Bayer looking at double-digit growth in India
German chemical and pharma giant Bayer AG completed the integration of biotech major Monsanto’s India business with itself. This came after Bayer AG announced a $63-billion megadeal to acquire the US-based biotech major Monsanto to create the world’s biggest agro-chemical and seed company. In their first interview after the merger, D Narain, Managing Director & CEO, Bayer CropScience Ltd, and Simon-Thorsten Wiebusch, Chief Operating Officer, Crop Science Division of Bayer for India, Bangladesh and Sri Lanka, told BusinessLine how Bayer’s crop sciences unit is trying out new models to make farming sustainable and profitable for farmers even as the company is eyeing double-digit growth in India. Excerpts:
What are the key targets that you have set for Bayer post the merger with Monsanto?
Narain: One of the most important targets for the crop sciences business we have set sight globally is to transform the lives of 100 million small farmers. So a company for profit but with a strong socio-economic impact. This fits well with India’s stated goal of sustainable farming. We are also focussed on the Make in India vision. On the seed side, we have started building up significant production capabilities to support global needs. Earlier, we were sourcing primarily from America and Europe. We are also building up digital capabilities aimed at small farmers. We are assembling a team for agri-tech and start testing models in India and take it to other parts of the world.
How does the merged entity look like in terms of products and footprint in India?
Simon: Monsanto brings in its expertise in corn, cotton and also vegetable seeds. From a footprint point of view, we have moved from 4 commercial units to 5. But more importantly, there is a rethinking of how we approach the market post this merger. Monsanto brings in a lot of intelligence on digital platforms and how to disrupt this market. It gives us more techniques in addressing the key issue of keeping farmers on the farm and keeping them happy. Asia is about 10 per cent of our business but it is where 50 per cent of the population resides. So the opportunity here is huge.
Narain: We have for the first time created a vertical, reporting to me, that is developing models to interact with farmers that will transform our future business. The biggest synergy is in infrastructure and people. India is a talent base for building future leaders.
How did you deal with cultural issues while merging the two companies?
Narain: Right from day one, we set out to understand what are the cultural aspects we should keep and what we should leave out. Bayer has its own culture but we looked at what we can bring in from Monsanto. This was done over a period of 12-15 months through discussions with multiple layers of people across the organisation. What came through was there were more similarities than differences. One of the differences was that Bayer, being a large global entity, had its own processes and Monsanto, much smaller, had processes that enabled quick decision making. So we had to find a convergence between the two so that it didn’t become a sticking point.
How big is India for Bayer from a global business point of view?
Narain: Overall, we are still small. For a country of this size, we need to be much bigger. But in crop science business, we would be among the top 5-6 countries for Bayer globally. It is one of the markets that can drive growth for us in the future.
Simon: India is important for us to test some of the new business models and see if we can scale them up globally.
What are the new models you are testing here?
Simon: What we have done in places like Varanasi is to partner with other players in the ecosystem to ensure that farmers’ income grows five to tenfold. We cannot do it on our own because its also about using the right fertilizer, getting accurate weather updates, and linkages to market the produce. Once you have such successful models then we can take it to the Government and showcase it as a way of uplifting the farmer community. Building such value chain partnerships is where we need to go in the future.
Is it a crop-specific intervention?
Simon: Now that we have success models what we want to do is to encourage holistic farming which involves collecting data from the farm and telling the farmers where the leakages are and how he can improve profits. Can we help the farmers predict if he will make better money by the time he harvests the crop? How do we make sure that supply is managed between geographies to deal with spikes in pricing?
What are the challenges?
Simon: The biggest challenge is scaling up. We are currently engaged with 2000 farmers on this programme. India has over 130 million farmers. As Bayer, we perhaps interact with not more than 3 million farmers. That’s where partnerships come in. We are talking to Government and there is tremendous interest.
How do you deal with pricing given that India is a highly price-sensitive market?
Simon: We can have a debate on cost versus quality. So this view that it needs to be cheaper doesn’t really fly. Sustainability for me starts with ensuring farmers make a profit. I need to participate in the outcome not just sell a product. That changes the perception of cost.
Are you looking at financing as part of this model?
Narain: That is something we are working on. There are two missing pieces that we have to solve to scale this up: financing and risk mitigation. You can improve yields and improve quality but if prices crash then we need to cover that.
What kind of growth are you targeting for the crop sciences business in India?
Simon: We need to target double-digit growth in India. It is my personal ambition to make India the most important market in the global context. But we are not here to just a get a part of the pie, we want to grow with the growing wealth of the farmers in India. In the global context, the Indian market is number 5 or 6 and we are far away from number 4.
What are the challenges in achieving targetted double-digit growth?
Simon: If only I could convince the Government to deregulate everything and open the markets for me. That’s not going to happen, right? So we focus on what I can influence and I try to gain credibility.
When I see a menace like the Fall Army Worm out in the maize, it is easy for me to say, please Indian government, deregulate Bt on maize and you are going to solve this issue. I need to build credibility and I need to build bridges along the way. We are taking baby steps right now to see are they ready to discuss with us. Do we bring enough to the table to convince them that we are not the multinational that’s coming in just to suck the money and take it out of the country. Because, unfortunately, that’s the image of multinationals sometimes, right or wrong.
Narain: What we can do are invest in technology, breeding, digital tools. As we engage with governments, not just as Bayer, but as multi-stakeholder engagement, we start showcasing the benefits on technology. Even if we keep the biotech out, drones is a good example. Today, 10 per cent of planted acres in China is using drone technology. At the same time, how do we break the logjam on biotech with constructive dialogue. That’s where we want to collaborativee approach. For us to get double-digit growth, we have to unlock the potential of agriculture in India and grow with it.
Simon: Drone is a good example. We need to deliberate much more on the use of drones. The readiness to adopt technology is absolutely mind-boggling in this country. If China moves completely into automated farming, then India’s competitiveness becomes really tricky.
The government is telling farmers to go back to basics, and trying to promote Zero Based Natural Farming (ZBNF). How do you see this?
Narain: All these things – organic, ZBNF and traditional farming fall in the same bucket. I think everything should be looked at from the prism of co-existence and what brings value to the farmers and what brings value to the consumers. We are not here to say this is good or that’s bad. It is a large country, huge acres. Let the farmer have the choice.
Considering the stalemate over GM crops, are you looking at newer technologies for breeding?
Narain: Absolutely. Within the framework of the Indian regulation we are working and bring in all those technologies that are possible. By just saying I want to make the Indian agriculture globally competitive is not going to solve the problem. The whole regulatory approval process for newer technology – can that be opened up and accelerated. Then coming further down to drones. How do we fast track and bring it in. When it comes to bio-technology, it is a tough nut to crack. It has been de-regulated for cotton. Can we unlock cotton? That whole sector has started to lose competitiveness. So it is a technology you opened up and another three or four generations have gone. And we are still stuck in last generation introduced in 2006. So that’s the multi-layer approach we would like to drive this forward.
Are you looking at investing in start-ups or is it more collaborative?
Simon: We are screening and we are interacting. There lot of interesting start-ups, some in areas of disease recognition technologies and so on. We tend to do approach them to see any opportunity to work together. The technology which was brought in with Monsanto is more robust than some of these start-ups, but the beauty is backward innovation you find here. Make it simple, make it cheaper and make it smaller adapted to Indian conditions is the biggest advantage.
What’s your focus on the vegetables?
Simon: Its tomatoes, cucumbers, and chilies. Globally we have decided to support more gourds. Seeing the size of the Indian market, there is okra. Seeds are a very local thing. They are bred for the local environment. Most of the corn sold under Dekalb brand here is specific to India or Asian growing conditions. There is a strong seed industry in India. Here the topic of locals versus multinationals is sometimes not as obvious because the Indian players are producing their own germplasm. They are spending lot of money developing it and want it protected.
The use of unapproved Herbicide Tolerant (HT) seeds are on the rise. How do you see this development?
Narain: It’s definitely a challenge because it is illegal planting. The challenge is more from a farmer’s standpoint. You are buying spurious stuff which may not work. That is the reason why, I think there is a huge opportunity to collaborate as an industry with the government to break this log jam because more proliferation is not going to benefit anybody at all. This is an opportune time to look at the sector end-to-end and say how is India going to become competitive again. Since the last 4-5 years, countries in Africa have come and looked at the Indian model and have started adopting it there. Brazil is expanding significantly. So as we speak, the competitiveness is one thing that we need to grapple with. In the context of illegal HT, it is not going to help anyone.
With regard to the developments relating to glyphosate in the US, are there any ramifications in the Indian context?
Narain: Glyphosate is the most used agrochemical in the world. The HT topic has led to three state governments restricting the use of glyphosate. The interest in glyphosate is actually rising because of the labour costs and labour shortage. People lose sight of in the whole discussion is that it is actually the most tested and in many one of the safest agrochemical currently on the market. That is where it sometimes hurts because perceptions are really so far away from reality.
Source : thehindubusinessline