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Monsanto Threatens to Pull GMO Tech from India | KTIC Radio

Monsanto Threatens to Pull GMO Tech from India

Monsanto Co. on Friday threatened to pull its genetically-modified crop technology from India in protest of the government’s plans for further price controls over its products.

India’s agriculture ministry plans to implement the price curbs this month, adding to an array of challenges that the seed giant and its local partner Mahyco face in one of the world’s largest agricultural markets.

The Indian government last month launched an antitrust probe into the joint venture’s pricing practices, while several other local seed companies are disputing the fees it charges for licensing crop genes.

“It is difficult for [Monsanto and Mahyco] to justify bringing new technologies into India in an environment where such arbitrary and innovation-stifling government interventions make it impossible to recoup research and development investments,” said Shilpa Divekar Nirula, chief executive of Monsanto’s India unit.

If India’s agriculture ministry presses ahead with “a sharp, mandatory cut” in the fees that seed companies pay Monsanto and Mahyco for using their crop genes, the two companies “will have no choice but to re-evaluate every aspect of our position in India,” Nirula said.

Indian farmers have embraced biotech cotton that St. Louis-based Monsanto helped to develop. Cotton that has been genetically modified to produce bug-killing proteins blankets about 97% of India’s cotton fields, according to estimates by PhillipsMcDougall Ltd, a consultant.

Cotton remains the only GMO crop that can be grown in India, and efforts by seed companies to introduce biotech food crops such as corn and eggplant have stalled due to push back from environmental groups and bureaucratic inertia, according to seed-industry officials.

India’s widespread use of biotech cotton makes it the world’s fourth-largest cultivator of genetically-modified crops after the U.S., Brazil and Argentina, according to the International Service for the Acquisition of Agri-biotech Applications. Small-scale farmers’ rapid adoption of GMO cotton since its 2002 launch there helped elevate India to become the world’s largest producer and a leading exporter of the fiber.

India’s government has long regulated the price farmers pay for cotton seeds, but the new rule will include the technology fees or royalties the venture can charge other seed developers for their modified cotton-plant genes. Monsanto and Mahyco are challenging the order in court.

The government’s move to regulate seed-technology fees follows a months-long dispute between Monsanto’s and Mahyco’s joint venture, known as Maharashtra Hybrid Seeds Co. Some local cottonseed sellers that license crop genes from the venture have been withholding $65 million to $70 million in fees in pursuit of better terms, according to Monsanto.

The joint venture between Monsanto and Mahyco licenses crop genes to about 50 Indian cottonseed sellers, who pay for the right to insert the genes into their seeds. For Monsanto, which maintains just a small Indian cottonseed business of its own, the technology fees represent a significant chunk of its India business, although the company doesn’t disclose revenues.

Officials at India’s Ministry of Agriculture said in a court document that Monsanto’s dominance in supplying genes for biotech cotton in India requires controlling technology fees, which ministry officials called “exorbitantly high.” Officials didn’t respond to requests for further comment.

Monsanto has said it would cooperate with the antitrust investigation launched by the Competition Commission of India into its seed pricing. The company said it is confident all allegations will be dismissed.

The National Seed Association of India, a trade group representing seed companies and generally a supporter of biotechnology, has sided with the government on the fee controls. It warned that the industry may suffer if seed prices and technology fees aren’t regulated as a whole.

Kalyan Goswami, executive director of the group, said lower technology fees are justified because the seeds aren’t as effective as when they were first introduced in 2002. The rise of pink bollworms resistant to biotech cotton has damaged crops and forced farmers to use more insecticides, critics say.

Monsanto says newer biotech cotton varieties, producing multiple pest-stopping proteins, are proved to be effective against the worms. The company argues that technology fees represent 2% of Indian farmers’ overall cost of growing a crop, and that such fees for biotech cotton in India are “already the lowest in the world.”

 

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