Project Report Agriculture Input Marketing

Company: Bayer

19th August 2010

Submitted To

Prof. Sanjeev Kapoor

Submitted By

Ravi Kumar (ABM06004)

Sornam A.R (ABM06005)

Manoj Kumar (ABM06008)

Ankita Yadav (ABM06016)

Ashok Kumar (ABM06018)

Roly Dhanuka (ABM06023)

Contents INTRODUCTION ..................................................................................................................................3

Bayer in India : History ........................................................................................................................3

Product offerings ................................................................................................................................4

Fungicides ......................................................................................................................................5

Insecticides.....................................................................................................................................5

Herbicides: .....................................................................................................................................6

Plant growth regulators...................................................................................................................6

Table: Portfolio of crop protection products.........................................................................................7

Pesticides Industry in India: A Glance ...............................................................................................7

Bayer Bioscience: Seed division ...........................................................................................................8

Marketing and promotional events....................................................................................................10

Policy change affecting business ........................................................................................................12

Distribution channel: ........................................................................................................................12

Criteria for selection of dealers: .....................................................................................................13

Future markets .................................................................................................................................13

Structure of MIS implemented in the Company ..................................................................................14

Organizational structure: ..................................................................................................................14

New Changes in the business: ...........................................................................................................15

INTRODUCTION Bayer group of companies

It was founded in Barmen Germany in 1863 by Friedrich Bayer and his partner Friedrich Weskott.

Bayer is a global enterprise with core competencies in the fields of health care, nutrition and high-tech

materials. The company’s products and services are designed to benefit people and improve their

quality of life.

The Bayer Group markets some 5,000 products, represented around the world by 302 companies,

108400 employees worldwide and had sales of €31.2 billion. Capital expenditures amounted to €1.7

billion, R&D expenses to €2.7 billion. Its Global headquarters are in Leverkusen, Germany. Bayers is

Included in nearly all the major share indices in world

The Group is committed to the principles of sustainable development and to its role as a socially and

ethically responsible corporate citizen. Economy, ecology and social responsibility are corporate policy

objectives of equal rank.

They have following divisions:

1. Bayer healthcare

2. Bayer crop science

3. Bayer material science

4. Bayer business services

Bayer in India : History Originally, Bayer came to India in 1896 under the name “Farbfabriken Bayer and Co. Ltd”. Set up in

Mumbai, it was the first wholly-owned Bayer subsidiary in Asia.. Initially Bayer entered in India in

partnership with BASF but later on it separated to become Bayer Crop protection, India. In 2003, Bayer

Cropscience was formed by the merger between Bayer Crop Protection Group with Aventis Cropscience,

SA, which has been operational since June 2003. Bayer Cropscience India now offers services under one

roof from April 2003. The company will offer a complete crop protection package from seed dressing

agents to a wide range of well-known research-based insecticides, herbicides, weedicides etc. Earlier

only Cropscience division was active but after acquiring Aventis worldwide, Proagro being a part of

Aventis and active in seed production, Bayer formed bayer bioscience and merged Proagro with it to be

a major player in seed business. With above-average growth potential of the Indian market, it has

become one of Bayer's most promising locations in the Asia-Pacific region. Now India figures as the

fourth largest individual market for Bayer in Asia.

Bayer crop science is divided into three business groups: Crop Protection, BioScience and Environmental

Science - offering an outstanding range of products and extensive service backup for modern,

sustainable agriculture as well as for non-agricultural applications. Their main function is to undertake

production and marketing of pesticides and marketing of crop seeds.

Product offerings Bayer crop science has created eight integrated crop platforms to tackle crop protection in a more

efficient manner. They have a well diversified portfolio of products that cater to a wide range of market.

Bayer Cropscience

Crop protection

Environmental science

Bioscience

Fungicides They avoid or abolish fungal plant diseases, which could affect severely harvest outcome and quality.

Major fungicide markets are cereals, vegetables, fruits, vine, rice and industrial crops e.g. canola and

soybean.

Major brands of fungicides include:

Antracol Baycor

Folicur

Monceren

Insecticides Bayer is leader in the insecticide division. Products of the company were known for their state of the art application methods and long term efficacy. They were the first to produce systemic insecticide.They try

to develop products targeting local needs.

Major brands of insecticides include:

Confidor/ Admire

Calypso Decis

Temik

Oberon

product protfolio

fungicides

herbicides insecticides

plant growth regulators

Herbicides: Bayer CropScience ranks number three in the global herbicides market including Plant Growth Regulators (PGR), while they hold a joint number 1 position in conventional herbicides. Their highly selective herbicides target different crops, regions and market segments. They are one of the

leading companies in the cereals, corn, sugar beet and rice markets.

They recently launched two new active ingredients – mesosulfuron (Mesomaxx, Atlantis) and foramsulfuron (Option, Maister) which are expected to reinforce good position in cereal herbicides

and expanding position in the corn segment.

Major brands of herbicides include:

Atlantis

Basta

Topstar

Whip Super

Plant growth regulators Bayer CropScience is one of the leading companies in the plant growth regulator (PGR) market. They provide highly effective solutions to many aspects of crop management. Cotton, cereals and fruits are

the main areas of application for their plant growth regulators.

These can include:

preconditioning of cotton crops for effective boll opening even and accelerated boll opening in cotton crops defoliation and re-growth control in cotton crops to facilitate mechanical harvesting lodging control in cereal crops by shortening and stabilizing the plant inducing even and accelerated blossom in fruit- and vegetable crops inducing even maturation in fruit- and vegetable crops inducing thinning in top fruit for quality enhancement purposes improving setting and increasing size in fruit

Table: Portfolio of crop protection products

INSECTICIDE Crops

Fame Rice

Reagent granule Rice & sugarcane Larvin Cotton, Cabbage, Brinjal, Pigeonpea, Chilli

Admire Cotton, rice Confidor Cotton, Okra, Sugarcane, Mango, Rice, Citrus,

Groundnut, Chilli, Sunflower FUNGICIDE Crops

Antracol Grapes, Apple, Pomegranate, Potato, Tomato, Chillies

Baycor Apple, Wheat, Tea, Groundnut

Bialaton Grapes, Mango, Chilies’, Pea, Wheat, Soybean, Coffee

Folicur Groundnut, Chilli, Paddy HERBICIDE Crops

Sancor wheat, potato , tomato, sunflower Topstar Paddy

Adora paddy

Pesticides Industry in India: A Glance

Higher incidence of insects, owing to India's hot and humid climate results in higher consumption of insecticides. The installed capacity of the Indian pesticide industry is about 124,000 tonnes. However, demand is seasonal - the maximum being consumed in the months from July to November. Thus average capacity utilization stands at 65 percent.

Nearly 67 percent of pesticides manufactured in India are used for two crops; namely rice and cotton, which are grown during July to November. Pesticide consumption is also skewed geographically, limited to Green Revolution areas. Andhra Pradesh and Punjab alone consume 47 per cent of pesticides produced in the country.

Pesticides can be manufactured and sold mainly in two forms: technical and formulations. Technical is the first stage of manufacture where the chemical is concentrated and unsuitable for direct use. This is then processed with other materials to create formulations. The technical grade segment is dominated by the organized sector while the unorganized sector mainly operates in the formulation segment. The area over 600 formulators of which around 20 per cent are associated with the technical grade manufacturer.

The industry is working capital intensive. Working capital accounts for nearly 45-50 percent of the total capital employed. Thus, TNCs with their strong financial clout dominate the Indian

industry.

India loses Rs 100 bn annually due to crop losses. The current demand for technical grade pesticides stands at about 85,000 tpa and has been growing at 5-10 percent annually.

With the current emphasis on increasing production (for exports and domestic consumption), and coupled with improve the quality of agricultural products, the country's dependence on better quality seeds and irrigation will have to increase. This in turn will translate into a higher

demand for pesticides.

Market status of pesticides: The total market for the pesticides for Bayer combindly stands to about Rs. 43crore in Uttar Pradesh.

As per revenue the areas in U.P which contribute to pesticide business are

1) Western U.P including Uttaranchal

2) Central U.P

3) Eastern U.P

As per value areas in U.P which contribute to pesticide business are

1) Weedicides

2) Insecticides

3) Fungicides

Bayer Bioscience: Seed division Bayer Bio Science is one of the top players in the country with four state-of-the-art seed processing

plants. It is engaged in research, development, production of high quality hybrid seeds of field crops.

To cater for the specific needs of farmers, Bayer Bioscience hybrid seeds offer a wide product range

covering Hybrid Rice, Cotton, Pearl Millet, Corn, Grain Sorghum as well as OP research varieties of

Mustard.

Seeds Marketed:

Hybrid Paddy: The hybrid paddy of Bayer is sold with the brand name of Arize. Bayer is the

market leader in the hybrid paddy market in not only in Uttar Pradesh but also in India. It is

market leader through out U.P and covers more than 80% of the market. The total hybrid paddy

seed market in U.P nearly equals 6500 tonnes out of which approximately 5000 tonnes belongs

to Arize. The major competitors include Pioneer, Advanta, Kanchan etc.

Benefits

Yield advantage

Arize hybrid rice yields above the best performing inbred varieties and at least on par with the high-yielding competing hybrids

Seed quality Arize seeds present high purity and germination ratio

Grain quality Arize grain cooking and taste quality match the target market standards

ARIZE Varieties and Features

Variety Characteristics States

6111 grain with slight aroma, higher yield than other Punjab, Haryana, U.P, Bihar

6129 widely adaptable, highest yield in mid-early duration segment All over India

6201 20-25% higher yield, good eating quality, tolerant to blast, Notified hybrid

West, Central, Eastern India

6444 Notified hybrid, Highest yielding variety in india All over India

6516 widely adaptable, excellent cooking and eating quality southern states

Tez More tiller than other variety, more grain per pinnacle

Punjab, Haryana, central India

XL Biggest pinnacle length, excellent eating quality All over India

Dhani Resistant to BLB, Tolerate standing water U.P, Haryana, Punjab

Maize: Maize is marketed in the brand name of Sampann (Hybrid), 4212 (Research variety). The

company has a market share of approx 10 % in Uttar Pradesh. It covers mainly areas of eastern

U.P ( Balia, Gazipur, Dewaria); Central U.P (Barabanki, Godda); Western U.P (Agra, Ferozabad) .

Mustard: The seeds of mustard are marketed in the brand name of Keshari 100, Peela sona,

4001. Bayer has a market share of 15%. The total quantity supplied to market is approximately

400 tonnes. The major competitors in mustard includes Nath, Krishna, Advanta.

Maize hybrid and features

Variety Advantage State

4001 old seed, wide adaptability

Rajasthan, Gujarat, Haryana, U.P

Keshari Ideal for early and late sown, Lodging tolerant

Haryana, U.P, M.P, Bihar, W.B

Peela Sona Highest oil content 45%, High no. of seeds/ siliqua

Bihar, U.P, Assam, W.B

Apart from these three crop seed bayer is also active in supply of seeds of Sunflower, cotton, Millet but

these area are not so prominent as far as bayer is concerned.

Marketing and promotional events

1) Mega shows in pre season: This was the unique marketing strategy adopted by Bayer In this

particular region. The mega show consisted of celebrity performance e.g. Manoj Tewari and Ravi

Kisen(who has great influence in these areas and mass appeal) did shows in remote areas. It

was done for the first time. This strategy has shown excellent reach and created huge ripple

effect among farmers. Invitation was given to large number of villagers and attended by 50000

villagers but the word of mouth promotion was excellent after the event. The event costed

approx 80 lacs to the company but proved to be excellent promotional effort for the company.

2) Road shows: It consists of large number of vehicles in a queue with banner wrapped around it

which goes from village to village and create awareness among farmers about the products. A

Road show with theme Arize Ek Toofan, in which a large number of vehicles (approx 30 in

number) move around in such a way that they created a wave with full throttle. The basic idea is

to undertake the promotion so that the villagers get very much affected positively.

3) Extensive demonstration in pre and post season: Demonstration of crop seed in identified and

chosen field is done by field assistant extensively. It is considered to be best promotion as it

evokes confidence amongst farmers, but this type of promotion are costly and time taking. The

reach is less because it can be done only in certain identified field. In post season they show the

yield comparison among their product and competitor by cutting an approx area of 10 sq mt and

comparing the yield there only with other varieties in the same area.

4) Groups meeting: Farmer group meetings are conducted by field staffs supervised by assistant

marketing managers to bring more impact on the farmers. It is very effective and used by all the

companies as promotion medium but number of such meeting is less due to constraint of time

and availability. For e.g. in summers due to extreme heat or adverse climatic condition the

farmers don’t turn up for the meets and hence some of the meets are not very successful.

5) Nursery training programme: It is conducted to raise the awareness of farmers toward the crop

especially for rice. It help in brand building and building trust amongst farmer for the company.

It teaches good farming practices and know how about facts to raise the crop properly to gain

maximum produce.

6) Management and agronomical enlignment of farmers: It again has a basic goal to make farmers

aware of the good farming practices. e.g. in eastern U.P the amount of nitrogenous fertilizer

administered was much more than required which eventually was hampering the productivity of

the crop (Paddy). Farmers were given the knowledge that more nitrogenous fertilizer means

more vegetative growth that is more pinnacle length and les grain. The recent trend thus

observed is decrease in nitrogenous fertilizer and increase in other fertilizer in balance amount

to increase the yield. It is very effective method of brand building.

7) Magic and Puppet show: These type of promotional activities are carried out to draw attention

of target consumer (farmers). These activities apart from acting recreational medium also

enlighten farmers and disseminate product information.

8) Testimonials of farmers: The testimonials of farmers are recorded about his/her experience of

using bayer product and in a form of leaflet are distributed to other farmers in other villages. It

contains farmers contact addresses and number such that any one can justify the claim. It bring

authenticity to the company claims of excellent products.

Policy change affecting business 1) Subsidy given by government to notified hybrid seed manufacturer: In this due to subsidy the

effective rate for the farmer decreased. The rate per kg. of hybrid seed was a major detrimental

factor in the increase in market for the hybrid seeds. This has eased the pressure on farmers and

the overall market has increased considerably and as result bayer has been able to capture

maximum market because of its excellent product and good brand name amongst farmers.

2) Earlier government certificate of registration was only given to company with good brand names

but then government eased the policy as a result certification of registration was given to lot of

company and local manufacturer also came out and increased the competition in the seed

market especially.

Distribution channel:

The distributor charges approximately 3-5% margin on invoice price, the dealer charges approximately

15% margin on the invoice price. Quantity and cash discount are given to dealers as applicable. Quantity

company

company's cnf

distributor

dealer

farmer

discount refer to if a particular dealer sells a requisite amount of products within a stipulated time and

demands for more and cash discount refers to if certain amount of cash is paid back to Bayer by the

dealers within a stipulated time.

Criteria for selection of dealers: The company follows a very strict procedure for the selection of dealers. The company believes that the

dealers are the pillars of any company’s success. Hence the company has come up with certain stringent

rules for the selection of the dealers. Some of the criteria are mentioned as follows:

Past history/ Experience: The Company does run the background check of the dealer before even

considering him apt for the job. It makes sure of the past history of the consumer, area covered by him,

his past transactions with other companies, etc. the company also mandates a work experience of

minimum of 4 years of prior work experience in the similar domain before handing him the reins of

dealership.

Number of companies one is dealing with: The present status of the dealer also makes a huge impact

on the selection of the dealer. The company ascertains the present transactions of the dealer as well.

This also ascertains that the dealer doesn’t sell similar competing brands from his outlet.

Capital management and total assets: The capital management skills of the dealer are also quite vital as

this also determines the credit period and the payback capability of the dealer. The company also

determines the total assets of the dealer which adds to the credibility of the dealer. This also makes sure

that the company gets its payment back even if the dealer runs in losses.

Capital rotation: the capital rotation between the consumer and the company also forms a vital

capability of the dealer. The company believes that the dealer who can rotate the cash effectively

between the end consumer and the company irrespective of seasonal fluctuation is capable enough to

scale up the company’s profits

Future markets The future market is very bright for the crop protection and the seed division owing to following reasons

Population explosion, The current and constant population not only in India but also in world

has started to exert a lot of pressure to lands. The only solution is to increase the productivity of

current land which is possible through hybrid seeds and crop protection method and in which

bayer is a major market force.

Land reforms: The land reforms such as land consolidation have improved the farmer condition

and they are now adopting hybrid seeds on increased scale. So market is expanding rapidly.

Breeding improvement: The constant and effective research and development carried by many

companies in this area has increased the presence of more improved varieties having more

productive germplasm, so the market is going to be competitive.

Rapid hybridization: There has been rapid hybridization for all the crops and new hybrid

varieties are coming to market giving more options to farmers for seed. There has been rapid

hybridization in Cotton, Paddy, and Mustard etc in recent times and the market is showing

excellent potential.

Structure of MIS implemented in the Company

The company has a proper channel to carry out the management information from one level to other.

The marketing information that are to be collected are generally outsourced to other firms which then

collect, process and present the data. However the sensitive Information processing is done by the core

company officials and maintained in their data library

Organizational structure:

G.M

A.G.M.

Field marketing manager (Marketing)

Regional manager (Sales)

Territory manager

Business Development Manager

Market Field Demonstrator

General Manager and assistant general manager - one for a state each, manages all the affairs of the

company in the state concerned.

Regional manager (Sales) & (marketing) - looks after all the activities of the company in the region, for

sales and marketing purposes UP is divided in to three regions- western, central and eastern UP.

All the territory managers report to the concerned regional managers, present them sales re ports and

other key inputs from their respective areas, on the basis of their feedback specific marketing strategies

are made to increase the awareness levels regarding the products and provide the farmers with suitable

products for increasing productivity on fields.

Western UP is divided in 8, Central 6 and Eastern in 5 territories.

Each territory is managed by a territory manager who looks in to promotional activities, managing sales

force, ensuring proper supply and resolving any organizational issues which come up in their respective

territories.

Business development managers (bdm) take care of all the activities in allotted districts, some big

districts can also have more than one bdm depending upon the sales potential and area. Primary works

include monitoring the Market Field Demonstrators, increasing the awareness levels about the products

and the sales in the area.

Market Field Demonstrators- 2 to 3 per district depending upon the work in the area. Most of them are

on company payrolls but at peak season some part time workers can also be engaged. Primary functions

include- increasing awareness about the products, organizing field demonstrations, interacting with the

farmers at the ground level, understanding their problems and conveying it to the company. They work

as the face of the company and represent it at the ground level.

New Changes in the business: The interesting fact about Indian agriculture as opposed to world overall agriculture is that in

world consumption of fungicide is on the higher side but in India weedicide consumption is on

the higher side. In India the consumption trend declines from weedicide to insecticide to

fungicide but at the global level the trend is just reverse.

This trend has been attributed due to two main factors:

The farmers want high productivity in their fields, which they associate directly with the

lower level of weeds as weed take the maximum amount of nutrition from soil causing

low production. So they apply large amount of weedicide in the field.

Quality consciousness is low in India as compared to world. Use of fungicide help in

maintaining the quality of the crop which is not much prevalent in India.

However in the recent years the trend is showing a change as the consumption level has shown

change as per the world trend

In the recent years farmers have become more conscious of organic farming and they are

shifting to addition of less chemical additive to the crop. Bayer promotes this trend among

farmers. The company already has bio pesticides in its portfolio of products at global level and

intends to promote the same in Indian conditions as the trend moves towards quality

consciousness.