3 Chairman’s Statement Dear Shareholders, Viewing agriculture from a long-term perspective, the positive transformation of Indian agriculture since the new millennium after 1999 is very noticeable. Of course this is true for urban India too. However the question arises whether the transformation is adequate, competitive and fair. We are assailed with well-placed public concerns about these three aspects. I wish to share some perspectives about rural and agriculture indicators in this new millennium because of their relevance to your Company – o Although agriculture accounts for the late teens in our GDP, considerably more than half of India’s labour is employed in agriculture. The unique importance of agriculture in India must be viewed in this context. o The terms of trade for agriculture have considerably improved during the last fifteen years compared to earlier decades. Per capita rural income growth has matched urban. One anecdotal evidence is that FMCG companies derive increasing business shares from rural. o Rural Incomes have been positively influenced by more production from a near constant acreage, more favourable MSP policies, funds spent for rural development/ MNREGA type schemes and higher growth of non-farm income compared to farm income. Farming costs though have also risen. o There is a less visible reason, but which needs to be stated and should not be taken for granted. This is the instinctive intelligence of the Indian farmer. Farmers have experimented and adopted new ideas and technologies, even though their training in the skills of modern farming is patchy or minimal. The pressure point is that our enterprising farmers do not have the benefit on-the-ground of institutional risk mitigation measures, which are essential for their risk-taking. o Though Indian farm productivity has increased over fifteen years, other countries have increased productivity faster than India. Compared to certain crops of China and Brazil, there is headroom for India to increase farm yields. The higher growth elsewhere is driven by administrative and technological factors: aggregation of land parcels, improved crop protection/ nutrient technologies, adoption of technology-driven seeds, expansion of irrigation and so on. o Against a perception in some quarters that Indian farmers use too much pesticides, the reality is that India’s per hectare consumption of agrochemicals is less than Pakistan, let alone US or Japan. Unfortunately, despite these positive trends, India experiences cases of extreme poverty, distress and farmer suicides; these incidences are gut-wrenching. The conditions of rural India are also marked by growing ecological imbalance. Water shortage, depleted soils and fields, polluted water bodies, decreasing biodiversity are only some issues that are challenging the sustainability of Agriculture. With respect to farmers, noted sociologist, A. R. Vasavi has rightly pointed out that farmers feel marginalised within our political economy as they face five types of risks – yield risk, price risk, policy risk, human risk and financial risk. She has rightly argued for skill-based education, and increased awareness in agricultural and agrarian methods.
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Chairman’s Statement
Dear Shareholders,
Viewing agriculture from a long-term perspective, the positive transformation of Indian agriculture since the new millennium after 1999 is very noticeable. Of course this is true for urban India too. However the question arises whether the transformation is adequate, competitive and fair. We are assailed with well-placed public concerns about these three aspects.
I wish to share some perspectives about rural and agriculture indicators in this new millennium because of their relevance to your Company –
o Although agriculture accounts for the late teens in our GDP, considerably more than half of India’s labour is employed in agriculture. The unique importance of agriculture in India must be viewed in this context.
o The terms of trade for agriculture have considerably improved during the last fifteen years compared to earlier decades. Per capita rural income growth has matched urban. One anecdotal evidence is that FMCG companies derive increasing business shares from rural.
o Rural Incomes have been positively influenced by more production from a near constant acreage, more favourable MSP policies, funds spent for rural development/ MNREGA type schemes and higher growth of non-farm income compared to farm income. Farming costs though have also risen.
o There is a less visible reason, but which needs to be stated and should not be taken for granted. This is the instinctive intelligence of the Indian farmer. Farmers have experimented and adopted new ideas and technologies, even though their training in the skills of modern farming is patchy or minimal. The pressure point is that our enterprising farmers do not have the benefit on-the-ground of institutional risk mitigation measures, which are essential for their risk-taking.
o Though Indian farm productivity has increased over fifteen years, other countries have increased productivity faster than India. Compared to certain crops of China and Brazil, there is headroom for India to increase farm yields. The higher growth elsewhere is driven by administrative and technological factors: aggregation of land parcels, improved crop protection/ nutrient technologies, adoption of technology-driven seeds, expansion of irrigation and so on.
o Against a perception in some quarters that Indian farmers use too much pesticides, the reality is that India’s per hectare consumption of agrochemicals is less than Pakistan, let alone US or Japan.
Unfortunately, despite these positive trends, India experiences cases of extreme poverty, distress and farmer suicides; these incidences are gut-wrenching. The conditions of rural India are also marked by growing ecological imbalance. Water shortage, depleted soils and fields, polluted water bodies, decreasing biodiversity are only some issues that are challenging the sustainability of Agriculture.
With respect to farmers, noted sociologist, A. R. Vasavi has rightly pointed out that farmers feel marginalised within our political economy as they face five types of risks – yield risk, price risk, policy risk, human risk and financial risk. She has rightly argued for skill-based education, and increased awareness in agricultural and agrarian methods.
Sixty-seventh annual report 2014-2015
Rallis India Limited
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Technology, Risk and Policy
I am not an agricultural economist, nor a sociologist. However my many years with Hindustan Unilever, Tata Chemicals and Rallis, have helped me learn a little bit about the rural India and farmer challenges. Over the last few years, I have spoken to you about how factors like increasing population, growth in emerging economies and increasing urbanization have spurred demand for food. Adoption of new agricultural technologies has helped the world to avert the dire predictions on food shortage made by scholars such as Robert Malthus and the Paddock brothers.
In India, the pressure to meet food requirements becomes even more acute considering the static or slightly decreasing acreage, fragmented land holding, inadequate risk management and slow adoption of technologies. Almost an exception to the global rule, India’s population will surely increase over the next two decades. Ensuring sufficient food production in a sustainable way will be a challenge. How do we produce more food in the short run without trading off the long run?
India needs very rapid diffusion and adoption of technologies such as – hybrid and genetically modified crops, precision farming, soil enhancement, GIS-based weather and water data, mechanization, and mobile Internet-based farm extension and market information services – all of these could improve yield, help create additional value and raise income of farmers and eventually cater to India’s growing need for food. But such diffusion of technology must necessarily be accompanied by agricultural skills training, as pointed out by Dr. Vasavi.
In order to usher in industrialisation, the government enunciated the Industrial Policy Resolution and enacted the Companies Act in the 1950s. Simultaneously in order to cater to the demand for skilled industrial labour, ITIs were established. Development financial institutions and industrial insurance institutions were actively promoted.
With respect to agriculture too, the country needs three things: first, a National Agricultural Policy; second, it needs institutions to help farmers own a part of an agricultural enterprise. Farmer producer organisations (FPOs) are already permitted under the Companies Act. This progressive possibility needs to be more aggressively and actively promoted among farmers. It would facilitate land aggregation, and the ushering in of professionalism and modern technology into farming; third and last, the country needs modern farm technical skill training. Agricultural Technical Training Institutes (ATTIs) can be set up across the country, a bit like the ITIs in the decades gone past.
If such a holistic view at agriculture is not undertaken, then the tensions within rural India and with urban India will grow.
Company Performance Overview
Last year we faced unfavourable agro climatic conditions and saw farmer sentiments affected due to impacted crop yield coupled with lower prices of key crops. I am happy to state that despite the adverse conditions, your Company crossed a new milestone of consolidated net sales exceeding ` 1,800 crores for FY15, a growth of 4.3% over previous year. PAT also grew by 3.5% to ` 157.22 crores. Your Company’s deep understanding of Indian agriculture, sustained relationships with farmers, quality agrochemicals, branding and marketing expertise and its strong brand portfolio has been crucial in upholding its business performance.
For sustainability the Company has phased out hazardous products (recognised by a red triangle). The Company is focusing on growing a compelling portfolio of non-pesticides products and business lines: Plant Growth Nutrients, Organic compost, seeds, micro-nutrients, and Contract Manufacturing.
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Our flagship farmer relationship building initiatives such as Rallis Kisan Kutumb (RKK) have been very effective extension systems with significant increases in farmer contacts (over 1 million farmers) and productivity improvement. The Samrudh Krishi programme provides a holistic agro-advisory wherein customized recommendations are provided by crop-advisors who visit each farmer’s plot. Through these programs we endeavour to deliver up-to-date information in the form of improved agronomic practices coupled with efficient use of agro-chemicals to improve productivity and lower costs using various communication means such as regular contacts throughout the crop cycle, organizing crop seminars, product demonstrations through carefully designed Package of Practices (PoP), Farmer exchange programmes (Prerna), Focused Group Discussions (FGDs) and Advisory Services.
In order to build necessary field force competencies, your Company has launched the Tata Rallis Agri-Input Training Scheme (TRAITS) initiative in 2011-12, whereby non-graduate, rural youths with a farming background are trained in agri-marketing and crop advisory activities. TRAITS has helped in providing employment to and improving employability of rural unemployed youth with an agricultural background. Through this intervention, which nurtures and equips youth, opportunity is created for them in the Company and elsewhere, as this kind of skill set is in demand across various Organizations. 8% of the participants under the TRAITS programme are from communities who deserve affirmative action.
Your Company is increasingly making its presence as a holistic agricultural solutions Company, driving agricultural productivity, adding value and changing the lives of farmers.
Acknowledgement
I would like to end by expressing my sincere appreciation for the continued support of the shareholders, employees, Tata Group, suppliers and commercial partners during the year. I would also like to thank my colleagues on the Board for their support and guidance to the Company’s management, which goes a long way in encouraging the management in meeting the challenges in the growth path.
Chairman
Mumbai May 19, 2015
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