Industry threatens not to buy Monsanto's GM soybeans

Monsanto now wants the trading firms that buy Monsanto's GMO Intacta RR2 soybeans from farmers to act as tax collectors and enforcers for the farmers' royalty payments to Monsanto.

It appears (items 1 and 2 below) that Monsanto wants the firms that buy the GMO soy from farmers to check if the farmers paid the royalties to Monsanto when buying seed from them or replanting seed (Brazilian law allows replanting even of GM seeds). If the farmers didn't pay the correct royalty, then the trading firms would have to withhold from their purchase price the royalties due from the farmer and pass the money to Monsanto.

Understandably, the trading firms don't want to be the royalty collectors for another company. Nor do they want to assume legal liability for Monsanto's royalty payments.

This story is a warning of things to come for any nation or industry that comes to depend on a highly consolidated industry selling patented technology, like the GMO seed giants.

1. Trading firms' dispute with Monsanto threatens soy sales in Brazil
2. Impasse over Intacta soy RR2PRO worries industry

1. Trading firms' dispute with Monsanto threatens soy sales in Brazil

Reuters, Jul 17 2014

An impasse between U.S.-based Monsanto Co and soybean buyers in Brazil over royalty payments on a new seed technology may complicate the country's sales of the upcoming oilseed crop.

Monsanto has fought farmers over royalty payments for its seed technology in courts around the world. In Brazil, it now wants commodity trading firms to ensure farmers pay the proper fees for its new South American seed, Intacta RR 2 Pro.

But trading firms are afraid to get caught in the crossfire.

Brazil's Vegetable Oils Association (Abiove), which represents international soybean traders such as ADM, Bunge, Cargill, and Louis Dreyfus, said members have been negotiating with Monsanto for six months.

"We can serve as monitors in this process, as Monsanto requests ... but we cannot assume legal responsibility for the collection of royalties," said Abiove President Carlo Lovatelli.

Monsanto said in a statement on Thursday that it was confident the best solution would be found in favor of Brazilian soybean growers.

The main concern for the soy industry in Brazil, which exports more than half of its annual harvest, is what would happen if questions arise over a royalty payment on a soy cargo that has already been shipped, Lovatelli said in an interview.

"It would be like selling a complete car and then having the tire manufacturer come and complain about something to do with the rubber," he said.

If the impasse continues, buyers may not be able to purchase soy from Brazilian farmers who planted their fields with Intacta. Brazil, the world's No. 1 soy exporter, is Monsanto's second-largest market after the United States.

Herbicide-resistant Intacta will likely make up 25 percent of the soybean crop to be planted in September, compared with 4 percent in the inaugural 2013/14 season. Farmers have said the seed is resistant to a devastating Asian caterpillar, helicoverpa armigera, that first appeared in Brazil in 2012.

Farmers are already buying seeds for next year's crop. The U.S. Agriculture Department expects Brazil to produce a record 91 million tonnes of soybeans but has said the United States may replace Brazil as the top soybean exporter next season.

"Producers want certainty, in this time of seed buying, that they are not going to have problems when they deliver their soy six months from now," Lovatelli said.

Brazilian farmers dropped a long-running legal battle against Monsanto last year, accepting the company's offer to lower the price of Intacta seeds in exchange for ending the case over its old Roundup Ready seed technology.

Earlier this year the U.S. Supreme Court upheld Monsanto's biotech seed patents, dealing a blow to a group attempting to ward off the company's lawsuits against farmers.

(Reporting by Gustavo Bonato; Additional reporting and writing by Caroline Stauffer; Editing by Steve Orlofsky)

2. Impasse over Intacta soy RR2PRO worries industry

AgroNegocio Gazeta do Povo, July 17, 2014
[Google/GMWatch translation of Portuguese original article]

* ABIOVE criticises the recovery of royalties model adopted by Monsanto, and threatens not to buy soybeans using the technology
* New technology should be used over 2.5 million hectares in 2013/14 season if all available seed is planted

An impasse over the purchase of Intacta RR2PRO soy - with Crawler [herbicide]-tolerance technology launched last season by Monsanto - places the multinational biotechnology and large trading companies operating in Brazil on opposing sides, threatening the purchase of about a quarter of the volume to be harvested in 2014/15, according to the Brazilian Association of Vegetable Oil Industries (ABIOVE).

The discussion that has gone on for six months is about the role of the purchasing companies in the verification of payment of royalties for the use of technology. In the model adopted by Monsanto, the charge is already built into the purchase of the bag of seed, but there is also a discussion at the time of delivery of the grain. The amount charged on Intacta varies between 96.50 and 115 Brazilian Real per hectare.

The negotiation between ABIOVE and Monsanto foresees that the trading companies will be paid to control the grain received. The companies would have to check if the volume of soybeans delivered by producers was equivalent to the amount that was paid in royalties to the multinational. Additionally, batches declared as not being Intacta would be subject to tests. In cases of disagreements, the producer is responsible for paying the difference.

"We come into the picture as a tax collector, at the request of Monsanto, with a contract of service ... We cannot take on the burden of having a legal obligation for the collection of that royalty or the standardisation of the royalty for the soy," said the president of ABIOVE, Carlo Lovatelli.

Lovatelli says that the fear of the industries is that there could be questions about the payment of a cargo already loaded, for example, involving the seizure of ships (confiscation) upon their arrival at the destination ports. "It would be like selling a complete car and then having the tire manufacturer come and complain about something to do with the rubber," said the executive.

Abiove says the resolution of the contract model is urgent because farmers are currently finalizing the purchase of seed to be used. In the last harvest the seed was used on about 4% of the national soybean area, and this year the company estimates that it is possible to expand to 25% of the crops. "The soybean producer wants to make sure, at the moment of purchase of seeds, that he will have no problem when delivering the soybean in six months," indicates Lovatelli.

If the impasse remains, the ABIOVE says industries and exporters will not buy Intacta soybeans next season. "We will not sign onto this at all," concludes the organization's president.

Monsanto says it is "confident that the best solution will be found in favor of Brazilian soy producers."