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MOSL: UPL (Buy)-Copper-based products on the radar in the EU-UPLL’s exposure fairly limited

UPL: Copper-based products on the radar in the EU; UPLL’s exposure fairly limited

(UPLL IN, Mkt Cap USD5.4b, CMP INR763, TP INR905, 19% Upside, Buy)

 

The EU has passed a regulation (effective from Jan’19) to minimize the use of copper in crop protection products. The new regulation states that the permissible use of phytosanitary products (pesticides, nematicides and rodenticides) containing copper compounds should be curbed. In this report, we analyze details of the regulation and its impact from UPLL’s point of view.

Tighter norms over the use of copper-based crop protection products

• The EU has passed a regulation, which states that the use of phytosanitary products (pesticides, nematicides and rodenticides) containing copper compounds should be reduced to the application of 28kg/ha over seven years i.e., an average of 4kg/ha/year (from 6kg/ha/year previously).
• The consumption can exceed 4kg/ha in a particular year only if the average quantity consumed over the seven-year period (current year and preceding six years) doesn’t cross 4kg/ha/year.
• Why is copper important? Copper is used in protection of plants against bacterial and fungal diseases. Currently, it is approved as an active substance in plant protection products for more than 50 different diseases and is generally used in combination with other active ingredients such as Mancozeb, Cymoxanil, etc. Its key uses are (a) in vineyards to control downy mildew, (b) in arable crops to protect potato against late blight, and (c) in apple orchards to prevent the spread of scab.
• Why has the regulation been passed? This is not the first instance of such a regulation being passed. The first instance was in 1991 when usage of copper was capped at a maximum of 8kg/ha/year, which was further reduced to 6kg/ha/year in 2006. As per EFSA (European Food Safety Authority), copper is non-degradable and toxic in nature, which can accumulate in the soil and pose a risk to farm workers, birds, mammals and soil organisms.