January 30, 2004



Brazil Soy Firms To Collect GMO Royalties For Monsanto


Following much dispute over the illicit use of Monsanto's Roundup Ready genetically modified soybeans, Brazilian soybean crushing firms and exporters have agreed to collect farmers royalties for the American company, an industry spokesman said Thursday.


On Wednesday, the U.S. biotech firm announced farm representatives in the southern state of Rio Grande do Sul had agreed their members will pay royalties, the first time Brazilian farmers have agreed to pay on Roundup Ready seeds, which are illicitly produced.


According to a spokesman for the Brazilian Vegetable Oil Industries Association, or Abiove, the industry accepted that royalties should be paid and will facilitate the system.


Last year, Monsanto threatened to have Brazilian exports blocked at foreign ports if royalties weren't paid.


"This threat undoubtedly pushed them into taking a role in this deal," said one Sao Paulo-based broker.


For the past five years, more and more farmers in the southern state have been planting Roundup Ready, despite a nationwide ban, using seed smuggled from Argentina or illicitly produced on farms and paying no royalties.


The government legalized the planting of Roundup Ready soybeans, exclusively for the 2003-04 season, but not the commercial sale of the seeds, starving Monsanto of its normal means of charging royalties.


Roundup Ready is widely used in all major soybean-producing countries.


Under the proposed scheme, farmers will notify crushers or exporters that the soy delivered is Roundup Ready, then the purchasers would discount royalties, passing that value on Monsanto.


Non-Roundup Ready produce may then be tested, although it is unclear who will foot the bill for the analysis.


The use of GMOs in Brazil is focused in the southern state, where analysts say anything up to 80% of the state's crop is transgenic.


Rio Grande do Sul farm representatives met with Monsanto executives on Thursday to further discuss the deal.


The main point of discussion remains the value of royalties paid.


Monsanto said it will charge farmers around BRL20 a ton harvested for this year, although this figure could drop to BRL10 a ton this season as part of an incentive program to pay.


But according to Carlos Sperotto, president of Farsul, the main union for large landowners in the state, farmers are refusing to pay more than BRL10 per ton this season.


"This is the main stumbling block to these talks," he said after the meeting with Monsanto executives.


He added that Farsul would not sign any official accord or force its members to pay out, but merely would recommend it.


But this would not be necessary should the industry agree to facilitate testing.


The Agriculture Ministry expects Brazil's No. 3 producing state to turn out 9.7 million tons of soybeans when the harvest begins in March. Brazil's GMO production is concentrated in the state, which accounted for 80,701 of the 82,650 officially registered producers of GMO soybeans this season, according to the Agriculture Ministry.


An agreement would represent a victory for Monsanto, which has been fighting for its intellectual rights over the past two years.


Sperotto said the broad agreement had been drawn up during meetings between producer, industry and Monsanto representatives over the last 40 days.


Neither Brazil's federal government nor the state government were involved in negotiations, he said.


The payment of royalties, which are universally charged in the U.S., has been made more palatable to farmers with international soy prices recently hitting six-and-a-half-year highs.

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