- Urban Land Ceiling Act 1976

- State Acts of land acquisition/land use

- State Acts for the control/movement of crops and seeds

Seed Policies and Regulation

The government regulates the seed industry and the seed trade in various respects.

The Seed Act of 1966, the Seeds Control Order of 1983, and the Seeds Policy of 1988

are the major components of policy specific to the industry. The seed industry has also

been subject to policies relating to industrial licensing and direct foreign investment

that are applicable to all industry. There have been two recent developments. In

September 2001, the Plant Variety Protection and Farmer’s Rights Act came into

being. In June 2002, the government announced a new seeds policy that significantly

alters the framework of regulation. The Seed Act of 1966 and the Seeds Control Order

of 1983 provide statutory backing to the system of variety release, seed certification

and seed testing. Varieties are released after evaluation at multi-location trials for a

minimum of three years. Varieties approved are “notified” which is a prerequisite for

certification. While all public sector varieties go through this process, it is not

mandatory for private varieties.

14

Certification is a process that certifies that seed is of a specified variety and is of

acceptable genetic purity. Usually, seeds are also tested for physical characteristics

such as germination capacity, analytical purity and pathogen levels. Certification

requires that that the certifying agency has access to the parent lines of the variety. In

India, while all public sector varieties are certified, the process is voluntary for private

varieties. Often private seed firms do not submit their varieties for certification either

because they do not wish to go through the time consuming process of notification or

because they have their own quality control processes. However, uncertified seeds are

required to be truthfully labeled listing quality attributes on the label.

The seed control order brings seeds within the scope of the Essential Commodities

Act that regulates the marketing of essential items. All seed sales outlets have to be

licensed and must observe certain marketing practices such as public display of stocks

and prices.

Major changes in this system of regulation are proposed in the National Seeds Policy

of 2002. Variety registration (i.e., notification) will now be mandatory for all varieties,

new and extant. The evaluation will be done over three seasons of field trials.

However, certification will continue to be voluntary. The emphasis on registration in

the new seeds policy ties in with the demands of the Plant Variety Protection and

Farmer’s Rights Act passed in 2001. This Act provides for plant breeder’s rights,

which requires extant and new plant varieties to be registered on the basis of

characteristics relating to novelty, distinctiveness, uniformity and stability.

Besides regulating quality, the government has also controlled imports and exports of

seed. The Seed Policy of 1988 allowed limited imports of commercial seed. Curbs

were removed from imports of seeds of vegetables, flowers and ornamental plants.

Seeds of coarse cereals, pulses and oilseeds could be imported for upto two years

provided this finally led to technology transfer in the form of parental lines/breeder

seed. The new policy of 2002 allows imports and exports of seeds of all crops.

However, all imported seed is also required to go through the process of registration.

Prior to 1991, the seed industry was also subject to the policies on industrial licensing

and foreign direct investment that applied generally. The seed sector was reserved for

the small-scale sector and the entry of foreign firms was tightly regulated. These

controls have fallen by the wayside as a consequence of the economy wide reforms of

1991.

15

While the system of mandatory registration will irk private seed firms because of its

time consuming process as well as the requirement to trust the registry with their

proprietary breeding material, the overall emphasis of the new seed policy seems

more favourable to the private sector than in the past. The goal seems to be to

facilitate private enterprise rather than to control it.

Corporate Profile and Objectives

NSC was established to organise the development of a sound seed industry in India

and a first step towards that direction, to function as a foundation seed production,

stocking and supply organisation.

The main objectives set before it, inter alia, were :

(i)To carry on in India the production, processing, drying, storing, distribution

and transportation of agricultural seeds.

(ii)

To enter into agreement with individuals, co-operative socieities, corporation

and government agencies in the growing processing, storing, distribution,

transporting and selling of agricultural seeds.

(iii)

To undertake by inspection and any other means, seed quality control

measures in all facets of seed business carried on behalf of or in co-operation

with the Corporation.

(iv)To store and stock pile reserve supply of any seed needed for improvement of

agriculture in India.

Objectives of National Seeds Corporation

1. Monitoring availability of breeder, foundation & certified seeds of all Indian

varieties and ensuring timely availability there of.

2. Setting up adequate processing facility to ensure timely processing of seeds.

3. Setting up conditioned as well as proper storing facilities to ensure proper

storing of raw & processed seeds as well as reserve stock.

4. Undertaking field inspections, periodical quality control checks as well as

continuous testing of seeds to ensure quality of seeds.

5. Developing seed dealers network with emphasis on co-operatives as far as

possible to distribute seeds through out the country.

6. Making available seeds to deficit states in time and in sufficient quantities.

16

7. Imparting training to personnel engaged in various activities of seed industry.

NSC seeds for Farmers Prosperity

1. Produced under suitable agro-climatic conditions in selected seed production

areas.

2. Quality control at all stages of production under the care of experts.

3. Treatment with appropriate chemicals assuring protection in storage and

during emergency in the field.

4. Healthy & vigorous seeds for high germination and field standards.

5. Scientific processing ensures removal of weed seeds, other crop seeds under

sized, non-viable seeds and inert matter.

6. NSC seeds are suitable for sowing under varying climatic conditions.

7. Sold in handy sealed packets or bags with tags containing all relevant

information.

8. NSC seeds are available from thousands of retail outlets at short bullock cart

distance.

Context for Research

In the past, the public sector was the principal vehicle for the development and

diffusion of new seeds. Indeed, the seed industry in India had its beginnings in the

early 1960s with the establishment of the public sector National Seeds Corporation.

The NSC provided foundation seed, training and technical assistance to state

governments and private companies. This was followed in 1969 by the Terai Seed

Development Corporation that became the model for state seed corporations

established in the 1970s and 1980s. The primary purpose of these and related public

sector organizations (such as the state seed certification agencies) were to produce,

certify and distribute high quality seeds that were the product of public research. But

they also stimulated private sector activity in direct (through distribution of

foundation seed) and indirect ways (through the creation of expertise in seed

technology, processing and distribution) (Candler, 1995). As the import of commercial

seeds was prohibited and since foreign direct investment was not permitted, private

sector activity depended on home grown firms. Consequently, it grew in incremental

steps focusing first on vegetables and later moving on to sorghum and pearl millet.

17

The obstacles to private industry were not just their lack of capabilities whether in

research or access to capital and technology. There was also lack of confidence, on the

part of the government, about leaving these activities to the forces of market.

Probably, the most important of all is the fact that with certain kinds of varietal

development, the innovator cannot appropriate a significant enough share of the gains

leaving little incentives for private effort. This is certainly true for seeds of open-

pollinated varieties (which includes rice and wheat) that can be reproduced by farmers

for their own use or sale to other farmers. On the other hand, this scenario is ideal for

public intervention. Not only does public plant breeding fill this gap, the ease of

reproduction aids rapid diffusion and adoption. As a result, even in cross-pollinated

crops, public sector research emphasized variety development rather than hybrids.

Although hybrids, wherever technologically feasible, offer a route for private sector

development, they were not always regarded with much promise in the initial years. It

was thought that the technology does not offer much to small farmers as hybrid seed

would be high priced and would have to be repeatedly purchased. As a result,

government policy focused principally on public sector seed provision and neglected

private industry.

In recent years, however, the private seed industry has grown to be a sizeable

presence in many crops. In the last decade, regulatory reforms have eased the

restrictions on the entry of large and foreign owned private firms into this industry. It

is also expected that the strengthening of intellectual property rights and the new

technologies of genetic selection offered by biotechnology would make this sector

even more attractive for private investment. These developments have affected the

structure of the seed industry worldwide. In the United States, private spending for

food and agricultural research tripled in real terms between 1960 and 1982. As a

result, the private sector invests considerably more in food and agricultural R&D than

the government. Furthermore, private research has expanded its range of activities.

While earlier most private research in the U.S. was for farm machinery, new food

products and processing methods, the private sector has since developed research

capabilities in plant breeding that was once a traditional area of public sector research

(Fuglie et.al, 1996).

In India too, private sector spending on seed R&D is rapidly growing. According to

one estimate, R&D effort (measured by rupee investments, technical personnel, size

of experiment stations) in the private sector tripled within a short span of about 8

18

years from 1988 to 1996. This period was associated with changes in government

policy towards the seed industry as well as the industry wide economic reforms. The

same study concludes that about 50% of the observed increase in R&D was

attributable to the liberalization in government policies that allowed entry into the

seed industry by large domestic firms as well as foreign firms (Pray, Ramaswami and

Kelley, 2001).

The growing importance of the private seed industry has prompted new policy

concerns. Broadly speaking, there are three inter-related issues. First, is the issue of

efficiency. Since the entry of private players is possibly only because of greater

appropriability (of the gains from higher productivity), does the exercise of resulting

monopoly power reduce social gains and in particular, the benefits to farmers and

consumers? The earlier literature that estimated the gains to agricultural research

typically assumed competitive markets and therefore does not address the new

situation. This question is important because some of the regulatory reform, like the

New Seed Policy of 1988, was explicitly motivated by the objective of facilitating

rapid technology transfer from the private sector (and in particular, the multinational

seed firms) to farmers. The Seed Policy of 2002 is even more direct in its goal of

fostering the growth of a private seed industry. The last decade has seen the entry of

major international seed firms into the Indian market. However, it has also been

accompanied by consolidation of the industry through mergers and acquisitions. The

entry of large firms, backed presumably by formidable marketing and technological

prowess, has also raised fears about the viability of smaller seed firms.

Second is the issue of equity. Would the products of private technology suppliers be

so high priced that small farmers would not be able to afford it? Note that such issues

are not exclusive to private research; they were debated vigorously in the context of

the Green Revolution technologies as well although the concerns there were not with

the price of seed but with the cost of complementary inputs.

Third, do these developments call for a redefinition of the priorities of the public

sector whether in terms of research, seed production, certification and environment

regulation? On the one hand, there is now considerable expertise outside the public

sector that is capable of applied plant breeding, seed production, seed certification and

testing. On the other hand, the public sector constitutes a countervailing power in the

marketplace. Furthermore, it is still the major supplier of seeds of open-pollinated

varieties.

19

Seed pricing

The importance of price

Price has different meanings for different groups of people:

A. To the buyer price is a cost which is used as a measure of value; the buyer valuates

one variety or source of seed against the alternatives.

B. To the seller price is revenue and therefore a key element in the marketing mix;

setting the right price is an important tactical decision and is a key factor influencing

revenue and profit.

C. To a government price may mean popularity and votes and is therefore a sensitive

political issue; governments may therefore seek to influence and control seed pricing.

The importance of price varies from one market to another and between different

segments in the same market. For example, non hybrid seed, which the farmer can

save, will be more price sensitive than hybrid seed. Price will be a more critical factor

in marginal farming areas, where spending power is low, but less important where

high yields can be obtained and farm produce can be sold profitably. Providing the

benefits of the seed are understood, it is other factors, such as the availability of

fertilizer and confidence in the produce market, rather than price that dominate the

farmer's decision to purchase.

THE COST OF SEED

Cost is a major factor in any discussion about price. Thus the costs involved in putting

a bag of seed on the farm must be recorded, analyzed and known to management.

These costs will include the cost of the processed and packaged seed and the

marketing costs associated with selling and distribution. Costs may be grouped

according to the activities involved notably:

1. Seed production, involving procurement, processing and storage, quality control

and certification.

2. Seed marketing, taking into account marketing, market research, advertising and

promotion, sales and distribution.

3. Administration and finance.

20

For a company planning a seed production programme the working capital needed to

procure and process seed has to be assured. If it is not to be financed out of existing

resources then short-term loans are required to ensure that there is sufficient working

capital. Seed held in stock at the various stages of processing also has to be financed.

This is a significant cost item and there may be serious financial consequences for a

business that has high stock levels.

Seed Industry and GATT/WTO/TRIPS

GATT has a number of implications for the seed trade in Asia

Pacific region including India.

The Uruguay round of GATT sought to expand the scope of the

organization by including service investment and Intellectual

Property Agreement provided for setting up WTO.

Four major forms of intellectual property rights can be applied

to agricultural plants

• Patents

• Plant Breeders’ Rights

• Trade Secrets

• Trade Markets

Article 27.3 b of the TRIPs states that “ Parties shall provide

for the protection of plant variation either by patents or by on

effective Sui generic systems or by combination thereof.”

India is balance to meet this requirement through a Sui

generic systems for the protection of plant breeders’ rights,

the proposed legislation also seek to safeguarded farmers and

researcher’s rights. Framers’ right to use farm saved seed are

projected.

In USA, plant varieties are protected either by plant or Plant Breeder Rights

In India, it is protected by the Plant Variety Protection and Farmer’s Rights Act, 2001.

For satisfying the TRIPs GOI, amendments were made in the Indian Patent Act (1970) for the third time on 26th December 2004. In this act, medicines, foods, biotechnology aspects have been included.

21

Indian Patent Act of 1970/TRIPS

Only process not product patents in

food, medicines, chemicals

Process and product patents in almost

all fields of technology Term of patents 14 years; 5-7 in

chemicals, drugs

Term of patents 20 years

Compulsory licensing and license of

right

Limited compulsory licensing, no

license of rightSeveral areas excluded from patents

(method of agriculture, any process

for medicinal surgical or other

treatment of humans, or similar

treatment of animals and plants to

render them free of disease or

increase economic value of products)

Almost all fields of technology

patentable. Only area conclusively

excluded from patentability is plant

varieties; debate regarding some

areas in agriculture and

biotechnology

Government allowed to use patented

invention to prevent scarcity

Very limited scope for governments to

use patented inventions

The Protection of Plant Varieties and Farmers’

Rights Act

Rights Act was passed by the Indian Government in 2001.

The Sui generis system for protection of plant varieties was

developed integrating the rights of breeders, farmers and

village communities, and taking care of the concerns for

equitable sharing of benefits.

22

Comparison of India's Plant Variety Act to the UPOV Acts of 1978

and 1991

UPOV 1978 Act UPOV 1991 Act India's Plant Variety Act

Scope of

breeders' rights

Production and

marketing of

propagating

material

Production,

marketing,

exporting, and

stocking of

propagating

material

Production, marketing,

exporting and importing

of propagating of

propagating material

Extent of

coverageMin. 24 species 15 species All species

Term of

protection Min. 15 years Min. 20 years 15 years

Exception to

rights

Farmers'

privilege in

practice

Farmers' privilege

optional and under

conditions

Farmers' rights

specifically recognized

Compulsory

licensing

In case of public

interest (not

defined)

In case of public

interest(not

defined)

In case of public

interest, defined as

reasonable availability

of seeds,

and supply of export

markets

Market Structure and Regulation

In the global seed industry, the seed business is usually a part of a larger agricultural

business consisting most often of agro-chemicals. In the last decade or so, there was a

further wave of consolidation involving pharmaceutical and agricultural businesses.

However, in recent years, this trend has weakened and even reversed as these “life

sciences” firms have spun off their agricultural business primarily because investors

perceived the earnings from agriculture to be more volatile on account of the

controversies over GMO food. Monsanto (which has acquired DeKalb Plant Genetics,

the international seed business of Cargill and Plant Breeding International and many

other smaller firms), Aventis Crop Science (now taken over by Bayer), Syngenta (the

agriculture arm of the merger between Novartis and AstraZeneca), Dow Agro

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Sciences (which acquired Cargill Hybrids) and DuPont (which acquired Pioneer Hi-

Bred) are some of major input supplying agricultural businesses today.

The consolidation in the global seed industry is attributed to the rising cost of

research, the patenting of life forms and the scramble to control access to elite

germplasm. The impact of these changes in India has so far been limited to changes in

ownership rather than a dramatic reduction in seed companies. But they have raised

fears of corporate control of agriculture. In the United States, corporate control is seen

to be most prominent in the livestock sectors where producers are contractually tied to

agri-businesses in the supply of inputs as well as in marketing.

It is not clear whether smallholder agriculture offers greater or lesser opportunities for

corporate control. As issues of market structure have traditionally been analyzed by

looking at the market shares of the leading seed firms, there has not been much

research on the market structure at the micro level. How do firms compete at the retail

level? What choices do farmers exercise?

According to Shiva and Crompton (1998), the marketing strategies of seed firms aim

at persuading farmers to switch to hybrids from open-pollinated varieties. Some of

these strategies are organization of field days and demonstration plots, using field

assistants to visit farmers, farmer advocacy by the selection of model farmers,

customer contact programmes, free distribution of farmer’s handbook and free

distribution of small packets of seeds. Yet, the same study points out, the hybrid seed

market is fickle and farmers’ preferences for particular brands of seed change rapidly

reflecting the specific marketing success of individual company. This suggests that

seed firms in India have not yet built successful brands that could be leveraged into

some degree of monopoly power.

At the same time, it has also been observed that public hybrids sold under private

brand names are sometimes sold at premiums reflecting the farmers’ perceptions of

quality. Tripp and Pal (2000) studied the information flow between seed firms and

farmers in the pearl millet market of eastern Rajasthan. They found that even in areas

where the use of private hybrids is extensive, while farmers can recall the brand or the

company that produced their seed they cannot often distinguish between a company’s

hybrids. This is possibly because companies invest resources in advertising company

brands rather than in communicating information about the varieties. As established

seed companies have reputations to protect, branding is a convenient short-cut for

communicating product quality.

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Branding is also an entry barrier to small and new firms that cannot afford advertising

or do not have past reputations to build on. Ideally, seed certification should provide

the route for small firms to convey signals about their product quality. However, Tripp

and Pal find that such information is not used by farmers. The farmers in the survey

could not explain the difference between certified and truthfully labeled seed. Thus, in

the absence of farmer education, quality regulation fails to protect farmers and neither

does it reduce barriers to entry that are created by branding.

Relevance and need for biotechnology

At the current pace of growth, meeting the future food grain demand would be an

uphill task. The new technologies for increasing yield should also be sustainable in

the long run. The high-yielding technology that heralded the Green Revolution has, no

doubt, rescued the country from chronic food deficiency and starvation but it has had

its adverse effects too. The high input cultivation of rice and wheat has led to

excessive water use and eroded soil quality; indiscriminate use of chemical pesticides

has led to pesticide resistance making pest management increasingly difficult11. Any

scope for pest control through host plant resistance is becoming limited on account of

shrinking sources of resistance. Weed infestation causes heavy crop losses, if not

controlled in time. The estimates of losses caused due to pests and weeds range

between 10% and 40% but in some cases the losses could be much more12. Beyond

herbicides, which are weed specific, there are no means to manage the wide weed

spectrum. Limited variability for yield-related traits is slowing down the progress in

yield enhancement. Hybrid technology, though a potential technological option, has

not yet become a reality in several crop plants for want of stable cytoplasmic male

sterility–fertility restoration system, as is found and exploited in sorghum, pearl-

millet, sunflower and rice. In crops like wheat, heterosis is being commercially

exploited in India from this year. In crops like Indian mustard and in pulses

likepigeonpea and safflower though exploitable hybrid vigour is quite sizeable, for

want of stable male sterility/ restorer systems and lack of economic hybrid seed

production technology, the scope for increasing yield has been limited. Many of our

staple food are characterized by deficiency of one or the other nutrients and excessive

dependence on the same has led to nutrition deficiency related health disorders.

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Need for transgenics

Plant breeders can rectify problems in a crop only when there is variability available

for the desired character within the compatible species complex. Transfer of useful

traits from distantly related species which do not sexually cross with the crop plant is

not possible through conventional recombination breeding procedures. Considering

that many problems still remain unsolved and that the currently available technologies

are inadequate to solve them, there is need for alternate technologies. Recombinant

DNA technology that enables movement of genes of interest across sexual

incompatibility barriers is one approach plant scientists are relying upon worldwide

today to find genetic solutions to specific problems13,14. Recognizing the potential of

genetic engineering and biotechnology and its relevance to India, the Ministry of

Science and Technology established the Department of Biotechnology (DBT) in

1986, exclusively to develop and apply biotechnological approaches in agriculture,

animal science and human health15. The Ninth Plan outlay of DBT was around at Rs

1026 crores, more than double that in the Eighth Plan (Rs 427 crores)16. The first

transgenic Bt cotton underwent field-testing in 1995. Today 185 institutions, which

include both public research institutions and private research laboratories, are engaged

in transgenic research. Currently, transgenic research is being done on several field

crops, viz. cotton, Indian mustard, corn, potato, tobacco and rice and in vegetable

crops namely tomato, brinjal, cauliflower, cabbage, chillies and bell pepper. The

problems receiving priority attention include insect pest control, hybridization

systems and nutrition improvement11. Genetically engineered hybrids and hybrids

with unique characteristics such as pest resistance are of special interest to the private

sector institutions, as they provide a degree of certainty, offsetting the risks to their

investments in biotechnology1. Two transgenics now under field-testing, viz. Bt

cotton hybrids against bollworm complex and Indian mustard (Brassica juncea) for

exploitation of hybrid vigour are of this kind. Several large and medium-seed

companies with turnovers ranging from Rs 35 crores to 100 crores are intensively

pursuing full-fledged in-house agro-biotech research and development either on their

own or through joint ventures with foreign companies. The fact that 23private sector

institutions have today their own Institutional Biosafety Committee (IBSC), which is

26

mandatory under the guidelines for institutes engaged in genetic engineering research,

is indicative that private companies are as serious and interested as public institutions

in pursuing transgenic research17. Transgenics will have a major impact on seed

business. For instance, as new varieties with improved performance enter the market,

shares of individual varieties will shift quickly. Dramatic increase in the annual

research expenditures of private companies engaged in biotechnology research is yet

another indicator to the increasing involvement of private sector in biotechnology

research.

Conclusions

The Indian seed industry is currently valued at more than Rs 2500 crores with about

150 organized seed companies. The seed industry has grown steadily in the last four

decades. There is seed legislation in place and a Draft Seeds Act of 2001 is being

finalized on the basis of the recommendations of Seed Policy Review Group. It will

replace the existing Seeds Act of 1966 and Seed (Control) Order of 1983. The

proposed legislation features establishment of National Seeds Board and compulsory

registration with the Board of any seed for the purpose of sowing or planting.

The seed industry has Government of India (DSIR) recognized research and

development departments which have resulted in a large number of private research

varieties and hybrids. A study based on the 1998–99 annual report of nine seed

companies has indicated that 0.78% (0.49 crores) to 15.08% (22.62 crores) of the total

turnover of the companies is spent on R&D. The availability of data for analysis of

the Indian private sector is problematic because it is often inaccessible and considered

strictly confidential. Therefore recognized National Seeds Associations have an

important role to play. The first transgenic crop, cotton hybrids with Bt gene, have

been cleared for commercial cultivation. The

current regulatory system requires coordination among 3 to 4 ministries. A single-

window clearance is recommended for faster release of useful transgenic crops. The

speedy implementation of the Enactment of the Protection of Plant Varieties and

Farmers’ Rights Act is urged. There is a need for promoting joint venture

collaborations between industry and national and international institutions. The need

for creation of awareness among farmers and general public on the benefits and risks

associated with transgenic crops is also very important.

27

Reference

• www.manage.gov.in

• www.indiaseed.com

• www.agricoop.nic.in

• www.seednet.gov.in

• www.indianagronet.com

• www.indiabudget.nic.in

• www.apsaseed.org

• www.seedassociationofindia.com

• Agriculture Today

• Indian Food Industry

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