Monday, 4 July 2005

Bt seeds: Games multinationals play

By Syed Akbar
Hyderabad, July 4: The State government is planning to approach the Monopoly And Restrictive Trade Practices (MRTP) Commission to end the monopoly of multinational Monsanto in the sale of Bt cotton seeds.
The State government's move follows complaints from farmers that companies marketing Bt cotton seeds with patent from Monsanto had established their monopoly in the State market jacking up the prices exorbitantly.
A 450 grams bag of Bt cotton seed, which should normally be available for about Rs 300-450, is now sold at Rs 1800. In some places the prices are jacked up to Rs 2400 per bag. Farmers in the State grow Bt cotton on four lakh acres and their seed input comes from one of the three licensed companies patented with Monsanto. Five varieties of Bt cotton seeds are now sold in the State after the Centre banned Mahyco from marketing its Bt cotton varieties that failed to deliver the promised results.
"We are now facing a monopoly situation. Only one company Monsanto is calling the shots by fixing a very high royalty per packet. Under monopoly situations, the government can intervene to regulate the prices. We have powers to regulate royalty", a senior official in the farm department told this correspondent.
The State government may also invoke the Competition Act 2002 or approach high court seeking its intervention to regulate the prices of Bt cotton seeds. Monsanto gets as high as Rs 1250 per bag of Bt cotton seeds from its patented companies. The royalty value per packet is decided by Monsanto every year.
As per the agreements the seed companies have with Monsanto, on sale of every seed packet a royalty of Rs 1250 has to be paid to the latter. Out of this royalty collected from farmers, 70 per cent will go to Monsanto and the balance 30 per cent to the seed company concerned. The conditions of the agreement provide powers to Monsanto to audit the seed company's accounts also to ascertain proper payments.
The State government's argument is that if the royalty is regulated and maintained around Rs 300-400 per packet, the seed price would be below Rs 1000. Even at this price the technology can rake in upwards of Rs 200 crore per annum to Monsanto.
"By a reasonable price if more farmers are attracted the annual returns can be even higher and can go up to Rs 400 crore on an estimated sale of 100-125 lakh seed packets a year", the official said.

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