Managing Weather Risk in Seed Business Weather Risks of a Seed Company Weather risk for a seed company is the risk of drop in sales volume on account of adverse weather conditions like excess / deficit in rainfall, extreme temperature and humidity conditions etc. Indian agriculture is predominantly dependent upon monsoon rains, with more than 60% of cultivated area in Kharif being rainfed. This rainfed nature of Indian agriculture makes the business of agri-input company completely dependent upon weather. Very often seed companies find themselves holding large unsold stock because of adverse weather conditions like insufficient or untimely rainfall. Seed companies also find it difficult to move stock from one location to the other because of very short time-period available for selling seeds. Environmental changes happening across the world have made weather more unpredictable. Seed companies are becoming increasingly vulnerable to weather vagaries because of frequent occurrence of extreme weather conditions. Out of last 5 years, India has faced extreme weather conditions in 3 years – drought in 2002, delayed monsoon in 2005 and excess and abnormal rainfall in Western Rajasthan, Gujarat, Maharashtra and MP in 2006. Financial Impact of Weather Risks Extreme weather conditions would throw awry any sales budgeting and planning exercise, and would seriously impact sales and profitability targets of the company. Weather risk increases vulnerability in income statement of the company which in turn gets reflected in its lower valuation compared to companies who have lesser weather risk or managing it better. Vulnerable income statement and lower valuation would also result in high cost of funding for the business. On an overall basis, weather risks have twopronged impact on the bottomline of the company. First, it directly impacts the topline of the company. Second, it