Opportunities For The Chemical Industry In Indian AgricultureRaman Ramachandran, Ph.DHead South Asia, Chairman and Managing Director, BASF India Limited

March 17, 2016

Challenge of the 21st century

… The beginning of the 21st century is marked not just by multimedia

technology and data highways, but also by the elementary question of how we

can feed nine billion people …

Lester R. BrownFounder of Worldwatch InstitutePresident Earth Policy Institute

By 2050 global food production has to double, to feed 9 billion people

The India challenge: Demand for quality and quantity of food

UN 2015 estimates; FAO 2015 estimates; World Bank 2015 report

Shrinking agricultural land due to urbanization

Effects of climate change

Changing dietary

needs driven by higher household

income

Gap in demand and

supply. Wastage a major factor

Nutritional challenge:

194.6 million malnourished

people

World's most populous nation by

2022

Yield/ha in many crops lower than the world

average and stagnant

Immense pressure on Indian agri sector

What is the solution to these growing challenges?Technology and Innovation

Without agricultural chemicals < > With agricultural chemicals(decitons raw grain yield / ha)

No herbicideNo insecticideNo fungicideNo fertilizer

38

With herbicideWith insecticideWith fungicide No fertilizer

69

No herbicideWith insecticideWith fungicideWith fertilizer

82

With herbicideWith insecticideNo fungicideWith fertilizer

92

With herbicideWith insecticideWith fungicideWith fertilizer

99

Fertilization: 120 kg of N/ha as NPK 20+8+8

Demo-test Agricultural Center Limburgerhof, photo 20.07.2010

Benefits of fertilization and crop protection technology

Chemistry as an enabler: From fertilizers to crop protection and beyond

Ammonia synthesis Fertilizers

Seed treatment

Nutrient management

Water management

Crop protectionU 46 herbicide

Mulching Food processing Aerial appln. Farm equipment

What are the opportunities today for the chemical industry, to help meet the country’s food challenge?

Growth and opportunities in crop protection

Agropages, FICCI & Tata Strategic Management Group reports, 2015

India is a key player in generic space; however, greater focus and invesment in R&D is needed

The Indian agchem industry is estimated to reach € 6.7 billion by FY19 from € 3.82 billion in FY14, with an expected CAGR of 12 percent

Export demand is expected to grow at 5-16% p.a and domestic demand is expected to grow at 5-6% p.a

~ € 8.1 billion worth of patents for more than 50 agrochemical products are expected to be taken off the patent list by 2020

R&D process: A lengthy effort

140,000

Costs per active

ingredient

225million euros

Years 1 2 3 4 5 6 7 8 9 10

Active Ingredient

Chemistry

Formulation

Research

Biology

Development

Degradation& residues

Toxicology

Ecotoxicology

Small-plot trials

Registration

Kilo lab scale

Process development

Synthesis

Production

Process development

Development

Field trials (worldwide)

Plant, animal, soil, water, air

Algae, daphnia, fish, birds,microorganisms, bees, beneficials

Acute and chronic toxicity, carcinogenicity, mutagenicity, teratogenicity, reproduction

Screeninglaboratory/greenhouse

140,000 molecules tested per year, resulting in 1 productIndustrieverband Agrar, 2008

Lessons from China on investments in technology and innovation

Foreign Policy Journal, Choices magazine

3 fold increase in agri productivity from 1961 till date

China’s guiding annual policy blueprint, the “No. 1 Central Document,” put agricultural innovation at the top of the nation’s wish list, for the 13th year, straight

The President has advocated overseas agricultural investment as a national food security and diplomatic strategy

Focus on R&D and M&A activities with industry consolidation

Opportunity in fertilizer technology and biologicals India fertilizer import in FY 2015-16: 83.09

Mio T

Industry is expected to grow to 69.2 Mio T in FY 2016-17

The annual consumption of fertilizers, in nutrient terms (N, P & K ), has increased from 0.07 Mio MT in 1951‐52 to more than 28 Mio MT in 2010‐11

Urease inhibitors (UI), micronutrients and biofertilizers key for yield enhancement and cost saving (for the farmer)

Central Government is also promoting the production and use of bio-fertilizer through “National Project on Development and Use of Bio fertilizers”

GOI: Department of Fertilizers

Smarter fertilizer use yields environmental benefits

Agriculture Research Station:

Focusing on local and global agricultural challenges

Areas of research include herbicides, fungicides, insecticides and solutions beyond crop protection

To employ directly and indirectly 30 new employees to support research efforts, in Pune

Mulching with ecovio® :

Biodegradable mulch film

No removal and disposal at the end of the crop cycle: films will be ploughed under the soil

Reduction of the environmental impact on the soil when traditional plastic is not properly disposed of

Bio-fertilizers:

Contribution from Becker Underwood portfolio is expanding the scope of our biological solutions

Innovation campus: Investment of

approximately €50 million

25% of global R&D employees in Asia Pacific by 2020

300 scientists will collaborate in Mumbai on global and regional R&D projects

Mumbai Campus to start up in 2017

Limus UI:

Nitrogen management: Products

that improve the availability

of nitrogen to the crop and reduce nitrogen losses

BASF’s commitment to R&D and innovation in India: Some examples

Now, let’s look beyond the conventional approaches into the opportunities that lie in the food value chain

Packers /Shippers

Produce processors

Distribution centers

Foodservice distributors

Food / Bev.Producers

RetailersClub stores

Supermarkets

Foodservice providers

Growers

Grain elevators

Feed processors

Feed distributors

Animal producer

Meat /Dairy / Egg processors

Seed producers

Grain processors

Oil seed processors

Additives Suppliers / Premixers / Dist.

Distributors

FOOD DISTRIBUTIONFRUIT / VEGETABLE / STARCH / LEGUMES

Biotech traits

Germplasm

FOOD / BEVERAGEMANUFACTURING

Ag chem suppliers

Raw material/

Inerts suppliers

* According to IFG, USA / separate value chain for aquaculture

Not in scope: floriculture, palm oil / fuel

Food industry value chain*Definition of scope

Agriculture Meat, dairy, eggsGrain processing

Major opportunity areas: Our view

Cold storage Transportation & logistics Food packaging

Drip irrigation Food processing NutraceuticalsPest management

Inadequate storage infrastructure, insufficient supply chain, poor packaging and nutritional security are key areas to focus on

Crop protection (AP)

Pest control (AP)

Vitamins, carotenoids, Omega 3-s, polymers for

beverage processing, caffeine (EN)

Post-harvest coatings (AP)

ITG Packaging

Waste treatment

Superabsorbers for soil (EM)

Ecobras, Ecovio for plantation (KT)

Seed treatment (AP)

Flooring (EB)

Warehouses/Cold storage (EB) & (PM)

Crop Protection / Seed

SupplierManufacturer

Super-market

Distributor

Consumer

Food Service

Food Ingredient

supplier

Additives for agricultural mulch (EV)

Additives against soil erosion (EM)

Reactants: amines, specialties, polyalcohols Solvents: NOP, NMP, propylene carbonat (CZ)

GrowerFarmer

Pest Control (AP)

Micronutrients for fertilizer, inerts, adjuvants (EM)

Food emulsifiers, chelates (EM)

Organic Acids for feed (sales by

EN / production CZ)

Value chain food and agricultureBASF‘s current offering

Continuing our legacy of innovations in the value chain

Chemistry can successfully help meet the demand for more (+70% by 2050) and better production of food, feed and fuel and contribute to sustainability

BASF pigment Sicotan® Yellow coated special

tarpaulins = reduction in temperature by 3-4

degrees Celsius, leading to lesser

wastage

Our Polyurethane (PU) insulation

solutions for cold storage, especially for

Potato = energy savings of over 15%

Newtrition™ products and solutions =

human health and well being. e.g.

vitamin A, B2, B5, B12, D3, E, K1,

phytosterols (Vegapure®) and

omega-3 (Pronova Pure®)

Biodegradable and compostable

packaging solutions with BASF

ecoflex® = effective and efficient

preservation of fruits and vegetables

Carifend®, one of our innovations in the

public health space, can be effectually used in the grain

storage space as an insecticidal net = protection against invasion or attack

of pests

And all this through sustainable agriculture – with the help of technology

Balance Social

Economic

Ecological

19

Custody/Transport

Retailer

Off the farm production of

operating funds

Preparation Input

Cultivation HarvestingProcessing

Disposal

Investigate sustainability performance of different Soybean practices, by quantifying key environmental, social and economic performance characteristics (indicators)

Demonstrate the impacts of Samruddhi farming practice on the sustainability compared to non-Samruddhi practice Biodiversity potential - 10%

Soil health

Yield* + 22%

Ecotoxicity potential - 22%

Land use

Professional training

Water use

Costs - 16%

Profit + 31%

* kg/ha, all other factors per 1 MT

- 4%

+ 16%

- 22%

- 2%

50 on-farm interviews were carried out by TÜV India Ltd on behalf of BASF

The life cycle steps in grey are not considered, since they are equal for all alternatives

Samruddhi addresses various key sustainability drivers, if not all

AgBalance™ study on Samruddhi

In summary India will have to double its food

production by 2022

Technology and innovation will be key tools to address India’s food and nutritional needs

Chemistry and the chemical industry will play crucial roles in mitigating the challenges of agriculture

We need to focus on opportunities not just in the crop protection and fertilizer space, but look beyond, at the entire food value chain