January 19, 2004



Monsanto Ceased Soybean Seeds Sales in Argentina


Monsanto Co. has stopped selling soybean seeds in Argentina since last month due to financial issues.

The company says a huge black market for the genetically modified seeds makes it impossible to recoup its investments. Until that changes, Monsanto Argentina said, it won't sell new-and-improved soy seeds or carry out research to develop new varieties tailored to local conditions.

The move has fueled fears that farmers will lose out on biotech advances and new seed varieties, and that other businesses may pull out of Argentina -- which has been struggling to recover from an economic collapse that sparked the world's biggest debt default in 2002.

"The last thing you want to see in your country is investment in research being cut off. That undermines the future of the whole agriculture industry," said Arturo Vierheller, a former agriculture department official.

GM soybeans, which are popular with farmers because they save money on herbicides, have become Argentina's top crop and biggest source of foreign currency, despite opposition from consumers and environmentalists, especially in Europe, who demand more safety tests.

The European Union effectively banned the growth and importation of biotech foods and crops in 1998, although some GM soybean varieties had already been approved and can still be imported.

The sale of GM soybean seeds is still illegal in Brazil -- the world's No. 2 producer after the United States -- but the government is allowing farmers to plant GM soybeans during this season until a broader law to regulate GM crops is passed.

Officials say Brazilian farmers are planting seeds originally smuggled in from Argentina and Paraguay.

Some 50 percent to 60 percent of all soybean seeds in Argentina are bought on the black market, said Federico Ovejero, a spokesman for Monsanto Argentina.

Seeds from soybeans, like wheat, can be culled from newly planted plants and reused without any significant drop in the yields of soybeans.

Argentine farmers don't have to pay royalties to Monsanto when replanting its GM Roundup Ready seeds due to a widely exploited exemption in the law. And many farmers cull the seeds just to sell them illegally, Ovejero said.

This black market is known as the "bolsa blanca," because farmers and farm-goods stores sell the saved seeds in large white bags that have no labels.

Monsanto Argentina said it will concentrate instead on Roundup Ready corn, which the government has yet to approve, and new varieties of sunflower seeds and sorghum.

Although these crops have been losing ground to soy, their seeds cannot be reused without risking wildly variable yields. That means each year, farmers will have to buy new seeds -- presumably from authorized seed dealers.

"It is a shame for us to be putting on hold such technology as Insect protected soybeans," Monsanto Argentina said, referring to insect-resistant seeds developed especially for Latin America.

Monsanto had about 15 percent market share in the soybean seed business, industry sources say. Now that it has withdrawn, just three major companies remain -- Netherlands-based Nidera and Argentina's Asociados Don Mario and Relmo.

But Monsanto, which is based in St. Louis, Missouri, is still the world's leader in biotech crop development. All other seed companies pay Monsanto to sell soy containing its Roundup Ready gene, designed to resist harm from its top-selling Roundup weed killer.

"The biggest risk is that Argentina loses access not only to biotechnology but to improved varieties generally ... This will mean lower yields and could also increase plants' susceptibility to new diseases," said Gerardo Bartolome, president of the Argentine Association for the Protection of New Plant Varieties.

Farmers could lose up to $78 million a year due to lower yields if they are unable to buy new soybean seed varieties, Bartolome said.

Monsanto does not rule out re-entering the market, however, if government efforts to combat illegal seed sales bear fruit.

The agriculture department said it aims to reduce the number of farmers saving and replanting seeds by more strictly defining an exemption in the law, which was originally meant to protect small farmers.

"I think the government is aware that if this doesn't get solved, the country and the farm sector are in serious trouble, but no concrete action has been taken yet," Bartolome said.

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