The swarms of locusts have been attacking the states of Rajasthan, Gujarat, Maharashtra, Uttar Pradesh, and Madhya Pradesh since many days. While these attacks have raised the concerns of the farmers coupled with the lockdown crisis, it might give agrochemical companies a boost in the Financial Year 2021, as per reports.
According to a report in the Economic Times, ICICI Securities believes that there isn’t a direct impact with negligible standing crop in the March to June period in India but events like these attacks tend to create awareness among farmers and prompt them to use agrochemicals.
With logistics and transportation facilities being slower, there is a shortage of agrochemicals in the market and farmers may not be getting agrochemicals easily. This could be a positive sign for the agrochemical companies if we look at it from the future aspect. There are chances that these companies may get additional demand in the FY21. According to the report, the brands with strong balance sheets and moats are likely to benefit in the near future. There are many insecticides and combinations of insecticides that can fight back the locust attacks. One of the key insecticides used to control locusts include Chlorpyrifos.
As per the reports, “Companies which continue to innovate and launch new products are expected to emerge a winner. The companies with strong moats such as brands and distribution network will continue to benefit.” The leading agrochemical players like Sumitomo and UPL and Insecticides India are planning to roll out new products.
