INDIA MARKET REPORT ADOPTION OF BT COTTON IN INDIA PACE OF ADOPTION OF BT IN INDIA STATE-WISE ADOPTION OF BT COTTON IN INDIA (FIGS IN THOUSAND HECTARES) Source : ISAAA Series of Biotech Crop Profiles Source : ISAAA Series of Biotech Crop Profiles COTTON SHARE IN SUMMER PLANTING COTTON-FOODGRAIN-OILSEEDS SHARE IN SUMMER PLANTING Summer plan+ng includes oilseeds, food grains and co4on. Food grain includes cereals plus pulses. Cereals includes coarse cereals plus rice Oilseeds includes Non-edible and edible Oilseeds : Groundnut, Nigerseed, Sesamum, Sunflower, Soybean & Castor. Food grains : Rice, Jowar (Sorghum), Bajra (Pearl Millet), Maize (Corn), Ragi (Finger Millet), Small Millets, Pulses (Grain Legume). 1
COTTON ACREAGES ACROSS REGIONS (PERCENTAGE SHARE) MAJOR COTTON GROWING STATES SATURATED OR SCOPE FOR INCREASE The share of Orissa & Others has remained constant at 1% from 2002-03 until 2015-16. q CAGR for the regions and the country o North : 0.46% o Central : 2.6 o South : 6.37% o India : 3.1 Source : Cotton Advisory Board MAJOR COTTON GROWING STATES SATURATED OR SCOPE FOR INCREASE MAJOR COTTON GROWING STATES SATURATED OR SCOPE FOR INCREASE IRRIGATED COTTON ACREAGES IRRIGATED/RAINFED COTTON YIELDS Irrigated Acreage 2011-12 Percentages India 36 518 Brazil 4 1353 Pakistan 100 769 USA 40 886 Uzbekistan 90 645 Source : Directorate of Economics and Statistics for India; ICAC for other country irrigation percentages and USDA for yields 10 9 8 7 6 5 4 3 2 1 Canals Tanks Wells Tube wells other sources 1% 7% 21% 17% 13% 12% 2 26% 27% 3 35% 3 17% 39% 8% 4 49% 11% 27% 38% 61% 4 12% 38% 4% 47% 43% 2% 3 2% 33% 38% 28% 12% 16% 21% Gujarat Maharashtra A.P. & Haryana Madhya Punjab Rajasthan Karnataka Tamil Nadu Telangana Pradesh 57% 3% 18% 10 5 10 93% 26% 19% Source : Directorate of Economics and Statistics for India 2
BAD MONSOONS OFTEN COINCIDE WITH EL- NINO. REVERSE ISN T TRUE IRRIGATED/RAINFED COTTON YIELDS 2011-12 Percentage Area Under Co4on Irrigated Area Rainfed Area Irrigated yield Rainfed yield Irrigated (Million Hectares) (Million Hectares) (Million Hectares) (Kg/hectare) (Kg/Hectare) Yield (Kg/ Hectare) Produc+on (Million Bales) Punjab 100.00 0.560 0.560 0.00 607-607 2.00 Haryana 99.90 0.641 0.640 0.00 690-690 2.60 Rajasthan 93.00 0.470 0.437 0.033 605-651 1.80 Gujarat 56.70 2.962 1.679 1.283 750 396 597 10.40 2015 monsoon over the country was 86% of its Long Period Average. Maharashtra 2.70 4.125 0.111 4.014 750 365 375 9.10 Madhya Pradesh 49.80 0.706 0.352 0.354 750 263 506 2.10 AP/Telangana 18.20 1.879 0.342 1.537 750 497 543 6.00 Karnataka 26.00 0.554 0.144 0.410 750 358 460 1.50 Tamil Nadu 29.10 0.133 0.039 0.094 750 864 831 0.65 Orissa 0.00 0.102 0.00 0.102 750 583 583 0.35 Drought Below Normal Near Normal Above Normal Excess 53% 6% 29% 6% 6% Source : Indian Meteorological Department Others 0.00 0.00 0.00 0.00 750-739 0.20 India 35.90 12.132 4.305 7.827 708 398 511 36.70 Source : Directorate of Economics and Statistics for India; ICAC for other country irrigation percentages and USDA for yields COTTON ACREAGE AND YIELDS COTTON YIELDS (KILO PER HECTARE) 14.00 6.77 6.46 600 13.00 12.00 11.00 5.19 5.76 6.24 6.29 6.21 550 500 (million hectares) 10.00 9.00 8.00 2.02 2.35 2.07 2.35 2.89 3.02 2.69 2.81 2.65 2.38 2.69 2.31 3.04 4.13 4.10 4.76 5.22 4.93 450 400 350 (kilo per hectare) 7.00 6.00 5.00 1% 6% 15% 42 % 66 % 81 % 81 % 84 % 87 % 9 92% 88 % 300 250 4.00 200 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 WAF countries include Burkina Faso, Mali, Benin & Cote d Ivore Source : Cotton Advisory Board and IMD SCOPE FOR IMPROVEMENT IN YIELDS SUMMARY Increase in fertilizer usage Increase in pesticide usage Lower plant density Lower yields in India Declining water tables Moisture stress Uncertain Climate Balance usage of fertilizers and pesticides Mechanization High Density Planting System Improvement in yields Better water & pest management HDPS will help crop escape moisture stress & will have lesser weeds Better seed quality u Diminishing marginal returns on Bt-yields given current crop husbandry and irriga+on support (FH BT-era ; r ~ 81%, SH BT-era ; r = 49%) u Pest resistance to Bt (increasing CoP + reducing yield) u North and Central zones area saturated u South zone has scope for expansion if profitable vs compe+ng crops u Indian rain-fed yields ~ 400 kgs/ha similar to WAF (Brazil is 1500 kgs/ha) u Indian Irrigated yields ~ 700 kgs/ha similar to Pak/Uzbek (Australia is 2250 kgs/ha) u Government focus on food crops vs cash crops u Will High Density Planta+on adop+on be as successful as BT-Co4on and will it give diminishing returns like BT u Can we move from low efficiency irriga+on (ridge-furrow) to high efficiency irriga+on (low cost drip)? u Mechaniza+on of picking?(picking Cost in India is $113/mt vs $55/mt for Pak vs 36/mt for China) u Is BT the long term solu+on for farmer? u Produc+on to range between 5.80-7.40 mmt unless something drama+cally changes (lowest acreage, lowest yield : highest acreage, highest yield over the last 5 seasons) Source : CICR 3
MINIMUM SUPPORT PRICE (USD/MT) Minimum Support Price (SUMMER CROPS) Source : CACP for MSP prices and RBI for forex MINIMUM SUPPORT PRICE (CAGR) MSP PROCUREMENT (KMT) Range: 2.5-5.5% 4131 4097 4760 5219 4930 5185 5763 6239 6290 6766 6460 Source : CACP for MSP prices and RBI for forex Source : CCI/Nafed/Mahcot for MSP procurement and CAB crop figures GROWTH IN CAPACITY OF COTTON / MAN-MADE FIBRE TEXTILE MILLS CONSUMPTION CAGR of installed spindle capacity is 2.63% Source : Textile Commissioner s Office 4
INDIAN COTTON CONSUMPTION (KMT) INDIAN COTTON YARN PRODUCTION (MILLION KG) 14% CAGR for Indian cotton consumption : 4.76% CAGR for World cotton consumption : 0.95% Source : Textile Commissioner s Office RELATION BETWEEN COTTON CONSUMPTION & COTTON YARN EXPORTS (Figs in million bales of 170kg each) 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 (P) Co4on Yarn Export 4.96 4.15 4.40 5.38 5.82 8.23 9.73 9.31 9.44 Co4on Consump+on 23.69 22.9 25.9 25.91 25.07 28.32 29.95 31.76 32.3 Consump+on Growth YOY - -3.33% 13.1 0.04% -3.24% 12.95% 5.77% 6.04% 1.7 Percentage of yarn exported 21% 18% 17% 21% 23% 29% 33% 29% 29% Yarn eq - -0.81 0.25 0.97 0.44 2.42 1.50-0.43 0.14 Domes+c Increase - 0.02 2.75-0.96-1.28 0.83 0.13 2.24 0.40 Total - -0.79 3.00 0.01-0.84 3.25 1.63 1.81 0.54 Percentage - 8% - - 75% 92% -24% 25% Source : Textile Commissioner s Office for consumption & DGCIS for cotton yarn exports 5
Total Market Size : 1571 USD Billion SUMMARY u About 3 of Indian yarn is exported; up from 2 about 8 years ago. 5+ of current exports of yarn are to China; where the world co4on spread with domes+c co4on has been decreasing u Co4on consump+on has grown by 3.5 CAGR over the last 8 years but yarn consump+on has increased by 2.23% pa only. If co4on yarn exports stay constant over the next 5 years i.e. equivalent to 9.44 mn bales of co4on; co4on consump+on would be around 35mn bales by 2020 (around 5.95mmt) assuming domes+c market grows at 2.23% pa u Need to develop the value add sector to enable import subs+tu+on of greige and processed fabric for domes+c use u Relax SSI norms for knits sector to enable economies of scale COTTON- TRADE TO/FROM INDIA u Indian neighbours have access to cheap indian raw material and compete with india in finished goods with their benefit of duty free access to Europe/US, even with low value addi+on (BD, Pak, SL, Nepal, Myanmar, Vietnam) 6
INDIAN COTTON EXPORT (KMT) INDIAN COTTON IMPORT (KMT) INDIAN COTTON TRADE (KMT) India was a net importer THANK YOU MANEK GUPTA manek.gupta@glencore.com 7