December 20, 2004

 

 

Monsanto Plans To Charge Fee On Argentina's Soy Exports

 

The biotechnology giant Monsanto plans to charge Argentine exporters a licensing fee for every ton of soybeans shipped abroad, a company spokesman said Friday.

 

"We sent a letter to exporters letting them know about this," said Federico Ovejero, manager of public and government affairs for Monsanto.

 

Initially the fee would be 2% on the per ton value of a shipment and eventually would rise to 3% per ton, Ovejero said. At current prices, this would force exporters to pay about $3 for every ton of soy exported.

 

The plan is part of Monsanto's effort to collect royalties on the pervasive - and often unpaid - use of its genetically modified soybean seeds.

 

Ovejero said the plan is not definitive. Monsanto is still negotiating with the Agriculture Secretariat and farm groups to reach a consensus about how to ensure royalties are paid, he said.

 

"We are committed to continuing talks with the government and the rest of the players here to reach a consensus," he said. "But on the other hand, we need to implement a (royalties collection) system for the 2004-05 campaign. If there is not an effective system in place by then, we'll move forward with our proposal, which involves selling licenses to exporters."

 

A similar system is now used in Brazil and Paraguay, where exporters pay $3.50 and $3 per metric ton, respectively, for the right to export soybeans derived from genetically modified seed, Ovejero said.

 

Ovejero said those fees probably will rise next year to $7/ton in Brazil and $6/ton in Paraguay. An increase eventually would occur here, he said.

 

"We did studies and found that a reasonable fee is 3% on the value of each ton, but for the first year there would a discount, so that the fee would be 2%," he said.

 

Cash soybeans sold for ARS475 pesos ($1=ARS2.989) Thursday at the Rosario Cereals Exchange. If prices held steady over the next year, the fee eventually would rise to about $4.75 per ton.

 

Around 95% of Argentina's soybeans are genetically modified, and most farmers use Monsanto-made seeds. Those seeds were designed to make soybean crops compatible with another Monsanto product, Roundup herbicide, which kills weeds and other plants. By reducing problems caused by weeds, farmers have boosted crop yields.

 

Thanks in part to the use of such seeds, farmers increased soybean production to 34.8 million tons in 2002-03, up from just 11 million in 1996, when the seeds were first introduced in Argentina.

 

Monsanto struggles to collect royalties on the seeds because they can be used year after year by farmers who pay for them just once. The company stopped selling the seeds in January, saying it was no longer profitable.

 

Unlike hybrid corn or sunseed, which must be purchased anew each year, farmers can store soy seeds from one season to the next. Many farmers see no problem with this, saying they already have paid for the seeds.

 

But that is not how Monsanto sees it. Repeated use of the seeds, the company says, denies it a fair return on its investment. Additionally, the company has noted that some farmers never even pay once for the seeds.

 

Monsanto claims that many seeds are sold unauthorized in Argentina's vast underground seed market, depriving the company of a legitimate source of revenue.

 

Ovejero says this revenue is necessary to ensure Monsanto continues to invest in new products.

 

"Success in implementing a system will allow us to continue investing in new technologies...," he said.

 

However, farm groups oppose Monsanto's plan.

 

Argentina's Rural Society, the country's largest and oldest farm group, said Tuesday that royalties should be paid for but not as a licensing fee on the sale of grains.

 

"We believe royalties should be paid for at the moment of legal sale and (the rules of a seed's repeated use) should be agreed upon freely between the parties," the SRA said. "No fee should be collected on the sale of grains."