Monsanto seeks Brazil soy royalties
Seed company wants to prevent farmers saving seeds

SAO PAULO, Brazil, March 31, 2005, from CropChoice.com: In an effort to safeguard royalties from its genetically modified RoundUp Ready soybeans, U.S. agribusiness giant Monsanto will seek to continue charging Brazilian farmers on delivery of soybeans, a company lawyer told Dow Jones Newswires Tuesday.

In March, Brazil's President Luiz Inacio Lula da Silva signed off on a biosafety bill, which is expected to lead the way to the legalization of the use of Monsanto's GMO seeds in the 2005-06 season (October-September).

The new law would allow Monsanto to charge royalties on seed sales as it does in the U.S. However, the company anticipates some farmers will continue to use seeds that are produced on the farm or bought illicitly. These farmers will still be expected to pay on delivery of their soybean crop.

"We will seek to ensure these farmers respect Monsanto's intellectual property rights," said Luiz Henrique do Amaral of the Dannemen Siemens practice, who is working with Monsanto on the royalty issues.

Brazil's crop law allows farmers to reproduce seeds for their own use without payment of royalties. However, Monsanto argues that royalties are guaranteed under Brazil's patent laws.

"We have had success enforcing this in the south and expect to continue," said Amaral, referring to a number of legal victories against farmers contesting royalties in the south of the country.

Brazilian farmers have been using RoundUp Ready soybeans smuggled in illicitly from neighboring Argentina over the past five years. Such was the extent of GMO use in the south of the country that the government decided to legalize GMO production and sale in 2002 but didn't allow seed production.

Faced with the prospect of legal action, farmers in the southern state of Rio Grande do Sul agreed to pay royalties at 0.60 Brazilian reals ($1=BRL2.57) per 60-kilogram bag last year and royalties at 1 percent of revenues for the current 2004-05 crop and for the 2005-06 crop.

"It is better that we pay as we know that the trading companies would deduct the royalty charge anyway," said Carlos Sperotto, president of the Rio Grande do Sul farmers federation, in a recent interview.

Monsanto has pressured the major trading firms and exporters into supporting their plan by threatening to have their shipments impounded at foreign ports if it has proof they contain illicit soybeans.

"Anyone who tries to wriggle their way out of this is going to be broken," said Amaral.

Brazil is the world's No. 2 soybean producer after the U.S. Somewhere between 21 percent and 26 percent of Brazil's soybean crop was RoundUp Ready in 2004-05, according to a survey by the local agricultural consultancy Celeres.

In Argentina, the government has reacted angrily to Monsanto's plan to charge royalties on soybean exports due to the high incidence of illicit use of RoundUp soy planting, fearing Monsanto's Brazil plan will be imposed on Argentina.

The Argentine Agricultural Secretariat is attempting to garner support for rejection of the proposal from the Brazilian Agriculture Ministry. However, while Agriculture Minister said it feels royalties should be charged on seeds, he recently told Dow Jones that the payment of royalties was a matter for farmers and seed producers to decide.

Monsanto received a boost in its attempt to charge after harvesting when Paraguayan farmers settled in March.

For the current season, Monsanto hopes to close royalty accords with producers from the Brazilian states of Piaui, Bahia and Mato Grosso do Sul and has already reached an agreement with Santa Catarina producers. Since seed production was illegal this season, Monsanto will exclusively charge on delivery of the soybeans.

These states produce little GMO soy. The other state with a large amount of GMO planting is Parana, the No. 2 soybean state behind Mato Grosso. However, the state government's anti-GMO stance is making negotiations difficult there, said Amaral.