| dc.description.abstract | India is a predominantly agriculture based economy, which accounts for more than 30% of our total GDP and employs more than 70% of our population. Agriculture is India's largest private sector enterprise. With the development of HYVs, where yields took a quantum leap, the pest problem also intensified. This led to increased usage of pesticides. This was all the more important because the annual loss in agriculture output attributed to pest damage was estimated at R9.20,000 corer in 1989. This has been going up ever since. India lags behind other developed nations when it comes to both productivity and pesticide usage thereby suggesting that the two are linked. Even in terms of our pesticide usage, the market is dominated by few old, highly polluting pesticides like BHC, DDT, Malathion, etc.. To add to this the government policies on pesticide manufacture and license raj was not helping matters. Most of the pesticides being used in India were dated ones.
Then in 1991, the government undertook a policy of economic liberalization and opening up of the Indian market to the world. This evoked a very positive response from the foreign investors. In the pesticides sector too, there were a few new entrants and more are planning to come into the country. The basic reason behind this is that India is one of the biggest markets in the world especially when it comes to agriculture. On the top of it, the market has been growing at more than 20% per annum. This is massive growth when compared to the growth in the developed markets of 2-4%. Another important factor in favor of new entrants is that India is a signatory to the WTO, which means that now there will be product patents allowed in India unlike earlier when only process patents were accepted.
Presently out of more than 500 pesticides, only about 125 are registered and even among that only about 42 are in current use. The government is not issuing any more licenses to new manufacturers of pesticides_ The pesticide usage in the country has crossed 88,000 tonnes and expected to rise faster now with the opening of the economy. Traditionally, pesticides have been sold by the route:
Company --> Distributor --> Retailer --> Farmer.
This is followed by most of the players, small or large, Indian or Multinational. The pesticide buyer behavior is quite complicated. Though the decision maker is the family head, the buyer is a young male of the family. Though farmers are unaware of different types of pesticides, they are aware of different pesticides for different pests. The purchase quantity is based strictly on the immediate requirement and that too just before time of application. The various influences are current users, popular media of that region, and people who are respected Factors which are important to farmers while buying are quality, company reputation, price, dealer recommendation.
Currently, companies do not have very specific market strategies. They are mostly determined by market behaviour. Those companies who are innovators/pioneers in introducing a product command premium prices. Also some companies have built a good reputation either of themselves (Tata Rallis) or their top selling products (Hoechst: Thiodan). followers generally brand their products based on the name of the technical (Hildan: Endosulfan from HIL) or part of the company name (Monocil: Monocrotophos by NOCIL). Being a very competitive market, the margins typically range between 15-20% for the whole channel.
On the basis of this study the strategy to be followed by a new entrant should be:
1. Introduce and environmentally friendly insecticide or herbicide.
2. Go in for a licensing arrangement with a formulator who will formulate the imported technical. The company will undertake marketing activity only.
3. The product should be priced at a premium and the approach followed be 'skim the cream'.
4. Use &national level distributor for its product.
5. (live industry level margins.
6. Will not have its own sales force. Marketing executives will work closely with sales people of distributor.
7. Promotion aimed at both, head of the family and buyer.
8. Promotion has to be crop specific.
9. Media selection keeping local tastes and preferences in mind.
10. Easily identifiable brand. | en_US |
