Whether in the agriculture industry or not, all of us have a direct link with food. I came across this article about the seed industry in Economic Times last week. Now seed is the most important and primary input to agriculture and the demand for seed will always be there. No matter what the conditions a farmer will always sow, making seed industry highly lucrative in the entire agricultural chain. Scare land, growing population and rising food prices necessitate the need for agricultural innovations to increase yield. As the crop development is embedded in the seeds, they are the primary vehicles of delivering the new technology. According to the ET article, the Indian Seed Industry is currently growing at ~20% a year!
Broadly speaking seeds are of two kinds: varietals and hybrids. Varietal or open-pollinated seeds can be reproduced for many generations with little deterioration in quality. So after the initial purchase the farmer can multiply his own seeds. Hybrids on the other hand are developed through controlled pollination and cannot be reused and thus need to be repeatedly purchased. White and rice are mainly varietal seeds, while hybrids are large on cotton, oilseed, pearl millet, maize and sorghum.
The private sector is mainly into hybrid seeds. While the public sector consisting of the National and State seed corporations and agricultural research institutes is still limited in their research capacities focussing largely on varietal seeds. Now a growing private sector in something as basic as seed gives me mixed feeling.
Competition ensures that private sector is working on cutting edge technologies and innovations. Large International names such as DuPont or Monsato do bring in huge capital and expertise. Nearly 75% of agricultural biotechnology plant patents are owned by the private industry. Innovations have resulted in drought tolerant and pest resistant crops such as BT Brinjal, corn and sorghum. Most crops can now be grown all year round and across all the climatic regions on India. All this sounds good for the food industry.
The industry is pushing for a move from varietal to hybrid seeds. Seed companies maintain that while varietals may appear cheap they are expensive in the long run as yield and quality deteriorates from one generation to another. Now private firms are there because of the gains from the higher productivity and they would appropriate some cost of R&D to the farmer. Hybrids are thus priced higher and also need to be repeatedly purchased. Without any government control on pricing, are they viable for the small farmer? There are also concerns that land once tilled with hybrid seeds cannot be used with varietal seeds making the farmer dependant on the private firm.
There is also some recent research that claims that crop yield and quality can be improved by magnetic treatment. A development, which has received no interest from any of the seed companies!
A free market and competition should ensure better quality and benefits to the farmer. While I can’t dig a lot deeper into the economics of the seed industry, I just hope it is happening.
Disclaimer: The views expressed are author’s own. The views expressed herein are not intended to harm any person or entity – they are merely the opinions of the author. Any factual errors, misunderstandings, or misinterpretations are author’s own.
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