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Monopoly and Monoculture Trends in Indian Seed Industry
Burgeoning Indian Seed Industry
THE Indian seed industry is undergoing a period of rapid change. inaugurated by the economic liberalisation of the last five or six years and The New Seed Policy of 1988. This latter lifted restrictions on private sector import of foreign germplasm, enabling larger seed producers, particularly those with foreign collaborations, to access seeds from international sources.
Increasingly, the public and private sectors are being delineated in terms of the type of seed they each produce. The public sector focuses on the development and production of open pollinated varieties (OPVs), which are less commercially exploitable than hybrid seeds. The private sector concentrates upon these latter. and more remunerative crops (such as vegetables). This is a polarisation which is set to continue, particularly as pressure on farmers to switch to use of high yielding hybrids intensifies. Despite this polarisation, both the public and private sectors are engaged in initiatives to increase hybrid seed usage amongst those farmers currently using open pollinated varieties.
Predictions suggest that the Indian seed industry will be worth some Rs 20 billion (around US $ 600 million) annually by the turn of the century. Indeed, the former managing director of Monsanto estimates that it will be worth Rs 60 billion (around US$ 2 billion) in 7-10 years time.
As the value of seed sales grows, the proportion of these a ccountedfo rb y the public sector is diminishingw, ithm oref armerst urningto highy ieldingh ybrids eeds produced by private seed companies. Simultaneously, there will be a continued coalescence of the industrya rounda few key companies.most of which will either be subsidiaries of transnationaclo mpanies,o r otherwise have entered joint agreements with such companies.R epresentativeosf large seed companies (and in some instances the directors of smaller companies)admit that the futuref or low-turnover domestic seed enterprises looks grim.
There is uncertainty over the actual current value of the seed industry through it is anticipated that this stands at Rs 12-16,000 million per annum.Estimates placed the value of the industry (both public and private) at Rs 10,000 million back in 1994. According to one such estimate the value of seed sales broke down by market sector as detailed in Table1. This massive and continued growth isattributed to a shift in seeds alesa way from the public sector and towards the private sector,commensurate with an increasing demand for high-yielding hybrid seed. As K R Chopra (managing director of Mahendra Seeds, president of the Seed Association of India,and consultant of the World Bank) writes: "The commercial exploitation of hybrid vigour in recent years has been a crucial factor in phenomenal increase of private sector contribution to the total turnover" [Chopra et al 19951. The managing director of Mahyco estimates that the distribution of the market has shifted since 1994( Table1 ).
He suggests that currently some 30 percent is attributable to the public sector (state seed companies), 40 percent to 'large' private companies, and 30 percent to 'small' seed companies. If he is right, this represents a small shift away from the public sector. and a significant shift within the private sector in favor of larger companies over the last three years. However, these figures are essentiallly speculative and Barwale was unclear how he defined a 'large' ( or 'small' ) company. Table 2 shows one projection for a breakdown of the growth of the seed industry. by crop type.
Estimates of the proportion of the market accounted for by hybrid seed sales ( in terms of value, rather than volume) also vary, but the suggestion by Baig ( director, Nath Seeds) that this stands at 70-75 percent represents a consensus viewpoint. Baig also estimates that 25 percent of the market is held by 15 or 16 companies ( perhaps 10 percent of all companies nationally.) INdeeed, S. D Khanna, the former manager of Mosantgo suggests that there are only 15-20 'sustainable' seed companies in the country. Khanna goes further, suggesting that suppliers within the public-sector have "only" survived this long due to the ignorance of farmers"
The reduction in the public sector market share is difficult to document, for two reasons. Firstly, the seed production of State Seed Corporations, the main public sector suppliers of seed, continues to grow. What is not clear is whether this is growing in proportion to the expansion of the overall market. Secondly, State Seed Corporations themselves buy seed from the private sector ( Andhra Pradesh State Seed Corporation, for example buys some 25 percent of its seed from the private sector). This means that an appreciable proportion of seed sales, by this Corporation are, in actual fact, attributable to the private sector.
Expectations for the expansion of the seed market are derived from two considerations. The first is based upon estimates that at present a high proportion of seed is saved by farmers from year to year. This may be seed saved from commercially bought open pollinated varieties, or even second generation (F2) hybrid seed. In addition, a significant proportion of this seed is taken from local
'landraces'. It is anticipated that farmers will increasingly buy new seed each year and where they are using landraces, will turn to alternative commercial varieties and hybrids. The second consideration is that farmers are expected to increasingly turn to more expensive hybrid seed in preference to open pollinated varieties. Each of these factors will be considered further.
FARMER SAVED SEED
Estimates of the ratio of farmers who replant saved seed each year vary. The managing director of IML Seeds estimates that nationally in 1990 around 10 percent of farmers bought new seed annually, rising to 25 per cent in 1997. He claims that this is now set to increase 5-6 percent per annum. Agarwal, the general manager of ProAgro-PGS, estimates that overall use of 'quality seed' is 9.5 percent [Agrawal . The Eighth Five-Year Plan (1991-96) set a target of a 6 percent seed replacement ratio The target for the Ninth
Five-Year Plan (running to 2001) is 8 percent. Most farmer saved seed is OP or local land race. OP seed performs well for four to five generations, with minimal selection of plants each year. In addition, some hybrid seed is planted in the second or third generation (F2 and F3). Second generation maize seed, for example, is used in preference to new OP seed, according to the managing director of IML., Table 3 shows the amount of seed supplied by the industry for each of six crops, in 1994. Also shown is the estimated percentage that this represents of the total seed planted. This is calculated on the basis of average seed requirements per unit area of a particular crop. As might be anticipated, relatively little seed is bought for crops which are predominantly open pollinated (paddy and wheat). Other crops, where hybrid seed is available, show higher proportions of supplied seed. Infact, the proportion of sunflower seed that is taken from suppliers is now probably far higher (estimates suggest that around 95 per cent of sunflower seed planted is hybrid, and most of this will be re-bought annually).
The Agricultural Commissioner forAndhra Pradesh estimates that between 10 percent and 30 percent of cereal seed planted in the state annually is of local landrace varieties. In particular, use of landraces is concentrated in areas of newly cultivated land, which tend to be farmed by novice farmers unclear of the vaunted advantages of use of commercial seed; areas where water shortage makes investment in commercial seedless attractive areas where credit of or purchase of commercial seed, fertilisers and pesticides is difficult to secure; and areas where local landraces are preferred due to local taste preferences.
At the National Conference on Seeds.Agra( in 1993),t argetsw eres et for annual increases in the hybrid seed production (expressed as mass of seed) up until 1997 (Table 4). K R Chopra estimates that total hybrid use has increased from 8 percent (1994) to an estimated2 5 percent (1997) of seed annually planted. The director of Nath Seeds estimates current hybrid seed use as shown in Table 5.
Factors contributing to this remarkable increase in hybrid seed use will be considered in some detail. Chopra identifies two such factors.( 1) The development by the private sector) of short-maturing hybrids and( 2) The hiking of grain prices making heavy investment in hybrid seed commercially if able fort house farmers who can afford it. Note the maintenance of these grain prices is determined in part by seed suppliers(Cargill for example which is able to manipulate maize prices, also sells hybrid seed for planting).
To these two further factors might be added.( 3) An intensive advertising campaign conducted by seed companies, and augmented by government-funded projects t o increase farmers' acceptance of hybrid seed. (4) According to some industry representatives the effects of farmer-to-farmer advocacy of hybrid use. The marketing manager of Cargill, for example, adopts a strategy encouraging farmer themselves to become 'Cargill spokes people'.
The hybrid seed market is reputedly highly fickle, farmers' preferences for particular brands of seed change rapidly, reflecting in part the specific marketing success of individual companies, and favouring those with a broad product port folio. This viewpoint is corroborated by the manager of one small seed retail company who claims that in his experience it takes just two years for farmers to switch allegiances to a new HYV or hybrid This frequently follows heavy promotion of particular brands. He cites, for example, the case of a western agri cotton hybrid which was heavily promoted through the distribution of free 50 g seed packets to selected high-performing farmers, and provision for an attractive profit margin for seed retailers( Table9 ). However,t he (possibly fortuitous) suitability of a particular hybrid to growing conditions one year will boost sales of this same hybrid the following year, to the detriment of sales of alternative seed. An example is provided by the public sector cotton hybrid NHH44, which was particularly successful in 1996 (perhaps as a result of its suitability to good rains). Sales of the hybrid this year are expected to be colossal,although if the rains are poor, yields may below and farmer's allegiance switch for 1998.
puBLIC AND PRIVATE SECTOR CAMPAIGNS
The State Seed Corporations have two stated aims, summarized in the strategy document produced by Andhra Pradesh SSC: The first is to provide "high quality seed to farmers at reasonable prices", the
second is to "co-ordinate with the department of agriculture in accelerating the spread of hybrid/high yielding varieties of different crops for promoting increased agricultural production". This latter aim is addressed through both the provision of seed at subsidy, and the supply of private sector produced seed. In fact, as discussed in Introduction of this section, 25 percent of the seed supplied by AP-SSC is bought from the private sector (mainly maize and sunflower - crops dominated by multinational companies). This is an evident source of embarrassment for R S Paroda. director general of the Indian Council of Agricultural Research. He points out that the policy of individual SSCs is beyond the control of central government, and claims that instances of these buying seed from the private sector are exceptional.
During the kharif season, 1997, the government ot' Andhra Pradesh organized a series of state wide 'Karshaka Sadassus'.or farmers' seminars. These comprised a two-day exhibition of agricultural technologies, and a programme of seminars extolling the applications of these. It was anticipated that around 30,000 farmers, representing all neighboring villages, would attend each of the 22 karshaka sadassus. In addition. the participation of private seed companies was invited, to "exhibit agri-inputs and other related products". The seminars, it was claimed, offered "a good opportunity for exposing the latest technology in agriculture and inputs available to farmers".
In Andhra Pradesh, the State Agriculture Commission has set up a network of Farmer's Training Centres. with one to each district. These organize training, both at the centre and through two-day training sessions in villages, for groups of 25 or so farmers. In addition. each district has several mandal development and agriculture officers.
In Andhra Pradesh, the State Seed Corporation supplies seed to two regional Intensive Tribal Development Agencies (based at Paderu and Utnoor), for distribution amongst tribal peoples, at large subsidy. The managing director of the APSSDC predicts that within 2-3 years, all residual use of local land races by tribals will be eradicated. In Utnoor district (3,50.000 people, around 80,000 families) soyabean seed, black, green and red gram, paddy, cotton and sorghum (jowar) seed is supplied at a subsidy. Some of these represent new commercial crops for tribals (soyabean, seed, black for example). Others (jowar) area lreadyg rowna s importanlta ndraces. Under a scheme that was initiated three or four years ago seed was initially supplied at a 75 per cent subsidy. This has since been cut to a current.50p er cent subsidy (25 per cent subsidy is provided by the Andhra Pradesh Department of Agriculture, with the ITDA meeting the remainder)Under the scheme fertilizers and pesticides area lso provided at subsidy, with the government providing subsidies on fertilizers, and the ITDA a 50 percent subsidy on bio pesticides
Only around 20 per cent of families can be supplied with subsidized seed. These are selected at a local level by the Village Tribal Development Association. Although theI TDA hopes to do away with the subsidy in the near future, the project officer admits t hat amongst those to whom subsidized seed is no longer made available,very few are continuing to plant hybrid seed.
This is attributed to the difficulty encountered by tribals in securing loans. In the past. Tribals have been forced to default on bank loans following crop failure( HYV sand hybrids are particularly vulnerable to this as a result of the more stringent growing conditions)The project officer also concedes that there has been an increase in patriarchal power following a shift toward planting of commercial crops. This follows a reduction in the importance of the role of women in harvesting these crops. In an attempt to redress the balance, grant aid is simultaneously being given to womens projects. To encourage alternative enterprises (cattle breeding or small market-based projects, for example).
The private sector is predominantly concerned with conversion of farmers currently relying upon open pollinated varieties to use of hybrids. Except in the case of sunflower w,here most seed planted is hybrid( estimates are that the proportion is as high as 95 percent),t he potential for expansion of the hybrid market is seen as large. The president of Shri ram Bio seed Genetics, for example, summaries the attitudes of many industry representatives when he comments: "Only after farmers currently dependent upon OPvs switch to hybrids can we foresee the development of commercial interest in farmers still relying upon land races."
This emphasis upon market expansion means that many companies profess to concentrate upon a development of the market per se, rather than pushing their own particularly hybrid brand Multinational seed companies invest most extravagantly in the development of the hybrid seed market Cargill, for example. organizes a series of 'field-days' and demonstration plots. The company has a team of 'field assistants' which have the sole job of visiting farmers and 'cold-selling'. Strategies also include mail-shots and newspaper advertisements. The marketing manager claims that the key to their sales strategy is 'farmer advocacy' -encouraging farmers themselves to advocate Cargill seed.
Farmers are invited to the field of another exhibiting uncommonly high yields of branded seed. These exemplary farmers may be singled out before the growing season, on the basis of their competence in previous seasons, and asked to grow the relevant branded seed. Alternatively, exemplary crops may be chosen at the end of each growing season from amongst a company's customers. Cargill adopt the latter approach, choosing around ten exemplary fields in Karataka alone, and inviting between 200 and 300 farmers to each. Those farmers invited are not
by and large, Cargill customers. ITC Zeneca adopt the alternative approach: Selected farmers are given ITC Zeneca seed to plant, alongside local varieties. At harvest time, up to 500 neighbouring farmers are invited to a 'farm-day'. Here the farmer relates his experience of growing the seed to other farmers, and Zeneca technical staff are on hand to back him up. Cargill augment field-days with 'Intensive Customer Contact Programmes' (ICCPs), where Cargill staff gather together a group of farmers, and "sit under a tree with a flip chart, to talk to them". By the end of their first season of sales, Cargill staff had held perhaps 3,000 such sessions, each attended by 20 or 30 farmers.
Although all Cargill seed is distributed through Rallis, the company has an extensive marketing network of its own. Each member of a seven-person marketing team employs a further 10-15 temporary staff. These temporary staff are taken from farming communities local to those in which they will work. Cargill's marketing manager claims that this means sales staff appear "more credible".
ITC Zeneca have a touring cinema which shows a short film dramatising inter-village competition for the annual trophy for the
best crop. The consistent victory of one village is attributed to its use of Zeneca seed. Following adoption of the same seed by the neighbouring village, both become equally successful, and the rival villagers are reconciled under the slogan "with ITC Zeneca, it's a win-win situation". Cargill view their Krishi Kaipidi (or 'Farmer's Handbook') as a public-relations coup. This published in fortnightly installments in local newspapers during the growing season,and offers farmers practical advice on maximising the yields they obtain with their hybrid seed. In engineering their dramatic (though self-proclaimed) rise to prominence as suppliers of maize seed in the north, Kanchan Ganga sold seed at a loss for the last two years or so in order to establish a market. Cargill also may provide small packets of free seed to farmers, particularly poor farmers in areas where use of open pollinated varieties predominates. Cargill's marketing manager claims that free seed is not used as a strategy for converting farmers from rival brands of hybrid seed to Cargill seed. Free packets of hybrid seed may also been closed with larger packs of open pollinated seed. Arora (1995) claims that "there have been instances" where the additional yields obtained with the hybrid seed have justified a complete switch to this the following season.
Decline of Public Sector
Whilst the green revolution of the 1960s and ' 1970s was orchestrated by the public sector, the so-called 'second green revolution', based upon new hybrid and genetic technologies, will be driven by the private sector. Accompanying this shift is a change in motivation from one based upon the common interest (however misguided this may have proven to be in practice) to one based upon corporate profit. Who, under this new regime, will pursue research in the public interest where this does not concur precisely with corporate interest? In this chapter, the decline of the public sector seed industry will be charted. The next chapter will examine the rise of the private sector.
There are as yet no cases of transnationals taking over public sector companies in the Indian seed industry (.though there has been at least one attempt - see below). Under Structural Adjustment Programmes, investment in the public sector, and therefore the competitiveness of this, has fallen. Its role has now diminished to:
Provision of open pollinated seed: The majority of seed distributed by State Seed Corporations is open pollinated. The market for open pollinated seed is expected to decline as pressures to use hybrid seed increase. But at present, SSC sales of OPVs do little to compete directly with private sector sales (predominantly of hybrid seed). Successful public sector pearl millet hybrids represent an exception to this generalisation. However, the area planted under pearl millet (denigrated as a 'coarsec ereal') is fallingn ationally[R am
Sale of hybrid seed in crops for which there is little private sectorinterest: Public sector bajra (pearl millet) hybrids are extolled as demonstrating the continued competitiveness of public sector research and development. However, the area of land planted under pearl millet is actually falling annually, as farmers turn to other, more commercial, crops.
Erosion of the public sector market share: It is a professed aim of State Seed Corporations and Agriculture Departments to encourage the shift to increased use of hybrid seed; a market increasingly dominated by transnational companies (or national companies with tie-ups with foreign companies).
Production of parental lines: Increasingly, the role of public sector research institutions is viewed as the production of parental lines to be given to private companies for further developmnent.
Sale of private sector seed: Seed from private sector companies, particularly maize and sunflower seed from transnationals, comprises an important proportion of total seed distributed through some State Seed Corporations. This attracts central and state government subsidies, amounting to direct, though unacknowledged governmental support for the private sector.
STRUCTURE OF PUBLIC SECTOR
National Seeds Corporation
The National Seeds Corporation (NSC) was established in 1963, with the massive importation of new high yielding varieties.The NSC became the distribution arm of the public sector, responsible for the production and marketing of varieties bred at ICAR funded institutes and agricultural universities. Its role has since been largely superseded by the State Seed Corporations. However, it still grows seed, under contract to 7,000 farmers, to compensate for shortfalls in seed production by the SSCs. The NSC is an important producerof vegetable seed, particularly open pollinated varieties (of around 100 products, nine are hybrids). The director, Deepika Padda, claims that the NSC produces vegetable seed over an area of 9,00,000 hectares, by comparison to a total private sector production area of 15,00,000 hectares. Despite being (or perhaps because it is) such an important producer of vegetable seed, attempts were made by World Bank representatives to persuade the director of the NSC to cut back vegetable seed production. Quite
whether or not the private sector can be entrusted with the pricing of vegetable seed in the absence of public sector competition is equivocal. Cabbage seed imported from Japan and sold by the National Seeds Corporation for Rs 6,000 per kg is sold by a private company for Rs 12,000-15,000 per kg. Meanwhile, whilst the NSC has maintained a workforce of around 600 (comparable to its strength in the 1960s), the same private seed company is paying recent graduates Rs 2.500 (or US $ 70) per month.
State Seed Corporations
Thirteen State Seed Corporations were established in 1975, under World Bank funding. These largely took over public sector seed production from the NSC. They still comprise a highly important sector of the Indian seed industry, particularly with respect to open pollinated cereal varieties. The managing director of Andhra Pradesh SSC, for example, estimates that this provides some 75 per cent of the seed requirements of the state; 40 percent of
this seed is hybrid, much of it provided by the private sector. The remainder of the seed supplied by the State Seed Corporation,
in the case of Andhra Pradesh, is produced by some 6,000 shareholding "cultivating farmers'. Nuclear seed, developed in the public sector - by ICRISAT, ICAR, and the Universities -is used in the production of breeder, foundation, and certified seed. This is then processed at one of 18 processing units in the state, and supplied to farmers. Some SSCs are financially profitable. The APSSC
for example returned an 8 percent dividend to shareholders last year. It seems, however, that profitability is set to increase the threat from the private sector. This is not merely manifest as an encroachment upon the market share of SSCs. For example. John Hamilton. then managing director of Cargill. tried (with the support of World Bank representatives) to buy Karnataka SSC.
All private sector representatives concur that the competitiveness of public sector varieties and hybrids is falling. The managing director of IML Seeds estimates that 90 per cent of maize. and virtually all sunflower seed now sold, are private sector hybrids (or varieties). Even State Seed Corporations are increasingly supplying private sector hybrids. Several contributory reasons are suggested for this: (1) The success of private sector advertising campaigns; (2) Funding problems. both nationally, with higher education funding in crisis, and internationally (for example, withdrawal of international funding for ICRISAT in Hyderabad), leading to underinvestment in public sector research programmes; (3) Public sector bureaucracy; and (4) The failure of poorly-trained SSC staff to properly maintain public sector lines, which are given to SSCs for perpetuation. This has led to a shift in the role of the public sector. Increasingly, public
sector research establishments are seen as the providers of lines for further development and refinement by the private sector. These are made freely available to private sector breeders.
Paddy and wheat seed sales are still dominated by the public sector, although with increasing private sector interest in hybrid paddy, the public sector share of sales of this seems set to diminish. Sales of public sector hybrids of pearl millet are also good, though (as mentioned above) there is comparatively little private sector competition for the market for hybrids of so-called 'coirse cereals', for which the area cropped nationally is falling annually.Many smaller seed companies rely upon sales of public sector hybrids and varieties.Other new companies have used sales of these to maintain viability whilst developing their own hybrids. Examples are provided byJ K Agri Genetics and IML Seeds, both of which entered the seed market in 4989, in the wake of The New Seed Policy (1988). Initially, both companies relied upon sales of public sector varieties and hybrids, before launching their own research and development
programmes. However, it is generally recognised that relying exclusively upon sales of public bred hybrids is difficult. Such hybrids are available to all small companies, and competition is stiff. Subsidies for public sector suppliers of this same seed makes private sector
involvement less attractive Further more,and in response to the intensive advertising campaigns of large seed companies, farmers are moving increasingly toward use of proprietarhyy brids.Many smaller seed companies will be hard-hit by the dual effects of the diminishing competitiveness of public sector varieties and hybrids, and heavy investment in the expansion of the private sector market for proprietary hybrids.
World Bank-funded National Seed Projects were initiate din them id-seventies, to make the Indian seed industry "more viable and result-oriented"That is, "to create necessaryi nfrastructurafal cilities for seed production conditioning storage and distribution of high quality seeds" [Chopra et al 1995]. Three such Projects (NSP I. NSP II, and NSP III) were undertaken(beginning in 1975. 1981,and
1988,respectively)The last of these three ran up until last year( 1996). The proportion of funding for each project offered to the
private sector follows a trend representative of the shift in emphasis from public to private sector investment under Structural Adjustment Programmes (Table 5a).
In particular World Bank policy changed in 1993, when it was concluded that investment in the public sector seed industry was unproductive Subsequently, support was concentrated in the private sector. In the case of NSP III. $ 30 million credit was made available to private companies through the National Bank for Agricultural and Rural Development (NABARD) under favourable loan
agreements. Specifically these were media available for infrastructural improvements, germ plasm import, agricultural education
and seed testing( they did not cover working capital or land purchase). Recently, an FAO team recommended against a Fourth
Project concluding that the growth of the seed industry will continue without further intervention. (However, individual state governments are invited to submit applications for financial support for the private sector to the World Bank. Uttar Pradesh, where the private sector is 'under developed', is thought to be pursuing such sources of funding.)
Big Companies Getting Bigger
Tiwari (1996) estimates a total of 147 private sector seed companies, which can be broadly categorised according to whether they (1) develop, produce and market their own varieties and hybrids, (2) produce and market public sector varieties and hybrids, or (3) have no production capacity whatsoever, concentrating solely upon marketing. Agrawal (1996) estimated that of the former category, 24
companies have entered collaboration with foreign companies. In addition several multinational companies have opened subsidiaries in India.
There are several recent and discrete legislative changes which have promoted the growth of the private sector. Agrawal (1996) identifies these: In 1986, the provision of private seed companies with breeder seed for public sector developed self-pollinated crop varieties; in 1988, New Seed Policy, liberalising seed imports and encouraging foreign investment in the seed sector; and in 1991 relaxation of limitations on foreign equity participation, permitting foreign companies to hold controlling takes in industrial enterprises.
Multinational companies dominate in crops where access to international germ plasm places these at an advantage over national companies. In particular, these are maize, Sudan-grass/sorghum hybrid (SSG), sunflower and soya. Rather than developing new hybrids specifically for use in India, multinational companies have tended to focus upon the exhaustive testing of extant hybrids imported from other countries, for suitability to Indian conditions. For example, Cargill maize and sunflower hybrids (which are 'price leaders', reflecting, it is claimed, their superior quality) were imported from international sources. Of the four biggest suppliers of sunflower seed, three (ITC Zeneca, ProAgro and Cargill) are multinational, reflecting the origin of all sunflower germplasm in the US. Now, however, multinational companies are beginning to move into crops which have been dominated hitherto by domestic companies. Cargill, for example, are poised to push sales of sorghum hybrids.
Multinational companies have a characteristic sales strategy, typified by Cargill. preferring to emphasise 'quality' and consumer confidence, rather than competitive pricing. Thus Cargill' s hybrid sunflower seeds retails for Rs 350 per kg, over three times the price of hybrid sunflower seed produced by a local company. Bhavani Seeds (Table 8). Cargill justify this price on the basis of higher yield, consumerconfidence, and after-sales back up. Besides, it is claimed, only 3-5 percent of a farmer's total outlay cost is expended on seed. (Cargill claims that a progressive farmer spends perhaps 8 percent of his cost of production on hybrid seed, but can achieve a 50 per cent yield advantage.) The local seed company concedes that the yields obtained using Cargill seed exceed those obtained with
its own proprietary hybrid. However, they suggest that the yield gains alone do not justify the vastly inflated prices. The production manager suggests that typical yields obtained with Cargill sunflower seed would be 12-13 quintals per hectare as compared to 10 quintals per hectare using Bhavani Seed's own hybrid. Cargill sales, he suggests, are maintained only through massive advertising campaigns with which smaller companies cannot hope to compete.
CASE-STUDIES)OF SPECIFIC MARKETS
The maize market is growing rapidly,and is expected to continue to grow as the processed food market expands under liberalisation. Calculated upon the basis of the total area nationally under maize, the potential seed market is reckoned to be some 1.20()00() tonnes. With Cargill (the price leader) selling maize seed for over US $ I per kg, the maize market alone is viewed as being worth a potential
US $ 12() million. Note that Cargill, the Largest supplier of maize seed to the Indian market. also has some control over global grain prices, and hence the relative economic benefits to the farmer of investing in expensive hybrid seed. Cargill are attempting to force up the price of maize seed: The marketing manager is rueful that his company sells the seed at three times the Indian price in Pakistan (US $ 3.50 per kg). He attributes this price differential to thle lower domestic production of maize seed in Pakistan. Of course diminishing domestic production of seed by domestic Indian companies will inevitably follow the consolidation of the multinational market share. The price of maize seed is,it seems, set to increase.
It is clear that the area fplantedu nder
maizei s increasinga nnually,w hilst sales
It is clear that the area planted under maize is increasing annually,whilst sales of certified seed is falling [Ram 1996] (Table 6). If we assume that the proportion of farmer's saved seed is also falling from year to year, it is evident that an increasing fraction of maize seed planted, though bought commercially, is not certified. This in turn suggests a shift from public sector (generally certified) to private sector (usually uncertified) seed usage.
The director of Pioneer estimates that around 90 percent of the maize market is in the private sector. Some estimates suggest that currently, 25 per cent of maize seed planted annually is hybrid (25-30,000 tonnes of seed), around 60 per cent of open pollinated variety, and 15 per cent landrace. However, it is considered difficult to differentiate clearly between the OP and landrace share of the market. Landraces are used particularly in the north of India, in the Indo-Gangetic belt. Here cropping patterns demand a short-maturing maize. Whereas local landraces mature in 60-70 lays, the quickest maturing hybrid requires 85-90 days. Although yields may be lower, maize is grown principally for domestic (as opposed to commercial) use; maturation time is prioritised over yield. The marketing manager of Cargill estimates that over half the country's maize is grown in the north, with landraces accounting for perahps two thirds of this (note an inconsistency here with the estimate that 15 per cent of maize planted nationally is landrace). By comparison.in the south, maize is grown as a commercial crop and hybrids predominate. In Karnataka, for example, it is estimated that 70-80 per cent of maize is hybrid.
Initiatives are being taken by seed companies to develop the market for hybrid maize in the north. Ultimately, it is believed that the full market potential will be realised only when short-maturing, high-yielding hybrids become available. Kanchan Ganga Seeds claim to have developed such a hybrid, which has seen their maize seed sales leap from 5 tonnes in 1995 to 1,300 tonnes in the first half alone of 1997. Such examples of the direct targeting of hybrid seed at farmers who currently rely upon landraces is uncommon, at least at present.However, in this instance, many of the farmers sowing local landrace varieties of maize are simultaneously using proprietary
hybrid seed in other crops.
The alternative approach is to encourage the planting of maize as a commercial crop in the north. Cargill has entered an agreement with Anil Starch which has a production unit in Ahmedabad requiring large qunatities of maize. Under the agreement Anil guaranteed to buy Cargill maize from nearby Rajasthani farmers, dramatically boosting Cargill sales in the state.
The sorghum market
It is estimated that the total area under sorghum is in the region of 12 million hectares, of which approximately 3.5 million hectares is under hybrids (accounting for annual hybrid seed sales of around 25,000 tonnes). Most of the remaining 8.5 million hectares is thought
to be under landraces, with sales of OP sorghum low. There are two important sorghum seasons, kharif(autumn) and rabi (spring). Ninety-five per cent of sorghum seed planted in the kharif season is hybrid.
This is used principally for fodder. The rabi crop is planted for domestic use (human consumption) and relies upon local landraces which are tastier, and which are more resistant to the shoot fly than proprietary plants.
Hitherto. private companies have had difficulty entering the sorghum market,particularly For the rabi planting.
T his is for several reasons: (1) The yield benefits of hybrids over open pollinated varieties are low, (2) Sorghum flour is used formaking rotis,and farmer's preferences lie firmly with the taste of local varieties, and (3)P ublics ectorseedi s gooda ndo f course, cheaper.However there is increasing commercial interest in rain-fed crops. like sorghum and pearl millet.Hitherto these have been relatively neglected by the private sector because research was easier on irrigated crops, and gains in yield higher. The business manager of Hindustan Lever foresees imminent replacement of rain fed landraces inremdte and tribala reason with hybrids, and Nath Seeds has recently introduced a hybrid sorghum, targeting the rabi market. This has a high grain and fodder quality,resistance to shootf ly, and a claimed (though seemingly improbable) four-fold advantage in terms of yield.The hybrid is derived from local landraces, which Nath Seeds found no difficulty in securing. (Even had this presented problems under farmers' increasing
awareness of the commercial exploitation of landraces by seed producers, similar germplasm could have been freely obtained from the ICRISAT germ plasmb ank).The 1997 rabi season will be the first full season of availability of the hybrid sorghum, and Nath seeds are anticipating sales in the order of 50 tonnes. Mahyco, too, have developed sorghum for the rabi season, claiming a more modest yield
advantage of 25 per cent, and Cargill will launch sorghum hybrids imminently.Although farmers are knowns till to prefer the taste of their own varieties. Cargill hope that they can develop a commercial market in hybrid seed. They envisage farmers planting two discrete sorghum crops. one (of the local landrace) for domestic use. and one hybrid crop for sale.
Despite this increasing interest in rain fed crops, hybrid coarse cereals are sold mainly in assured rainfall areas. In areas where rainfall cannot be assured, farmers are reluctant to invest heavily in expensive seed and the additional inputs required for cultivation of hybrids. Company representatives recognise the market potential for low-input intensive hybrids in areas where rainfall is not assured, but cannot foresee the developmento f this in the near future.
The vegetable market
The market in seed of temperate vegetables far pre-dates the green revolution. However, the first hybrid vegetable seeds were introduced much later than cereals with the release by Indo-American (which, despite its name, is wholly an Indian company) of tomato and capsicum hybrids in the mid-1970s.Hybrids purportedly extend the possible cropping season, offer improved disease
resistance, uniformity of size, and improved transportability Table 7 lists estimated proportions of hybrid vegetable in total cropped area for the year 1993-94. These national figures obscure more dramatic adoption of hybrid seed in some states.A rorat, he managing director of Century seeds, writes that "there has been 100 per cent replacement of open pollinated varietiesw ith hybrids in major
parts of Karnataka, Tamil Nadu, Maharashtra nd West Bengal" [Arora 1995].
According to Arora( 1995) public sector institutions have been handicapped by poors eed distributionn etworksa, ndh avetended to focus upon lower value crops like okra and peas. He claims that "their [the public sector's] mind-set is still not tuned to the high risk involved in demand/supply uncertainties and sudden varietal obsolescence... While public bred hybrids, barring a few, have not been
able to get intot he farmers' fields,private hybrids are spreading at a much faster pace.
Opportunities for multinational companies in the Indian vegetable seed market are different from those in cereals. In the case of the latter, foreign companies can rely upon selling hybrids developed elsewhere,b ut foundt o be appropriate to the Indian market (take Cargill. for example, which spent two years checking existing hybrids for suitability to the Indian climate and market)I. n the case of vegetable seed production, however, greater adaptation of extant hybrids is needed in order to tap the Indian market.In practice, this means that multinational companies (like Peto and SVS Seminis) prefer to form joint agreements with Indian companies. The germ plasm of these companies is then relied upon as the basis for development of hybrids suited to the Indian market.
RESPONSE OF NATIONAL SEED COMPANIES TO MNCs
Representatives of large Indian seed companies (for example, Nath, Mahendra, Mahyco, Indo-American) identify several areas where competition from multinational companies will not greatly impinge on their own marketshares. Firstly, in the case of cereals, they do not foresee serious competition from MNCs in the sale of sorghum or pearl millet, for which access to international sources of germplasm
is of little value. (Note, however, that MNCs are poised to move into the sorghum market.) Secondly, it is felt that, even where the hybrids offered by multinational companies are accepted as good (principally, maize and sunflower) these companies simply do not have the marketing base, production infrastructure or distribution system to capitalise upon this. These sanguine expectations may be ill-founded, or simply affected. KR Chopra, the managing director of Mahendra Seeds reports with a note of optimism that multinational companies 'only' have half the maize market. He says "the widespread fears of the effects upon domestic companies of the Seeds Policy of 1988 and the opportunities this opened up for multinational companies have proven ill-founded". But with half of maize seed sales, according to his own estimates, going to multinational companies, can he really be so complacent?
Attavar, president of Indo-American Hybrid Seeds is more candid in his criticism of multinational companies. He has seen the market share of Indo-American seeds decline since 1988, and is bitter about the aggressive marketing policies of multinational companies,
"with the investment potential to support low pricing". (Note. however, that this is not an avowed marketing strategy of most MNCs. which tend to be price leaders.) To his chagrin, Indo-American Seeds has also lost key staff to multinational companies. Attavar's response has been to look fortie-ups with foreign companies.
Seminis seed, for example, is produced and sold by Indo-American, and capsicum seed grown and exported for Peto. Indo-American has recently completed a huge capsicnum seed production facility at Bangalore. This comprises 100 greenhouses. each 40 m by 10 m, with a total capacity of 1 8 kg of seed per greenhouse. In a celebration of a showcase of Indian industry, the site was opened by the then prime minister Gowda, for whose visit the road up to the site was tarmaced. There is some irony to the fact that the unit is in fact used for the contractual production and export of capsicum seed for a large multinational. Indo-American is not the only large national seed company to have seen its market share erroded following multinational competition. Mahyco, for example. enjoyed an 85 per cent share of the market for sunflower seed in 1988. Today. their share (of an albeit expanding market) has fallen to just 10 per cent. This is attributed by multinational company representatives to poor genetic practice, and careless seed production.
It seems clear that, at least for the immediate future the size of the Indian seed market is set to increase dramatically. Whilst this growth is sustained, direct competition between seed companies may be averted. With the plateauing of the market. it is generally accepted that competition between companies will intensify. K R Chopra (who says he has already seen off attempts to buy Mahendra
Seeds by both Cargill and Monsanto) foresees more mergers and take overs, particularly in the wake of the increased competition that will accompany market saturation.
The managing directors of several small Indian seed companies are evidently very concerned to form collaborative links with foreign companies. One, having solicited me to look for potential UK collaborators, remarked melodramatically "we must join hands with them Iforeign companies] or die". Whilst this director had tried out fifty or more varieties oft foreign seed, in the hope of interesting companies with successful hybrids in ajoint venture, none took him up. Despite his own difficulty in finding a toreign collaborator. he foresees increased collaboration between smaller Indian seed companies and MNCs.
"After companies like Mahyco and ProAgro have all been taken". Smaller companies will. he feels, fulfil a role in the distribution of new varieties, and possibly in the provision of Indian germ plasm. The customer interface of smaller companies is, he feels, more fimbriate,
and may provide local advantages. Furthermore, smaller companies (and certainly Indian companies generally) are allegedly more aware of the importance of appeasing middlemen in the distribution chain. In some instances, seed passes through three such middle men between producer and customer (a distributor, a dealer, and a retailer). Whereas multinational companies may be inclined to
attempt to simplify this process, the managing director of Bejo Sheetal claims that it is these middlemen who really establish sales. Consequently, it is important. he claims, to provide these with appreciable margins. The director of Nath Seeds also recognises the importance of the role of dealers, claiming "farmers blindly follow dealers".
In addition. some foresee a continued market for cheaper open pollinated seed varieties. Those poorer farmers who cannot afford hybrid seed, or higher input levels, and are vulnerable to increase in the prices of fertilisers and pesticides, are seen to present a secure market for small domestic companies. It is also claimed that these farmers are becoming increasingly aware to the accumulative and deleterious effects of saving seed from open pollinated varieties from year-to-year. (Contamination from neighbouring crops leads, it is suggested, to a diminution in yield.) Such farmers are therefore increasingly re-buying open pollinated seed on an annual basis.
Small companies also derive sanguine hope from their conviction that open pollinated varieties have a longer projected marketable life expectancy. Hybrid varieties derived principally from western germ-plasm are, it is claimed by representatives of companies specialising in open pollinated varieties, more susceptible to pests and disease. Indeed, most company representatives admit that hybrid seed has a commercial longevity of around just five years.
Hybrid seed use represents a higher risk, which many farmers are not prepared to take. Note however, that some MNC representatives specifically identify poorer farmers with smaller holdings as being those who could benefit most clearly from a switch to hybrid seed. Such a shift would, they claim, maximise the yields, and therefore profits, of smaller holdings. That many poorer farmers have not switched to hybrids is attributed, they claim, to a caution born of ignorance and to the difficulty experienced by small farmers in securing bankloans. In the case of tomato for example. hybrid seed may be ten times more expensive than open pollinated seed (in terms of price per seeded acre). So, for example, open pollinated tomato seed sells for perhaps Rs 300 perkg (sowing between 500 gm and one kg per acre). Hybrid seed sells for up to Rs 50,000 per kg (sowing perhaps 40 g per acre).
One alternative role for smaller seed companies is the contractual production of seed for larger companies (Sandoz, for example, contracts out seed production to smaller domestic companies). Unicorn Agrotech is one such seed producer. This company concentrates mainly on the production of seed tfor foreign companies, under contract. The managing director claims that there are perhaps five other similar companies which focus upon contract seed production, and there are still others which would like to move into this area. The vice-president of Bhavani Seeds, tor example, also solicited my help in looking for a foreign collaborator. He foresaw a dual role in such a collaboration. Firstly, Bhavani Seeds would produce seed for foreign companies, under contract, and for export. Secondly, he envisaged that foreign companies could sell their own hybrids through Bhavani Seeds marketing base. However, it is evident that smaller seed companies are indeed caught between pillar and post. Whilst Bhavani Seeds looks for opportunities to move towards contract seed production for foreign companies. Unicorn Agrotech is trying to move away from contract growing. toward production of its own hybrids. Under relaxation of the restrictions on investment of foreign companies in India in 1991. two foreign customers of Unicorn Agrotech have set up their own subsidiaries for seed production. Unicorn is feeling that its market is threatened, and has responded by increasing investment in development of its own hybrid varieties for sale on the domestic market.
Some small companies allude to difficulties they experience in producing sufficient seed to meet supply. Bhavani Seeds, based in Bangalore, for example, contracts production of their hybrid sunflower seeds out to local farmers. Bhavani retails their seed for around
Rs 140 per kg (by comparison to Cargill' s retail price of Rs 350). Thus whereas Cargill is able to pay their seed producers Rs 60 per kg. Bhavani Seeds offers only Rs 40-45. Bhavani alleges that this means it has difficulty finding local growers, and has had to contract their seed production out to farmers 'in the interior'. As a result, Bhavani Seeds claims that it is unable to meet demand for its hybrid sunflower seed.
Representatives of smaller seed companies recognise that they are squeezed, increasingly, between a reliance upon a diminishing market amongst poorer farmers for open pollinated varieties, and direct competition with multinational companies. Representatives of multinational companies are well aware of the effects of their increasing market share upon smaller domestic companies. The managing director of ITC Zeneca foresees that as farmers increasingly turn to more expenlsive seed, "shake out will happen", with many smaller companies going to the wall. A former managing director of Cargill is still more categorical: "small companies have no real role; they have pissed on their chips
By and large seed is produced under contract to small farmers. Sandoz, which attempts to minimise both its infrastructural and staffing investments, 'contracts' out to local seed companies. Arrangements for re-buying seed from growers vary. Sandoz takes the most laissez-faire approach, refusing to enter written contracts with farmers or guarantee a price. The company does however guarantee that I'armerws ill receive a 'profit' (i e, that seed will be bought for a price above the market value of the grain). The only incentive for
farmers to resell to Sandoz. rather than on the open market, is the threat of being dropped as a contractor. Indeed, the managing director is proud of his no-fuss relationship with his seed producers, quoting them as saying "Gokhale may skimp on the butter, but he guarantees our bread". This approach contrasts sharply with that adopted by Cargill. Here, it is claimed, emphasis lies upon a transparent agreement with growers (albeit initially produced only in English), who are guaranteed a fixed price forthe seed. There are strict criteria for accepting a farmer as a 'Cargill grower'. Farmers are required to follow stringent land management and fertiliser use guidelines. However, John Hamilton (the former managing director of Cargill) claims a 95 per cent repeat grower rate.
Bhavani Seeds, a small seed company, is embittered that the prices paid for hybrid seed produced under contract for multinational companies are significantly higher than they themselves can afford to pay (Table 8). Bhavani pays twice as much for
production of its hybrid seed as its open pollinated sunflower seed. This is attributed to the increased stringency of growing conditions for hybrid seed. Farmers are expected to co-operate with their neighbours, such that if adjoining farms also want to produce sunflower seed, they too may be provided with Bhavani foundation seed. Bhavani does not guarantee purchase of the seed, which is first purity tested. Failure of this test will entail farmers having to sell the seed on the open market. Profit margins are low, according to retailers. The manager of a small retail outlet in Jalna claims that ProAgro hybrid maize seed, which is bought wholesale for Rs 33 per kg is retailed for Rs 35-37 per kg. Similarly, chilli seed is bought wholesale for around Rs 14,000 per kg, and sold for 15-18,000 per kg. Open pollinated chilli varieties are sold at a greater proportional markup. For example, one public sector variety was bought wholesale for Rs 225 per kg, and sold for between Rs 275 and 300 per kg (Table 9).
The company also sells second generation open pollinated varieties( a market which would become illegal under PVP). In the case of chilli seed, this retails for Rs 150 per kg (approximatelyh alf the price of first generation seed). According to the manager, these only achieve some 50 percent of the yield of the previous generation. This seed is apparently bought mainly by farmers with smaller holdings (note that there is general consensus that there is no correlation between the size of a holding and proportion of farmers buying hybrid seed).
It is typically claimed by multinational companies that the premium prices charged for their hybrid seed are justified (and indeed only sustainable)o n the basis of the superiority of their products, rather than reflecting heavy investment in sales strategies. One approach to testing this claim is to consider instances where several companies sell the same hybrid seed.Here, wide spread disparities in the
pricing of the same seed may be attributable to the differing advertising policies and promotional strategies of specific companies.
In practice, it is difficult to control for other factors which may lead farmers to prefer one brand over another(for example, seed production standards, proximity of the company to its customerb ase,o r after sales service and complaints handling). Such comparisons are necessarily based upon sales of public sector developed hybrids and varieties, which tend to be sold by smaller companies. These may be marked with the Same certification code despite packaging by several different companies. Disparities in pricing can be large. For example, the managing director of Navalakha Seeds claims that he is able to sell a university developed cucumber variety ('Hemangi') for twice the price of some other competitor companies.(Navalakha claims sales at R s 140p er 5 0 g as opposed to competitor sales at Rs 70. In fact, the Navalakha listed price proves to be Rs 105 per5 0 g.) In another example, the businessm anagero f Hindustan Lever makes the more modest claim that they are able to sell a public sector hybrid of sorghum ('Paras') for some 15 percent more than other competitor companies. Something that is attributed to "the reputation of Hindustan Lever for high quality seed production". Variation in the pricing of the public sector-developed cotton variety NHH44 are shown in Table 10.
Farmers are apparently becoming increasingly aware of brand name. The manager of Tryambak Krishi Kendra seed retailers claims that Mahendra Seeds was the first to commercially release the NHH44 variety on the market. If now commands a large market share in the variety, despite high pricing. Another approach to assessing the role of marketing strategy in fixing prices is to look at regional variation in the price of the same seed, produced by the same multinational company. Pioneer Hibred, for example, admits to high pricing of its maize seed in Bihar. where the company profile is high. Elsewhere the same seed is sold at lower prices. Pioneer staff openly attribute this to the success of their advertising campaigns in the state, rather than the particular suitability of Pioneer maize sees to the local climatic conditions and cropping patterns prevalent in Bihar. Agrawal (1996), the managing director of ProAgro-PGS. foresees that: "The brand name will become more important. Farmers will ask more and more for branded seed. The same hybrid or variety (imported. from public institution, International Agricultural Centres) sold under various brand names will compete with each other
and a strong brand name is expected to capture a larger market share.
Legislating for Privatisation
Under the Trade Related Intellectual Property Rights (TRIPs) arrangement of the General Agreement on Trade and Tariffs (GATT). signatories are required to legally confer exclusive property rights to seed producer. If these are conferred through legislation consistent with the International Union for the Protection of New Varieties of Plants 1991 (UPOV9 1), farmers will be divested of their rights to exchange seed, and even to save seed for their own use. UPOV91 thus "effectively extends the rights of plant breeders to allharvests derived from the original seeds" [Clunies Ross 1996]. It amounts to legislation for the further privatisation of the seed industry - a process which has already been described as resulting from increased use of hybrids, and a decline in public sector seed development and production. In the UK, enforcement of plant breeders' rights has led to the progressive restriction of seed potato production. To begin with, holders of new plant variety rights demanded royalties from farmers producing seed potato from their products.Subsequently permission to produce seed potato was restricted to farmers operating under contract to the plant breeder. Gradually, the acreage allocated to growers was reduced contracts stipulated tighter specifications for seed potato production, and the prices paid diminished. Seed potato production became concentrated in the hands of a few companies who colluded to manipulate prices, and limit supply [Clunies Ross 1996].
Industry representatives in calling for Plant Variety Protection legislation in India, identify several 'commercially significant' concerns
- The prevalenceo f the use of lines stolen from one company by another which may not have it sown research and development programmeT. hesep arentalli nes are then used fort he production of hybrid seed.By and large, such thefts are attributed to ephemera 'lf ly by night' companies Some credence is lent to this viewpoint by small companies themselves. For example, the managing director of newly-established,though small seed company, alluded to a fear of 'retrospective royalty claims'.However, the most notorious example allowed the large-scale exodus of staff from Pioneer. Many employees left for other large companies, reputedly taking parent allines with them.It is claimed by the former managing director of Cargill that 'all' long-maturity maize currently planted in India is derived from this dissemination of Pioneer's parental lines. The manager of Nath Seeds commented that India is recognised by International Seed Trader's Association staff as "the global capital for securing [other companies] parental lines".
The interception of seed between contract grower and seed company, by small seed retailers Such retailers may offer contract
growers a higher price for hybrid seed than agreed contractually with the owner of the foundation seed from which this was produced. Presently, the only sanction which large companies can take in this instance is to drop offending farmers as contract growers in subsequent seasons. The sale by smaller companies of second generation open pollinated seed, and F2 hybrid seed.This is widespread. One seed retailer in Jalna,f or example, sold second generation open pollinated chilli seed at around half the price of the proprietary seed.
Some companies attach relatively little commercial significance to the lack of PVP. Absence of protection for open pollinated varieties is of little concern to many larger companies which deal mainly, or exclusively, in hybrid seed) and reuse of hybrid (F2) seed is not perceived as an important issue.The managing director of Cargill, for example, suggests that PVP is an irrelavance with respect to two- and three-cross hybrids. He does concede, however, that introduction of single-cross hybrids will be postponed pending legal protection of these. Furthermore, one of his predecessors at Cargill claims that the company would introduce open pollinated varieties of rape if legislation guaranteed protection of this. The director of Pioneer also indicated that his company would have introduced single-cross hybrid maize seed, were this protected by PVP legislation. Indeed, he claims that none of the 18 companies selling hybrid maize seed in India are selling higher yielding single cross hybrids.
However, other representatives of large companies call for immediate legislation to address these infringements (as they see things) of their intellectual property rights. The business managerof Hindustan Lever, for example, sees the lack of PVP legislation as a major restriction upon commercial hybrid production, and predicts a rapid invigoration of the private sector market following such legislation. He emphasises the current risks of development and production of hybrids due to theft of parent, breeder or foundation seed.
It seems probable that the widespread replacement of local landraces with high yielding varieties was at least in part dependent upon farmer's freedom to save and re-use seed from season to season. without the obligation to repurchase from seed suppliers. This practice is particularly prevalent in the case of open pollinated seed (though F2 hybrid seed may also be saved). Seed producers, however, profess to be uninterested in legislating against either the seasonal retention of seed, or the exchange of this on a non-commercial basis between farmers. Deepak Mullick, the managing director of ITC Zeneca, speaks for the Associated Seed Industry (ASI) (a body representing the interests of the private sector seed industry in India): "What is a farmer's right? The farmer has a right to access to the best avilable seed. Saving seed for his own use, and exchange with his neighbours is not important to ASI; sale by small seed companies is." It is clear that this attitude may be more pragmatic. than magnanimous. Some estimates put the proportion of saved seed planted at over 90 per cent. Farmer-saved seed can therefore hardly be considered a commercial irrelevance. Rather, many managers agree that it would be impractical to litigate against farmers' use of saved seed, even were this to be made legally possible,given the prevalenceo f seed reuse. This amounts to tac it acceptance of the fact that legislation based upon
UPOV91 is inappropriate in an Indian context. In the west. most farmers are consumers. on an annual basis. of proprietary seed. In these countries, the legislation can be enforced - and indeed already has been enforced in some instances.
PLANT BREEDERS USE OF LOCAL LAND RACE
Under UPOV91 stipulations, the role of farmers as innovators in the development and constant refinement of local landraces is unrecognised. There -is a fundamental a symmetry in the UPOV91 recommendations. Industrial breeders are permitted to incorporate traits from landraces in their lines. There traits then become subject to plant variety protection, which is extended retrospectively to landraces exhibiting these same characteristics. This provision does not take effect reciprocally. however, the use of proprietary varieties in farmers' own breeding programmes is of course prohibited. This generates a rachet effect, by which landraces become subject to variety protection as their traits are incorporated in proprietary varieties and hybrids. The pool of landraces free from such restrictions will thus progressively diminish as plant breeders accumulate control over farmers' own varieties.
To what extent this scenario will be realised depends in large part upon the dependency of plant breeders upon local' landraces as sources of 'new' and desirable traits. Plant breeders are able to access landrace germplasm either through public germplasm banks, or directly, by prospecting down on the farm.
Plant breeders in India have access to public germplasm banks, subject only to a small administration charge.The National Bureau for Plant Genetic Resources holds a total of 1,65,000 accessions, of which 1,04,000 are landraces. It also holds many varieties and hybrids generated by public sector research institutions. Problems are encountered in encouraging private companies todeposittheir germplasm with the bank a scheme has been suggested whereby companies can use locked boxes. to which they alone will be granted access for some fixed time period.
By and large, multinational companies are not presently dependent upon local germ plasm in the development of their seed. As discussed above, the multinational market niche is centred upon selection of extant seed, globally and production and marketing of this for the Indian farmer. In the case of typical seed sold by MNCs (sunflower, maize, soya, sorghum sudan grass or cotton, for example) there are no important resources of Indian germ plasm upon which to draw.
However, producers of seed for crops which have a long history of arable exploitation in India are more highly dependent upon germplasm from local landraces for their research and development. In the case of national Indian companies, which may not have the access to international sources of germplasm available to multinational companies, use of local land races is more prevalent. Century
Seeds, for example (an Indian company specialising in development and production of hybrid vegetable seed) admits to heavy reliance upon local landraces. These are acquired on an informal basis. Whether or not farmers' heightened awareness of intellectual property rights issues has affected the availability of local landraces to commercial plant breeders is equivocal. Some company representatives,
A Mangat, director of Century Seeds included, report that demands for payment are increasingly made by local farmers for access to their germplasm. The director of Century Seeds failed to see the basis for farmer's demands for payment, feeling that they should have no rights to their landraces. Otherwise, he observed, "royalties should be paid to the Iraqis for wheat, and to the Mediterraneans for cauliflowers". The basis for discrimination between farmer-developed landraces (a 'national resource') and Century Seeds' latest tomato hybrid, based upon such a landrace (and guarded possessively by Century) is unclear.
Others point to the ease with which local landraces can be collected, and the difficulty of policing their exploitation. Seed can simply be recovered, for example, from produce bought at local markets. This points to the difficulty of safe guarding farmers' rights to their germplasm, even in the event of such rights becoming recognised by law. Some large seed companies (SPIC, for example) are investing in biotechnological approaches to identifying their germplasm (screening at the level of DNA sequence), allowing this to be traced in the event of suspected use by other companies. Such technology is of course not available to local farmers who may experience corresponding difficulty in demonstrating the unacknowledged use of their landraces in proprietary hybrids. This dependency upon local landraces does not translate into a concern for their preservation in the field. Rather crop researchers allude to the convenience of public sector germplasm banks, and foresee no reason why free access to comprehensive banks should not replace prospecting for germ plasm in the field.
On the whole, private sector seed companies produce parent seed and breeder seed on theirown farms. This is principally for reasons of security. Farmers are then supplied with foundation seed and produce hybrid seed under contract. Few company representatives identified land-ceilings as presenting a problem in seed production. This was partly because circumventing restrictions upon land ownership (or at least leasing) was considered straightforward. Also however, all company representatives said that, even in the event
of land-ceilings being abolished, they still envisaged contracting seed production to farmers. Large areas of land are required for the production of hybrid seed, and it was considered uneconomic to attempt this on corporate owned holdings. That land-ceilings are not considered an issue by many companies is demonstrated by the ignorance of company representatives of actual land-ceilings. In Andhra Pradesh, for example. managers' estimates of the maximum possible landholding ranged 'from 45 acres to 550 acres.
But there is a further incentive for companies to continue contracting seed production to small farmers. D B Sharma points out that "the embodiment of labour in agricultural produce has been devalued by treating family farm labour as of zero value, because it is free" [Shiva 1996]. This attitude is confirmed by the general manager of ProAgro PGS, who recognises that "in contracting out to a farmer, one is actually enlisting the services of his whole family at minimal expense, whereas on corporate farms, management staff would need to be employed at additional expense". Great care is exercised over cultivation of small areas of crop by a farmer and his family, not least because their very livelihood depends directly upon the productivity of their land.
Some managing directors take the opposite view, however. Deepak Mullick, the managing director of ITC Zeneca, sees it as highly problematic that "seed production over an area of a thousand acres entails dealing with a thousand farmers". Apart from the administrative problems this generates, there are problems of isolation of the seed production crop. Company land ownership, he feels, is a priority, particularly for production of breeder seed. The issue of land-ceilings is also important for the president of Indo-American Hybrid Seeds. Attavar, who in addition to his own farms, produces seed though contract with between seven and eight thousand farmers, has appealed for an exception to the Karnataka state land ceiling. He expects to secure this setting, he claims, an important precedent.
In addition to the encouragement of foreign capital inflows. liberalisation obovertly courts the transfer of new technologies from industrialised countries. It is anticipated that imports of new technology will precede the diffusion and assimilation of these by domestic industries, boosting international competitiveness in the global marketplace. However, such transfer cannot be expected to occur on the basis of deregulation of technology import alone. State intervention to nurture domestic research and development projects may also be needed. According to Bhaduri and Nayyur (1996, p 40) "the assumption. strongly advocated by the government, that direct foreign investment will transfer technology automatically. is both simplistic and dangerous". Theyclaim (p 1 18) "...it is clear that market structures and government policies have not combined to provide an environment that would encourage the absorption of imported technology.... or create a milieu that would be conducive to diffusion and innovation". The failure of liberalisation to encourage technology transfer is acknowledged by multinational companies themselves. The former managing director of Monsanto. for example, does not consider technology transfer to be an important tactor in the liberalisation of the Indian economy, and does not foresee transfer of Monsanto technology to domestic companies. He says that it was made clear before Monsanto developed its agricultural biotechnology business in India that this would be controlled solely by the multinational and that there would be no agreements for licensing the technology to others. Indeed, Monsanto's collaboration with Mahyco leaves little room for optimism that it will lead to increased competition and technology transfer. Monsanto has signed an exclusive deal with Mahyco. which would require
the approval of the latter if Monsanto's techonology were to be made available to other Indian seed companies. Although one such company is apparently prepared to pay Rs 400 million forthe incorporation of the Bt construct into their own cotton hybrids, under contract, it is to be anticipated that Mahyco will veto any such arrangement.
But if exclusive agreements (such as that forged between Monsanto and Mahyco) seem to leave few opportunities for broader dissemination of technology, such opportunitiesa re still less easy to foresee in some other cases. Nath Seeds, for example, has entered an agreement with Royal Sluis, a Dutch company owned by SVS Seminis. Biotechnological development of vegetable hybrids is expected to proceed through a joint venture recently forged between SVS Seminisa nd Monsanto. Nath anticipates benefiting from the is without needing t o enter direct contracts with Monsanto itself, and quite possibly without any initial research and development being conducted in India.
According to one possibles cenariop, arental lines would be sent by Nath to Monsanto laboratories in the US for incorporation of the Bt construct, and returned for subsequent field testing in India.
The benefit of joint ventures with foreign companies which is most frequently extolled by representativeosf such enterprises, is the availability of foreign germ plasm.Indeed,o ne is left witht he impressionth at had the exchange of germ plasm from the west to India
been as fluid historically as it has been in the reciprocal direction, there would be little benefit accruing from foreign investment in the seed industry.
Other company representatives do not even identify access to international germ plasm as a benefit of foreign collaboration. The business manager of Hindustan Lever, which is controlled by a 51 percents take held by Unilever, was unable to identify any area of technology transfer from the parent company to Hindustan Lever.This latter company has produced some 80-90 per cent of its product range in-house, independently from Unilever. The managing director of Kanchan Ganga Seeds is also seeking tie-ups with foreign companies,t houghe mphaticallyn ot for technology transfer( the company claims to be a leader in hybrid maize technology, with its short-maturing hybrid).Rather, Kanchan Ganga has experienced difficulty in securing loans( although its current loan ceiling is 10 million rupees), driving it to the sale of some parental lines, and seeks foreign collaboration as collateral for further investment.
In another area multinational companies claim effective technology transfer to the farmers themselves. This, it is claimed, has been particularlys ignificanti n encouraging better cropping and planting practices. In 1988, for example, public sector experts were recommending planting of sunflower seeds at a density of 3 kg per acre. Cargill found better yields were obtained by planting at the far lower density of one kg per acre. Yet Cargill can lay claim to no unique area of expertise
PLAN1B REEDERSU' SE OFL OCAL
ualifying them to make such recommendations. It would clearly have been equally possible for properly funded public sector research institutions able to finance research in commercial hybrid crops to have reached the same conclusion.
Biotechnological development of new transgenic crop varieties in India relies heavily upon western technology and investment. Development proceeds either through branches of transnational companies, or a marriage of convenience between western biotechnology firms and national seed companies. Under this latter scenario, the western collaborator provides biotechnological expertise and investment, whilst the national company provides Indian germ plasm, and a marketing base. Already, representatives of smaller seed companies are concerned that, limited as they are to classical breeding technologies, they will be progressively excluded from the market. Increasingly, this market will be dominated by a small number of large companies with the financial resources to invest in biotechnological research. Projections for the growth of the transgenic seed market vary. Some company representatives point to the difficulty experienced by the industry in persuading farmers to switch to hybrid seed, despitet he first introductiono f this
more than 30 years ago, and are correspondingly pessimistic about the acceptance of transgenic crops. The marketing manager of Cargill predicts that Bt-maize seed will sell for perhaps five times the price of hybrid seed,and foresees that it will be a decade or more before transgenic crops are generally accepted. Others, however, express the opinion that the source of the farmers i'nertia to moving toward use of hybrid seed stems from a reluctance to pay for seed perse. Having developed a high level acceptance of hybrid seed, corporate strategists foresee that acceptance of genetically engineered crops will be far easier to effect. Indeed, Mahyco, who has formed a company jointly with Monsanto, hopes that genetically modified cotton will account for entire sales of hybrid cotton seed within 7-10 years. Sales of Round Up Ready soyabean and Bt modified maize are expected to follow within the next two years (Table 11). In their corporate literature, ProAgro are buy an to about the possibilities of developing long-term biotechnological solutions to the problems of insect pests, writing that they are developing "...a proprietary strategy to prevent or delay the development of resistance in insects to Bt proteins". Privately, however ProAgrorepresentatives concede that the projected commercial life expectancy of their
products is just tour to five years.
After this period, it is expected either that the disease or insect resistance of the crop will have been eroded as a result of pathogen
or pest adaptation. or simply that the technology will have been superceded by more effective products. This rapid obsolescence is viewed as being advantageous for several reasons. Firstly, as pointed out by the former managing director of Monsanto. it will be difficult or rival companies to acquire the technology, and develop and release competitive products. whilst there is still demand for these. This is viewed as an important consideration in the absence of Indian PVP legislation. Secondly, it will ensure that the biotechnology industry continues to be highly technology-intensive. Technology transfer to domestic companies will be delayed as a result of the fast pace of technological change. This will effectively reserve the market in transgenic crops for multinational companieswith the financial muscle necessary to remain competitive in the field. Several company representatives alluded to the need for 'simplification' of mechanisms regulating the development of transgenic crops: "Regulation to commercialise the transgenic seed/products are quite strict, time consuming and far from transparent... In many countries in the world. one is not required to seekpermission from the regulatory department to conlduct trial with transgenic seeds, but simply to inform about the intention to conduct such a trial... India should become more transparent with respect to introduction of transgenic seeds and regulations should become more simple" [Agrawal 1996]
In fact, the department of biotechnology's 'Guidelines for Safety in Biotechnology', covering recombinant DNA technologies in micro-organisms, large-scale industrial processes, field trials of transgenic plants. and quality control of biological material obtained by recombinant DNA processes runs to just 14 pages. Whilst these guidelines are mandatory, K Kumar of the Centre for Cellular and Molecular Biology in Hyderabad notes that there are as yet no mechanisms for penalising those found to be contravening them.In practice, however, it seems that the agri biotech industry has precious little ground for complaint. The former managing director of Monsanto, whose trials of transgenic cotton have reached large acreage stages. has remarked at the ease with which permission was granted for each stage of the development of the crop in India. The department of biotechnology's permission was required, or will be required, for import of the Bt construct transfer to Mahyco cotton lines,outdoor planting, large acreage trials, and commercial release. At no point during this process was Monsanto's schedule interrupted by delays in permission being granted. Indeed, in another context (development of BST for commercial release in India), approval was obtained by a single part-time employee within just 12 months.
Compounding one technological super fluity with another the range of crops a men able to hybrid development is being extended
This is achieved through genetic contrivances which introduce male sterility to previously self-fertilising plants. Examples are provided by ProAgro-PGS's SeedLink system, which has been introduced to mustard, or SPIC's male sterlice.T herei s growing private sector interest in the paddy market following the development of hybrid rice (ProAgro for example.h ave recently set up Rice Hybrid International).