Due to weakening of India rupee, inputs for agriculture including pesticides and herbicides have turned costlier, says a BL report.
Agro-chemical makers such as Dhanuka Agritech and Insecticides (India) Ltd have hiked their product prices by 10-15 percent ahead of the kharif sowing season. This is mainly since the drop in the rupee value has made their chemical inputs costlier, noted the report.
Rajesh Aggarwal, Managing Director of Insecticides (India) Ltd said: “It is impossible to match last year's product prices. There's no way we can absorb the impact of the weakening rupee. We have recently increased prices by an average of 10-12 percent across our product range and we are also contemplating on implementing another round of price revision sometime in June-July".
The import dependency for various inputs such as intermediate chemicals and technicals ranges as high as 30-40 percent for many agro-chemical players. Besides the rupee slide, the increase in prices by Chinese chemical manufacturers is also hurting Indian players, the report pointed out.
MK Dhanuka, Managing Director, Dhanuka Agritech Ltd said: 'Our Chinese suppliers have hiked prices as high as 50 percent for some intermediate chemicals, which is affecting us'. What is more, the company imports about 25 percent of its raw materials to make pesticide and herbicide formulations. The hike in excise duty in the Budget 2012 has already been passed on to consumers resulting in higher prices. Even multinationals such as Syngenta are feeling the heat of a weakening currency, the report argued.
Parveen Kathuria - Head of Sales at Syngenta India informed: “Ideally we will like to pass on the costs to our customers, but recognising the fact that our customers profitability is also impacted because of the inputs cost going up and output prices under pressure, we will evaluate and selectively pass the cost of goods increase, but this is certainly not sustainable for us. We believe everybody is evaluating this option and will decide in the next couple of days or so". However, the agrochemical makers are divided on the impact of the price rise on consumption of their products. Dr KC Ravi, Head of Commercial Acceptance and Public Policy, South Asia, Syngenta said: 'With the price increase and input cost going up, consumption is bound to come down and ultimately the overall production of crop protection products for the country is likely to be affected".
But, Dhanuka felt that there would be no big impact of such price rise on consumption as farmers are getting better realisation for their crops and they would continue to purchase pesticides to safeguard their crops from pest and diseases. 'However there is always some impact on the consumption pattern due to such price rise,' Dhanuka added.