Companies compensated | Grain merchants want to be paid for collecting royalties on patent protected technology
SAO PAULO, Brazil (Reuters) — At least one soybean exporter in Brazil has agreed with Monsanto to collect royalties, in exchange for a fee, from farmers who planted the company’s genetically modified crops.
The landmark deal, already finalized by a firm that declined to be identified, highlights an increasingly complex relationship between global grain merchants and biotech firms.
Other bigger merchants such as ADM and Bunge will finalize agreements soon, industry sources said, which resolves a months-long dispute that had threatened to disrupt as much as a quarter of all soy shipments from the world’s second-largest grower.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The trading firms are wary of serving as biotechnology police in Brazil, a role they have not had to play in the United States because biotech company’s patents are protected by laws that do not allow farmers to reuse seeds year after year.
In Brazil, where GM seeds have been legal only since 2005, reusing seeds is more common and it is easier for farmers to skip out on Monsanto’s fees after buying the seeds the first season.
Soy-crushing group Abiove, which represents global firms such as ADM, Bunge, Cargill and Louis Dreyfus, spent months negotiating to ensure companies are compensated for collecting and monitoring payments on Monsanto’s new Intacta RR2 Pro strain of GM soybeans.
“Now the question is for Monsanto and each company to work out payments,” said Ricardo Tomczyk, president of the soy farmer lobby Aprosoja in Brazil’s top-growing state Mato Grosso, after meeting with Abiove representatives.
Some merchants have been collecting royalties on Monsanto’s first generation Roundup Ready soybeans in Brazil for as long as a decade, but the arrangement was a source of deep frustration because it required merchants to accept legal liability for their shipments without any compensation from Monsanto.
The industry has been determined to avoid a similar arrangement with Intacta. The variety includes a gene to ward off pests, which was first planted in South America last year.
The local firm that has already accepted the compensation said it did so reluctantly.
“We assume the risk of not receiving royalties from producers,” said a manager at the firm.
“They (Monsanto) offered compensation for the company,” although she declined to say what that was.
Concerns remain that Monsanto might force firms to halt soybean shipments without proof of royalty payments on cargos containing the strain.
Brazil is Monsanto’s second-largest market, making up about a tenth of its $15 billion in net sales last year.
Monsanto has blamed a downturn in royalty payments on its Roundup Ready products for a drop in net sales of soybean seeds last year.
The spat bubbled under the surface until an Abiove statement in July said the association had failed to reach an agreement after six months of negotiations, potentially stalling soy sales in Brazil.
An Abiove representative confirmed Monsanto is negotiating with individual companies.
Monsanto said in an e-mail that negotiations with Abiove companies “are ongoing and progressing.”
Tensions are growing between the merchants who dominate the world’s grain trade, buying from farmers and shipping to importers, and the makers of GM crops, whose products have become deeply embedded in the global supply chain.
Brazil’s Intacta saga is part of a broad trade, copyright, environment and food safety debate about genetic modification in agriculture that is far from resolved.
Intacta was not planted in Brazil until after China approved it last year. China buys the vast majority of Brazilian soybeans. However, farmers are worried that the trading dispute could limit buyers.
“If this hadn’t been resolved, the companies affiliated with Abiove were unlikely to trade Intacta soy,” said Tomczyk.
Early this year, China rejected 1.25 million tonnes of U.S. corn and byproducts containing Syngenta’s GM strain MIR-162, which China has not yet approved.
Cargill last month sued Syngenta for marketing the seeds in the United States, even though it lacked Beijing’s approval. Cargill estimated it suffered losses of more than $90 million.
Brazil’s foreign ministry said the same MIR-162 corn, which has been sold in small amounts in the country since 2012, is preventing the sale of more Brazilian corn to China after the two countries signed a bilateral agreement earlier this year.
