Agriculture Policy

Govt Mulls Price Control of Pesticides, Revamp of Insecticides Board; Sets up Committee

The agriculture ministry wants to bring pesticides under price control. At a meeting on 27 September, officials told the pesticide associations to “rationalize” the prices of about two dozen commonly used molecules, reports Vivian Fernandes. This article was first published in the Financial Express

After generic drugs it might be the turn of pesticides to be brought under price control. The government has set up a seven-member committee headed by P Balram, former director of Indian Institute of Science, Bengaluru, to suggest “suitable way for reduction/control in prices of pesticides as done in the case of generic drugs.”

Industry sources said the government has been adamant about pesticide prices being reined in. Sensing the mood, Crop Care Federation of India (CCFI)  issued an advertisement on Tuesday that its members have agreed to reduce the MRP of important pesticides which will help farmers in reducing the cost of cultivation. The lobby group has 48 companies as members, all of them Indian.

CCFI’s offer will give the agriculture minister something to brag about. Earlier, the seed industry had agreed to a 10 percent reduction in maximum retail price (MRP). This was after the 5 June police firing on protesting farmers in Madhya Pradesh’s Mandsaur district, which claimed six lives. At that time the agriculture minister was attending a yoga programme with Baba Ramdev in Motihari, his constituency. He got bad press for his comment, “yoga kijiye (do yoga)” when reporters sought his comments on the Mandsaur incident.

A meeting of the seed industry was called soon after. It agreed to a price reduction but the pesticide industry did not. On 15 July, the ministry notified an eight-member committee headed by Archana Sinha, Joint Director (Chemistry) in the Central Insecticide Board &  Registration Committee “to suggest mechanism for price control of pesticides” on the lines of  drug price control. It was to submit its report in 45 days.

The mandate of the new committee is wider. Apart from price control, it will review the working of the insecticide board, make an assessment whether it is fulfilling its mandate, suggest “pragmatic” ways to bring transparency into its working, evaluate guidelines regarding provision of technical and safety data, and suggest ways to prioritize the registration of pesticides manufactured in India.

An executive with a foreign company reads this as a repeat of the nationalist versus multinational game that is playing out in the seed industry.

Rajnikant (Rajju) Shroff, the Chairman of CCFI is also the Executive Chairman and Managing Director of UPL Limited, India’s largest manufacturer and exporter of agro-chemicals. Half of its turnover of Rs 16,800 cr last year came from exports.

During a conversation in August Shroff had disfavoured price control. Pesticides are sold below the marked price because of competition. There are about 40 companies making technical (generic) pesticides and about 800 formulators (some defunct). “Price control in pharma is a different thing,” Shroff said. “They are life-saving drugs. There is connivance with hospitals. In India there are millions of farmers and thousands of dealers.  India is the cheapest and most competitive producer of pesticides.” Enforcement of price control would be difficult, he asserted. Dealers usually charged marked prices from those farmers who bought pesticides on credit, he said.

Crop Life India (CLI), which is a lobby group of 14 agro-chemical companies, most of them multinational, is vehemently opposed to price control. “Prices are not out of control, so there is no need to bring them under control,” CLI’s CEO Brij Uberoi said. “We believe in free trade and market determined prices. Competition is severe. Eighty percent of pesticides sold in India are generic,” he added.

The incidence of taxes on pesticides had gone up by three percentage points with 18 percent GST, Uberoi added.  India is one of the lowest per capita consumers of pesticides. Crop protection chemicals account for just 2.5 percent of the cost of cultivation. “Our members are disturbed.  Compared to other markets we make less profits here,” Vasant L Patil, Crop Life Asia’s Director for Science and Regulatory Affairs said.

By offering to cut marked prices, CCFI intends to stave off price control. In August, Shroff had said the outcry about high prices was being orchestrated by importers from China who feared a ban. Agriculture officials said at a meeting that they had received complaints about high prices. “We put an (application under) RTI (Right to Information Act). We got reply that there was no complaint of high prices. It was an oral complaint.”

Shroff’s larger objective is to fix the insecticide board. He has been unhappy about its functioning. He thinks it is favouring multinationals. He had complained about its irregularities to the Prime Minister in January last year.

“We wrote to (PM) Narendra Modi. He said form an independent committee.” But Shroff found fault with the composition of the committees and complained to the Prime Minister about five times.

Shroff’s believes officials have connived with MNCs. On the pretext of introducing new molecules, they have been allowed to import formulations for sale in India and given exemption from registering the technicals for the first three years. After the expiry of the three-year period, they have used litigation to extend the privilege. Shroff said there are more than 10 such compounds being sold in India.

MNCs fear that if they register the technicals of molecules that have gone off-patent, Indian generic producers will be able to produce cheap copies and drive them out of the market. Shroff gives the example of bifenthrin, a pyrethroid insecticide, which MNCs used to sell as a brownish liquid of 89 percent purity. “We introduced 99 percent pure free-flowing powder.”  It has been a hit in Brazil. His company came in for praise for the product from President Lula (now sentenced to jail for corruption), he says, during President Pratibha Patil’s visit to the country in 2008.

Shroff said a post-emergent herbicide used in rice fields was being imported and sold for Rs. 8,000 a litre. But competition from Gharda Chemicals, Insecticides India and Godrej Agrovet has brought down its price to Rs 3,000 a litre.

Shroff is tapping into the “Make in India” and “Corruption-free India” sentiment. If the insecticide board gives priority in registration to agro-chemicals manufactured in India, farmers will no doubt benefit, but his company will also be a principal gainer.

(Top Photo of Rajnikant (Rajju) Shroff of UPL Limited. Photo by Vivian Fernandes)

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