Brazil Faces GM Soy Battle Despite Legal Progress

PETER BLACKBURN/ Reuters 13aug03

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RIO DE JANEIRO, Brazil—Brazil, the world's No.2 soy producer, faces a battle in court and Congress over the use of genetically modified soybeans despite a judge's initial favorable ruling, industry analysts said on Wednesday.

On Tuesday, Selene Maria de Almeida of the Federal Regional Court in Brasilia suspended an injunction from 2000 banning the commercial planting and sale of Monsanto Co.'s (nyse: MON - news - people) Roundup Ready (RR) soybeans until a definitive judgment is issued.

No date was set for a final ruling, but consumer and environmental groups said they will challenge Almeida's decision to suspend the ban.

"It's only a provisional ruling ... based on economic criteria rather than the environmental and health impact," said Greenpeace genetics campaigner Mariana Paoli. "We're studying ways in which we can appeal against it."

Consumer watchdog IDEC has also said it will appeal against the ruling, running to more than 700 pages.

The center-left government of President Luiz Inacio Lula da Silva has been struggling to join divergent agriculture and environment ministry views in order to present a bill setting rules for the planting and sale of transgenic crops.

The bill, due to be presented for fast track approval by Congress this week, is likely to face stiff opposition, even from members of Lula's own Workers' Party, analysts said.

Brazil is the last major agricultural producer to ban commercial planting and sale of GM crops, although the ban is widely flouted across Brazil's southern soy belt.

The government wants the bill approved before farmers plant the new soy crop in October, but traders said that the legal and legislative controversy could rage much longer.

"The ruling opened the door for GM soy but nothing has really changed in the short term," said David Brew, soy trader at Rio Grande do Sul-based Brasoja. "It's a step forward but there's a long way to go."

SHORTAGE OF GM SEED

Traders said that none of the five authorized Monsanto GM seed varieties was available in commercial quantities and it would take a couple of years to breed sufficient supplies.

The lack of GM seed supply was confirmed on Wednesday by a Monsanto spokeswoman in Sao Paulo.

In a statement on Tuesday, Monsanto said that the judge's ruling would benefit Brazilian farmers and safeguard exports.

"The Brazilian farmer will be able to exercise his right of choice and the country to enjoy the benefits of biotechnology," Monsanto said.

Analysts said that the judge's ruling would encourage further growth in soybeans, growing area for which has risen 10 percent annually in recent years.

"It's great news, especially for southern Brazil. It opens a breach for GM soy and increased plantings," said Seneri Paludo, soy analyst at Agencia Rural, noting that rising world prices due to U.S. crop-weather concerns were an added incentive.

Paludo said that farmers could now fix contracts for the 2003/04 crop which they will shortly start to plant.

"Contracts had been delayed by GM uncertainty," he said.

In Rio Grande do Sul, Brazil's No.3 soy state, an estimated 80 percent of the crop is transgenic.

"Farmers are likely to carry on planting illegal GM seed smuggled across from Argentina and Paraguay," said a trader in Porto Alegre, the state capital.

Most Brazilian farmers prefer GM soybeans because they require less chemical protection and are cheaper to grow than conventional soybeans. Researchers estimate that costs can be cut by 30 percent because less herbicide is needed.

Soy is Brazil's main agricultural export and the Latin American giant is expected to overtake the U.S. as the world's No.1 soy exporter in 2003.