@Donald has already pointed out very clearly and I would say these are cloudy days that provide one the opportunity to re-commit or enhance when the long term story is in tact. No need to get swayed away by reports so easily. As the first quarter sets the tone very clearly for Kaveri one has to wait atleast till that period to make any first conclusions.
Found an interesting report by Phillips Capital on GM Crops in India -
PC_-Agri_Sector_Update-July_2015-Bhagirath_Choudhary-_Expert_Speak_20150702101928.pdf (323.9 KB)
The next generation biotech crops are based on the new breeding technologies (NBT) like CRISPR CAS, TALEN, and ZFN. NBT features non‐GM biotech crops utilizing genome‐edited applications with three significant advantages over GM ‐ precision, cost, and speed, and importantly, they require less onerous and costly regulations. Biotech crops with new breeding technologies would require a different regulatory system, creating a level playing field for public and private enterprises. Such as the recent announcement by the MS Swaminathan Research Foundation (MSSRF) to develop high‐ yielding and disease‐resistant rice varieties using gene‐edited technologies.
What are the real benefits of adopting GM crop technology?
When biotech crops were first commercialized in 1996, critics were skeptical of the promises made by their proponents — 20 years later, facts confirm the multiple and significant benefits that these crops offer. In these 20 years a total 2bn hectares of biotech crops (equivalent to twice USA or China’s landmass) were planted by millions of risk‐averse farmers in 28 countries and generated an impressive additional US$ 150bn of farm income. A meta‐analysis by German economists Klumper and Qaim (2014) of 20 years of data (1995‐2014) showed that on an average biotech crops increased yield by 22%, decreased pesticide use by 37%, and increased profits by a substantial 65%, with yield and profit gains higher in developing countries than industrial. Moreover, biotech crops contributed to humanitarian benefits by helping alleviate poverty for 16.5mn small farmers and their families totaling 65mn — the potential for the future is enormous.
Regarding Safety?
Regulatory authorities in 28 biotech crop‐growing countries and 32 biotech‐importing countries have concluded that biotech crops are safe for food and feed consumption. There have been more than 2,000 studies that confirm GMOs do not pose an unusual threat to human and animal health and environment. Unfortunately, well‐funded groups averse to use of biotech in agriculture have exaggerated risks and fears and created myths and misconception about their safety.
Oppurtunity cost due to Govt. policy drag?
Given the enormous contribution of Bt cotton to India’s farm economy, the country should not drag its feet on biotechnology. The NDA government, led by the former Prime Minister Atal Bihari Vajpayee, had approved the commercial cultivation of Bt cotton – a judgment that yielded more than what was expected. The moratorium on Bt brinjal in 2010 by former UPA government stalled almost all projects on biotech crops in the last five years. There is an enormous opportunity cost in delaying many new biotech products including Bt/HT maize, Bt/HT cotton, Bt chickpea and GM mustard, which are at the penultimate stage of approval in the country. Bt brinjal is now successfully cultivated by farmers in Bangladesh whereas our farmers on the border look on, dismayed. Farmers spray insecticide on brinjal crop every alternate day to save it from the deadly shoot and fruit borer (FSB). Many other vegetables including okra, chilli, cabbage, and cauliflower that we consume are loaded with pesticide residues. These crops can be free from pesticide residue if biotech counterparts are allowed for cultivation.
Pipeline?
Bt/HT cotton, which is the first stacked insect resistant and herbicide tolerant cotton, is a near term opportunity for the country. We expect at least three additional biotech crops to see the day of light in the near to medium term including biotech mustard, Bt/HT maize and Bt brinjal. There are many other products that are pending field trials including Bt chickpea, Bt rice, high yielding rice, NUE rice, NUE cotton, salinity tolerant rice, LBR potato and groundnut. We hope the country will utilize some of the breakthrough biotech crops in reducing cost of cultivation, and increasing productivity and production to overcome the imminent challenges of feeding India.
Can you help us identify some technically sound seed companies?
Contrary to other developing countries, India fortunately has very strong and robust private‐sector seed companies. Mahyco was the first established Seed Company that led to many firsts including introduction of quality seeds in open pollinated crops to hybridization of cross pollinated crops. It introduced India’s first hybrid of millet and sorghum in 1980s and first insect resistant Bt cotton in 2002. Similarly, there are listed companies including JK Agri Gentics, Kaveri Seeds and Nath Biogene. There are other companies that have established R&D recognized by the DSIR including Nuziveedu Seeds, Rasi Seeds,Advanta Seeds, Bioseeds, Metahelix, Bejo Sheetal, Ankur Seeds and Ajit Seeds to name a few. The new generation seed companies including Metahelix, a part of TATA group, and Bioseeds, Shriram Group. Nuziveedu Seeds is planning the largest IPO in the seed sector. Mahyco is silently churning out new traits important for agriculture in India including nitrogen use efficient (NUE) and drought and salinity tolerant (DST). On the other hand, multinational companies including Monsanto, Syngenta, Bayer, Dow, BASF, and Limagrain are engaged in supplying high yielding hybrids of maize and rice, which has positively impacted yield and production of rice and maize and many other crops in India. These companies are also developing new traits in maize, rice, and cotton.
Disc: Invested
Completely agree with what Vamsi has written. There shouldnt be a knee jerk reaction based on one bad monsoon (given the possibility that cotton acreage might in fact go up)
@Donald - the only thing that leaves me a bit concerned is that the share of cotton in Kaveri’s portfolio keeps going up. With issues around export demand(arising due to China for eg)- do u think Kaveri’s overdependence on cotton is a big risk ?
Thought of sharing broad updates from Maharashtra
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Reports on Maharashtra cotton acreage going down by 10% is unlikely. If that was the case shift to Soya would have been much more evident. Soya cultivation has gone up to 38 Mn Ha from 36 Mn last year. So that isn’t going to affect cotton much
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Marathwada region has seen scanty rainfall - so Cotton is the only alternative there, and doing very well.
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Price cap announcement came pretty late in the buying season. By then more than 50% Sales were over. A conservative estimate (from some dealers) is that sales might get affected only to the tune of 20-30%. More affected would be the lower brands - top brands may scrape through. There is no evidence of Kaveri diluting their terms
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There is some unverified talk of Ajeet selling below the price cap - for the first time. They have in Maharashtra always sold above MRP - careful and skilful to craft a shortage scenario every year - so why would they play different this year?
This is easily verifiable from the field. Have asked some folks to help out…will update in couple of days
So still looks like there will be incremental gains for Kaveri in Maharashtra, Andhra & Telengana look to be maintained. Karnataka anyways wasn’t too critical - and company has stepped up efforts in areas they did very well last year - like Hubli/Dharwad
Guys - from respective regions - here’s your chance to put your hand up - do some local scuttlebutt this weekend - and get back to the community. Thanks
Disc: Continue to remain invested; no change in poistions
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Kaveri Seeds covered in the upcoming cover story in Business Today
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Quick question:
Does the INR 100 mandated price cut apply to ALL cotton hybrid variants sold by companies? Or only a specific flagship product?
Is this a temporary measure for the season or permanent?
Thanks for your clarifications.
Rohan
This is my first scuttle butt 
and i must say it is very helpful in my learning curve.
Thanks to @Donald and other senior for helping novice people like me by sharing their insights and knowledge.
This information is provided by a leading farmer in Raichur District.I got his contact when I inquired about the cotton with my couple of friends and I came to know that their family grows Bt Cotton in Raichur Dist(my home town as well).
I Made mistake not checking with my friends even though they are growing cotton for long time 
and invested with Kaveri as well
Here is the transcript(coversation happened over phone):
Q: What is the leading Crop in their village(Matmari)? And why?
Ans: It is Bt Cotton and in fact in 80% of the Raichur district(20% is covered Sindhanoor and Manvi where Rice is grown)
cotton is cultivated. Since most part of Raichur dist is dependent on rain, cotton is the default choice for farmers as it needs less water and yield is good.He has not heard of any other crop sown this year except Toor dal in 300km raidus (Raichur Dist)
Q: Since last year Cotton price was down, is there any reduction in cotton acreage? If so, any reasons?
Ans: Yes, around 10% is reduced(this is only abt Raichur). This year it is reduced because of 2 reasons
a) Cotton price is reduced and also because of the manual labour cost involved during the harvest.
b) Because of the Toor dal price which has gone up drastically during this year. It has gone to Rs.120/kg in Urban area (pinching me as well ). Farmers are getting better yield with Toor because of the new variety seeds.And Farmers can use machines for harvesting toor which is not possible with Cotton. But again, this has happened only this year because of the dal price.Last 4-5 years they have good profit after using Bt Cotton.
But I missed to ask the Toor dal brand.
Q: Which Bt Cotton brand is used for cultivation?
Ans: In 90% of the area, they are using Jadoo and ATM. They are very much in demand for last 2 years(Including this year)
Q: What’s the reason for selecting Jadoo and ATM?
Ans: Because of the better yield and pet resistant. Few farmers have got 1-2 quintals extra in better managed farms.
Until two years back, they were using various brand seeds(like Mahyco, Rasi,Nandi) but yield was not good.
Also, when Agriculture Scientists(in Dhadesugur Training center) tested the various company seeds, Jadoo and ATM scored really well.Due to these, now they are using only Kaveri.
Q: What is the selling price of each cotton packet?
Ans: For Cash-- Rs. 830-840 (60/- discount)
on Credit for 15 days to 1 month-- Rs.900/-
Above were the questions which came to my mind. Let me know, if you have any other questions, they are ready to answer.
Disc: Invested for more than a year.
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@wpf123 Prashant,
Super work. great set of info extracted by you.
Can you ask your friends if they can provide you contacts of their farmer friends in other regions of Karnataka where cotton is sown. Use info from one for the next …our mantra 
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Thanks Donald. Sure I will ask them. I completely forgot about this question. This is where experience matters!!!
One more media story from Hindu business line
“Cotton has also shown a significant increase in acreage by about 70 per cent, from 35.42 lh at this time last year to 60.16 lh as on Friday, led by Maharashtra and Telangana which have both reported higher areas under the crop by 5.96 lha and 5.26 lha respectively.”
Clearly the reporting is all over the place and the information should be used with due care.
Another diametrically opposite story from ET
"Good rains in the past month have encouraged farmers in cotton-growing states to switch to paddy and pulses, crops that require more water than cotton, resulting in a near 20% year-on-year fall in cotton crop acreage in northern India, a major cotton producing region. In the south, Karnataka, another big cotton producer, has seen the area under the crop fall 10%.
“The acreages shifted mostly to paddy and pulses,” said C Mit …
Read more at:
http://economictimes.indiatimes.com/articleshow/47903896.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
That’s very good info. Nice & neat job
Thanks & Regards
RajPanda
Inspite of all the diametrically opposite news, one thing is for sure that the seed industry is facing multiple headwinds this year
- Regulatory intervention by Maharastra govt. which can force other govt.'s to follow the same policy
- Unseasonal rains and increasing price of other alternate like pulses,soya may have forced farmers to switch to other crops
- Impact of slump in global cotton prices because China has started dumping its inventory.Global cotton prices have been tracking around five-year lows for the past 10 months, under pressure from weak demand and large stocks. Global prices have been tracking around 5 year lows for the past few months under pressure from weak demand and large stocks.
The real question is what will be the impact of each on Kaveri and how long will the headwind last. All these headwinds can lead to multiple scenarios like closing of smaller seed players because of unsustainable costs and forcing Kaveri management to start focusing on other crops to reduce over dependence on Cotton. This quarters results, management call along with insights from members like Prashant should help us in calculating possible impact of each headwind.
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Had breif discussion with a farmer from yadagiri district, sirupur taluk, kempaver village. Got his no my PG mate who is from north karnataka. Discission happened over phone:
Q1. Rain fall?
Ans: Compared to last yr its reduced by 10% in yadagiri district.
Q2. Leading crops in yadagiri district?
Ans: Equally distributed between cotton, maize,tur dal and rice.
This time people may grow more turdal.He was clear about it.
Q3. Why not cotton?
Ans:During 2013-14 they grew more cotton . A pt that time price of cotton per 1000kg was 5k to 5.5k.
last yr they got around 4.3k to 4.7 k. This time also he expect the same price or it may reduce to 4k
. He told as more people from andhra( telangana) and gujarat are growing cotton they r getting less money.
Q4. How much % drop in cotton growing is expected.
Ans: At yadagiri district it will be around 50% decrease compared to last year. He was again very clear abt this.
Q5.cotton seed companies? Which do u prefer and y
Ans :.They use mico, bayer and kaveri. No particular preference to any company. they use seeds from all three. Kaveri the yield is more compared to other two. At the same time it requires more insecticides.
Q5. Seed company for other crops like maize , turdal?
Ans; They use mico and sagar. Sagar M 35 brand is preferred.
I am trying to get contact no from Haveri district through my friend working there. Aparently cooton is main crop at Haveri district.
This is my experiance with such work.Bit excited also compared what I do normally. Any mistakes, suggestions abt questions are most welcome.
Regards,
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@narendra
Super work. Rememeber your enthusiasm is the biggest differentiator! You will learn to do a complete job soon.
For everyone!
There is a way to keep perspective
Go through Kaveri seed thread and see how we have dissected the market in earlier years. There is no point getting maha excited or totally down in the dumps. For cotton you have to know state by state and within state region by region. Some regions like Marathwada ( Maharashtra) can take no alternate crops either Soya or Cotton. If rains are scanty - only one choice.
Coastal Regions traditionally with lot of rainfall and/or regions with irrigation supply - have choices to shift to even pulses as has been seen in some places. The biggest draw is how prices behave comparatively between Cotton, Soya, Maize, Pulses!! BIg differences can cause shifts.
Useful to remember that in any given year - the acreage shift usually cannot account for more than a 10% difference!! Why, that answer too we have dissected in earlier years - check back posts in the thread & Management Q&A
Don’t forget Kaveri does well in Maize too
If the above (contradictory viewpoints) is confusing …well that’s also the opportunity to have the edge over the average investor in Kaveri in our markets. Having said that, things can always turn topsy turvy -certainly there are more variables to manage in this business - one needs to remain on top of the ground situation - in the most important markets for Cotton.
Today had breif discussion with with a farmer from satigihalli village, hirekur taluk, haveri district and a person from ranebennur( seems like had in depth knowledge about seeds). Questions were on same line.I just summarize the conversation regarding Haveri district:
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Deficiency of rain fall is around 50% till now compared to last yr .Avg rain fall is best to grew cotton . excess rain fall will reduce cotton yield.
2.At Haveri main crop is Cotton and maize( 50% each), small % grew chilli
3.Grewing cotton is more intensive labour demanding. It will take almost 8 to 10 months for the whole process -
Maize is less labour intensive . whole process will be completed in 4 months.
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Average profit from cotton per acre was 30K for cotton and 20 to 25k for maize last yr.
6.Definitely cotton growing will be reduced this yr . It may be around 10 to 20% drop at Haveri district.Mainly due to reduce in cotton price.
7.Main cotton seed players at Haveri : preferred are US agri, bayer, tulsi…etc …Kaveri cotton seed is not preferred as such it does not give good yield at Haveri dist. He gave reason for that which I could not understand.
8.Maize seeds : Its mainly NK brand 624,ganga and kaveri 25 k 55 brand. There is reasonably demand for kaveri maize seeds at haveri.Regards, Narendra prasad C
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Hi,
Some more feedback coming in from Karnataka on cotton sowing-
• Overall rains have been less so far, especially in interiors of North Karnataka
• In Karnataka, maize sowing has been completed around 60 per cent and around 5 per cent cotton area has shifted towards maize (which is lower than anticipated). Both in North and Central (Haveri distt) maize sowing has gained acreage.
• Cotton sowing is slow and lagging last year’s acreage till date, farmers seen adopting Maharashtra’s trend of sowing multiple seed brands in their fields and this year Mahyco is gaining popularity.
• Net net cotton scenario will have to wait for next 15-20 days for clarity, as of now there is stress which is reflected in sales offtake and discounting offered to expedite it.
Sowing decision is dynamic and such situations keep on emerging and changing fast during June/July depending on rains. Karnataka sowing window is also longer compared to other states so a lot will depend on quantum of rains going forward as cotton may be preferred in case it is subdued and maize otherwise.
Disc- Invested.
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Reporting from heart of Marathwada in the district of Aurangabad from middle of family holiday. So have to thank them first for bearing with me
Had a talk with a distributor and a farmer on my way. The essence of the discussion:
- The purchase of the cotton seeds have been already 70-80% completed before the price reduction initiated by the government
- The acreage might have slight changes, but overall this will remain negligible in the region
- Kaveri seeds is gaining traction in the region slowly year-on-year basis, as the demand for quality seeds has been on the rise. Especially when the rain luers the farmers a bit longer as this year
- Maize is the other alternative when Kaveri is being more relevant
One trend mentioned, as hypothesis earlier:
- Fear of losing sale as farmers tend to get across the broder esp. from AP. Remember that buses in three digits frequent between the region and AP to visit Shirdi, Jyotirlingas and so on…
Disc: Invested, might be biased. Recently increased holding. Not recommendation
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