Herbicides bright spot for Indian agrochemical firms

Amid a weak business environment, herbicides remain a bright spot for agrochemical firms in India. The herbicides business, which has been outperforming the agrochemical market growth for the past several years, is forecast to grow at strong pace in the next few years too.

Manpower shortage and high agricultural wages are driving demand for herbicides. Historically, the availability of an abundance of low-cost workers meant there wasn’t much of a need for herbicides, as the work of uprooting the unwanted plants could be done manually. But as wages rose, manual weeding has become an expensive affair, which in turn is driving demand for herbicides.

According to Avendus Capital Pvt. Ltd, in the five years to 2014, the herbicides market expanded at an average annual pace of 15%, faster than the 10-13% growth registered by insecticides and fungicides. Insecticides are used to kill insects, while fungicides destroy fungi. The total agrochemical market is estimated to grow by 12% per annum.

Avendus Capital forecasts the insecticides and fungicides market growth to moderate to 10-12% in 2014-2019. But herbicides are expected to maintain the growth tempo. From $900 million in 2014 the herbicides market is estimated to double to $1.8 billion in 2019. “This trend is expected to continue going forward, with strengthening demand arising for herbicides from increased mechanization and reduced labour intensity of agricultural practices, higher labour cost arising from urbanization and reduction in rural population,” Avendus Capital said in a note.

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