‘Policy Challenged’ Agri Seed Companies Cut Down R&D Spends On Hybrids, GM Crops

One of the sectors that has seen phenomenal growth in the last few years is the seed industry. Its growth is the main reason why production of crops, including horticulture and floriculture, in the country has been setting new records every year.

According to IMARC, a leading research firm, the value of the Indian seed markets grew at a compounded annual growth rate of 17 per cent between 2010 and 2017. The seed sector has witnessed this phenomenal growth due to the policies of the government like the National Food Security Mission (NFSM), National Pulses Development Project (NPDP) and the National Seed Policy.

These policies strengthened the seed industry in research and development (R&D), product development, supply chain management and quality assurance, says IMARC, adding that India now ranks the fifth largest seed market in the world.

However, the growth is under threat now and it will likely drop over the next five years. The Indian seed industry faces the danger of its growth shrinking that could result in a setback to government programmes such as NFSM and NPDP. In turn, this could also result in a huge setback to the Narendra Modi government’s efforts to double farmer incomes by 2022.

The NFSM envisages to increase yield of foodgrains every year, while the NPP aims to improve production of pulses through replacement of improved seeds and varieties. Why are these programmes likely to face problems, one might wonder?

The problem for the Indian seed sector is that the business climate is no more conducive at it was before. This has resulted in major seed companies cutting down their Research and Development (R&D) activities on new hybrid varieties. Also, some of them are winding up their biotechnology R&D operations.

In particular, major seed companies have stopped R&D activities on genetically-modified crops with the government particularly silent on allowing biotech crops. Seed companies could be carrying out R&D on other general traits and varieties, but these are far and few in between and don’t really ring in the cash for them.

Seed firms have resorted to such a move because of uncertainty in their business climate, mainly arising out of the problems in releasing new genetically-modified crops. Developments with regard to government policies and court interventions since 2010 have affected the R&D activities of these companies. They are now of the view that it would be better to scale down their operations in specialised fields such as hybrids and transgenics than to continue amid uncertainties.

In 2010, the United Progressive Alliance (UPA) government announced a moratorium on the commercial release of genetically-modified or Bt brinjal. When the Supreme Court stayed field trials of GM crops in April 2012, further research on transgenics came to a halt in India.

India’s agricultural production had gathered momentum mainly since farmers opted for seed replacement or going in for new variety of seeds. For example, maize (corn) production increased at a rapid pace compared with other crops mainly because of global seed firms introducing high-yielding hybrids in the Indian market. Maize production increased from 14.71 million tonnes (mt) in 2005-06 to a record 27.82 during 2018-19 crop year that ended June.

According to Nuziveedu Seeds, the seed replacement rate in maize is an average 50 per cent nationally, with farmers in Karnataka going in for total replacement. The replacement rate in bajra is nationally 63 per cent and 100 per cent in Gujarat. Similarly, farmers in Andhra Pradesh have gone in for 100 per cent replacement of jowar and sunflower seeds. The high seed replacement has helped farmers increase their income through higher production and yield.

One major reason why major global seed firms like Monsanto (which has now been taken over by Bayer), DuPont Pioneer, Syngenta and BASF ramped up their operations in India was the success reaped by farmers who planted genetically-modified cotton.

Bacillus Thuringiensis (Bt) cotton, better known as Bollgard I, gave cotton farmers a taste of how technology could help them. This was followed by Bollgard II and both helped farmers gain as they helped farmers tackle pests affecting the crop and reduced spraying of insecticides. In fact, the Genetical Engineering Appraisal Committee gave permission to over 50 Bt cotton varieties.

The advent of Bt cotton in India saw the country becoming the third largest country where transgenic crops were grown - all of it under cotton. However, the fact was that India didn’t progress beyond cultivating Bt cotton. Though efforts were on to introduce genetically-modified maize, mustard and brinjal, they haven’t gone beyond field trials.

In fact, efforts to launch Bt brinjal commercially led to a host of problems. Country-wide non-governmental and environmental organisations were up in arms over the move. This led to a public hearing of views for and against Bt brinjal by the UPA government, led by the then Minister for Environment Jairam Ramesh.

The hearings led to a moratorium of commercial release of GM crops. Then, following a Supreme Court stay, field trials of GM crops came to a standstill until 2014.

When Veerappa Moily was made the Minister for Environment, he allowed field trials of 11 GM crops, including maize, sorghum, rice, wheat, groundnut and cotton. In July that year, the GEAC under the new National Democratic Alliance government of Modi approved 21 varieties of GM crops for field trials.

In 2016, the GEAC gave its approval for holding field trials of GM mustard but the Supreme Court stayed it. In addition, companies producing GM crops found timelines for evaluation of the varieties a deterrent. The companies found the government intervention in fixing a maximum retail price for Bt cotton seeds as compounding their problems.

Seed companies also found problems with the implementation of Protection of Plant Varieties and Farmers Rights Act. The firms find it difficult to protect all their varieties as they have to register them with the nominated authority. Small seed companies, in particular, find the process costly. Besides the registration process is cumbersome and takes time.

All these have led to some of the major companies cutting down their R&D operations in the hybrid and transgenics varieties. For example, BASF has shut its biotech operations in rice. The German firm was a key technology provider in rice biotechnology. It had plans to commercialise a rice variety that has higher yield.

DuPont had set up a knowledge centre in 2008 and recruited about 300 plant biotechnologists. It also wanted to introduce a rice variety that gave a higher yield. The operations at the knowledge centre have been pruned and have been scaled down at least 50 per cent in the last one year.

Indian companies that had invested their Bt cotton returns on biotechnology R&D have cut their expenses on such operations. An industry note, accessed by Swarajya, said that plans of seed companies in the cereals business could take a hit due to “current policy challenges”. It could also lead to India missing an opportunity to become a seed production hub in the region to supply seeds to countries like the Philippines, Vietnam and Bangladesh.