One soybean exporter in Brazil has agreed with Monsanto to collect royalties, in exchange for a fee, from farmers who planted GM seeds marketed by the company
The background to this story is here:
Brazil soy exporters to police Monsanto biotech seeds - for a fee
Reuters via Daily Mail, 3 Oct 2014
At least one soybean exporter in Brazil has agreed with Monsanto to collect royalties, in exchange for a fee, from farmers who planted genetically engineered seeds marketed by the company, according to industry sources.
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 like ADM and Bunge will finalize agreements soon, the sources said, resolving 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.
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 there.
In Brazil, where genetically modified seeds have only been legal 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 including 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 genetically modified soy.
"Now the question is for Monsanto and each company to work out payments," said Ricardo Tomczyk, president of soy farmer's lobby Aprosoja in Brazil's top-growing state Mato Grosso after meeting with Abiove representatives this week.
While some merchants have been collecting royalties on Monsanto's first-generation RoundupReady soy seeds in Brazil for as long as a decade, that arrangement was a source of deep frustration as 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 for Intacta, a seed that 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 who was not authorized to speak with the press. "They (Monsanto) offered compensation for the company," she added. She declined to say what that was.
Concerns remain that Monsanto might force firms to halt soy 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 mainstay 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 but declined further comment. Monsanto said in an e-mailed statement that negotiations with Abiove companies "are ongoing and progressing".
Bunge, ADM, Cargill, and Louis Dreyfus declined comment.
Tensions are growing between the merchants who dominate the world's grain trade, buying from farmers and shipping to importers, and the GMO makers 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, which buys the vast majority of Brazilian soybeans, approved it last year. But 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 the genetically modified strain MIR-162 manufactured by Swiss firm Syngenta that China has not yet approved.
Cargill, one of the largest privately held U.S. corporations, last month sued Syngenta for marketing the seeds in the United States even though it lacked Beijing's approval, estimating it suffered losses of more than $90 million.
Brazil's foreign ministry says 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 bi-lateral agreement earlier this year.
(Editing by Alden Bentley)