Argentina

Farmers Don't Have To Pay Some Seed Royalties

Dow Jones Newswires 20may2005

[More on Monsanto]

BUENOS AIRES — The Argentine government on Friday said farmers here are not legally required to pay royalties on the repeated use of genetically modified seeds, underscoring a position that is likely to irk seedmakers like Monsanto Co. (MON).

Monsanto has been trying to get farmers to pay for repeatedly planting seeds such as Roundup Ready soybeans, which the company created and began selling here in 1996.

Those seeds have been widely adopted by farmers and have been partly responsible increasing the productivity of local farms. Soybean output has more than tripled from around 12 million metric tons a decade ago to an estimated 39 million tons this year.

However, Monsanto stopped selling the seeds around a year ago, saying that not enough farmers pay for them. The St. Louis-based company said this has made the business unprofitable.

Farmers properly pay for only 17% of the Roundup Ready seeds in use, according to Monsanto.

That's down from about 50% from when the company first began selling Roundup Ready.

Argentine law requires farmers to pay for such seeds at the time of the initial purchase, but it doesn't require farmers to pay for the right to plant the offspring off those seeds each year, which is something Monsanto wants to happen.

Seedmakers "cannot impose any conditions on farmers...nor for that matter, the payment of royalties," the government said in a statement issued by the Agriculture Secretariat Friday.

"The Argentine seed law allows producers to successively use seeds on their own farms," said Jose Luis Ruso, president of the government's National Seed Institute, or INASE. "Farmers cannot sell these seeds and they can't even trade them for other things, but the law says they can use them repeatedly on their own farms."

Ruso said many farmers are confused about their rights because seedmakers have been telling them that they are obligated to pay for repeatedly using seeds.

"Some producers are surprised to find out that when they buy seeds, they have to sign a receipt that commits them to pay royalties for the repeated planting of seeds on their own farms," Ruso said. "The law doesn't obligate or permit that kind of payment and neither INASE nor the Agriculture Secretariat approve of it."

Ruso said that if seedmakers try to force farmers into paying for this, farmers can sue the companies. Moreover, he added that in such cases Argentine courts would pay close attention to Inase's interpretation of the law when considering the validity of the farmer's complaint.

A spokesman for the Argentine Seeders Association was unavailable for comment.

Monsanto, citing an Argentine government study, says that Roundup Ready soybeans brought $4.5 billion in benefits to local farmers between 1996 and 2001, mainly through lower production costs and higher yields.