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Interview: Ruchi Hi-Rich Seeds Seeks to Upend the Indian Seed Market

July 13, 2017

By Michelle Pelletier Marshall

A joint venture of Ruchi Soya, Agrimax, DJ Hendrick International, and Agri-India Holdings, Ruchi Hi-Rich Seeds of India has developed non-GMO soybean seeds that promise to outperform yields of current varieties used in that country by up to 50 percent. Founder and Managing Director Dinesh Shahra of Ruchi Soya, one of India’s largest agribusinesses, said that just a 10 percent increase in yields would have a significant impact on that economy, which is projected to be the most populous country in the world by 2050, with a current population of 1.28 billion. “These [new soybean seed varieties] have the potential to be something truly special, revolutionary to the Indian soybean industry,” he said in a prepared statement. 

The joint venture has taken to heart the United Nations Sustainable Development Goals (SDGs) to end hunger and malnutrition, and double ag productivity and sustainable food production systems in India by 2030. The venture, incorporated in 2014, progressed through the soybean breeding process in less than three years to develop commercial varieties now in use with expected sales of 27,000 metric tons by 2021, reflecting about 10 percent of the market.

Nearly $3 million has been invested in these new seed varieties and the venture is seeking another $3.3 million to keep pace with the opportunity. There is quite an untapped market for the seeds in India seeing that up until now, the financing of soybean breeding in the country has been limited to government funding, and only one other of the top eight seed companies in India has its own breeding program.

GAI News spoke with Michael Treytiak, who is directing the fundraising efforts for the project, for more details.

You are based in Tokyo – how do you see this product attracting ag investments in Asia?

It seems that India is on everyone’s radar these days, with some saying it will be the next China in terms of expected growth, and they want to be there in some way, shape, or form.

Companies in Asia and Japan recognize India’s growth potential and are looking for opportunities to gain a foothold in the market. This investment provides the option to have a presence in India.

How are you reaching out with this opportunity?

While this is an excellent project in its own right, understanding the social impact and how it will benefit India’s farmers and the economy in general, is equally important. One of the United Nations Sustainable Development Goals is to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture.

When Ruchi Hi-Rich Seeds was formed, our stated goal was to develop a new soybean variety that out-yielded current Indian varieties by 15 percent. The results that we have achieved so far are truly incredible. We now have varieties in our breeding program that are out-yielding the most popular Indian varieties by over 50 percent. The eventual sale of our proprietary varieties to Indian farmers will make significant contributions toward achieving the objectives of the UN’s sustainable development goals. 

Why soybeans and why India with this first seed? What are the key factors for success in that market?

Upon my completion in 2013 of a joint venture in China, I was researching opportunities for future endeavors and was shocked to find that the yield for soybeans in India are half of that in North America. I found this to be for three main reasons: first, for weather anomalies; second for farming practices, and third, due to genetics of the seed. Also, I have been involved in soybean trading since1999 so it was only natural to start with that product.

Success in this marketplace will come from the fact that the seeds that we have developed outperform the current seeds available, reducing systemic risk. We also have the partnership with Ruchi Soya, which already commands the seed market in India, buying seeds from local farmers. With the introduction of our seeds, Ruchi Soya will now sell seeds to these same farmers, creating a closed loop of trust. We also will leverage Ruchi Soya’s established logistics, warehousing, and infrastructure foundation.

Additionally, through the collaboration with Ruchi Soya, we have “boots on the ground” that allows us to have direct dialogue with the farmers to better understand their agronomic practices and needs to bring about increased yields and brand loyalty.

The seed companies are very fragmented in India, and legislation in the country does not allow for the cultivation of GMO soybeans, keeping many of the big seed companies away. How does this impact the potential for this venture?

We were surprised to learn that there were virtually no other private sector resources assigned to breeding programs, and the one or two out there pale in comparison to the program we have orchestrated. We have the “first mover” advantage in India, in that, all soybean seeds in India now are public varieties and we will be introducing four private varieties that outperform all the others.

Any company looking to compete would have a three-to five-year cycle to catch up with our program. Additionally, due to legislation in India that allows only non-GMO seeds to be planted, the giant seed companies, such as Syngenta and Monsanto, have not entered the soybean seed market in India. Not having this competition is a big advantage.

You’re seeking $3.3 million from investors – where will this funding take the company and what’s the anticipated return on investment?

The initial $3 million was from private funding from the joint ventures’ stakeholders – this primarily covered the expansive R&D process and testing of the new seed varieties. Additional public investment is sought to bring the product to market and to the farmers, and to develop new seed varieties. We have already begun building a diversified portfolio by adding wheat and chick peas to our product line.

We are excited and passionate about the possibilities of this breeding program, not just because of the increased yields for farmers and return this will guarantee for them as well as our investors, but for the ability to make significant achievements in supporting the UN’s SDGs. Sustainability is important to us as well, and so we are committed to a continuing a robust R&D program with the goal of introducing new seed varieties every two years.

We anticipate a three-fold exit multiple return for investors so that a $3.3 million investment today translates to shares that sell for just under $10 million in five years.

For more information, contact Treytiak at mtreytiak@dgglobal.jp.

~ Michelle Pelletier Marshall is the managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and an occasional contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.

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