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Friday, Jan 07, 2011
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Markets - Stocks
Chennai, Jan 6
Last year, stock of companies in the crop protection business did well on the bourses. At one point of time, they gained over 50 per cent. Things looked good with the India Meteorological Department (IMD) projecting a normal monsoon, though experts in the US and Japan projected floods.
The experts' views turned true as it rained cats and dogs in November throughout the country. More painfully for farmers, it left crops damaged in some parts of the country.
For example, the groundnut crop that was all set for harvest got affected due to the inclement weather and its quality suffered. Similarly, the second flowering in the cotton crop got affected.
Losses have been reported in the paddy crop, too, especially in Andhra Pradesh and Tamil Nadu.
All these point to the fact that investors should not be surprised if these crop protection firms turn poor numbers for the third quarter of the current fiscal.
Those in the insecticide and pesticide distribution cycle have reported a drastic fall in use of crop protection measures for the kharif crop.
"The problem was you can not do anything when it rains and the crop has been affected by it. You can see the pests or insects on the crop but why waste money by spraying the insecticide or pesticide when the rain has already taken a toll of it?" wonders a pesticide distributor in the Saurashtra region.
Last week, the Indian Council for Agricultural Research reported that onion crop has been affected by pests. This is another proof that farmers had ducked from going in for crop protection measures in view of the damage by rain.
No doubt, higher sowing has been reported for the current rabi crops. But with the weather being dodgy at least until the third week of December and growing areas in the South receiving rain, the question is how are crops shaping up in the region.
Growing demand for food and improving living standards in India is another point for consideration. Food supply is struggling to meet rising demand and farmers, encouraged by higher support prices, are looking to improve yieldAlso, increasing economic conditions for farmers means they will be encouraged to go for higher protection. An example is the indiscriminate use of pesticide by growers of spices. The use has been so high that the Spices Board has thought it fit to hold campaigns for proper use of these chemicals.
However, lack of patent protection in the country dogs the industry, affecting introduction of new formulation. But with over 40 ingredients going off the patent list in two years time, established firms can look for better business opportunities. However, the Pesticide (Management) Bill, 2008 can still create problems. But with pests and insects developing immunity to certain chemicals, the sector can look forward to growth, provided better research and development is in place.
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