August 23, 2005

Monsanto faces GM soybean royalty issue in Argentina

Monsanto is facing a GM soybean royalty issue in Argentina for its Roundup Ready (RR) seeds.

According to reports, Argentina has tripled its soybean output to 39 million tonnes since 1996, when Monsanto started selling RR in the country.

However, the company's RR revenue has declined in recent years although 95 percent of Argentine soybeans were RR.

Monsanto said it received royalties on only 18 percent of the RR crop planted this season, resulting in millions of dollars in lost revenue. In the US, many farmers had signed agreements with Monsanto since 1996, with the understanding that they may only benefit from the RR technology for the season for which they were purchasing their seed, the company said.

However, such agreements were not present in Argentina where farmers could replant the RR seeds each season without paying royalties, since the seeds were able to reproduce. While this was illegal in the US, Argentine law did not prohibit this.

In response, Monsanto had stopped selling its RR GM seeds in Argentina during early 2004, and informed Argentine exporters this year that it would require a US$15/tonne fee on soybean exports to compensate for unpaid royalties.

This move led to an uproar among farmers and the Argentine government. However, the government also collected about US$2 billion each year from soybean export taxes and needed to resolve this issue in an amicable manner.

Meanwhile, Monsanto said it expected to get an agreement that would be acceptable.