October 15, 2014
Monsanto to pay Brazil-based soy exporter for collecting royalties of GM seeds
Monsanto will pay a fee to a soy exporter in Brazil for collecting royalties from farmers using Monsanto's genetically-modified (GM) seeds, the Buenos Aires Herald reports.
The agreement is described as a landmark deal and a key part of the complex relationship between global grain merchants and biotech firms. However, the unnamed exporter said that it reluctantly accepted the compensation deal.
"We assume the risk of not receiving royalties from producers," said a manager at the firm. "(But) they (Monsanto) offered compensation for the company," she added.
For months, soy-crushing group Abiove, which represents ADM, Bunge, Cargill and Louis Dreyfus, had negotiated for the companies to be compensated for collecting and monitoring payments on Monsanto's new Intacta RR2 Pro strain of GM soy.
In a July statement, the association said that it had failed to reach an agreement with Monsanto after six months, potentially hampering soy sales in Brazil.
Monitoring the usage of biotechnology in Brazil is a task which trading firms question since it's not a position they usually adopted in the US. American laws ensure that biotech patents are protected and farmers do not reuse seeds after their permitted period of application.
However, the practice of recycling seeds is common in Brazil, thus enabling farmers to avoid paying future fees after buying Monsanto seeds for the first season. These actions had been blamed by Monsanto for declining net sales of soybean seeds last year.
Complicating matters further is the need for merchants to accept liability for their shipments as they collect royalties for Monsanto's first-generation RoundupReady soy seeds. In fact, the company did not compensate for such efforts.
There are also continual worries that Monsanto may even force firms to suspend soy shipments, containing a certain strain of its product, if proofs of royalty payments are not provided.
In light of such disadvantageous arrangement, the industry hopes to avoid the same outcome for Intacta, a seed which includes a gene to ward off pests, and was first planted in South America during 2013.
Brazil is Monsanto's second-largest market, making up about a tenth of its US$15 billion in net sales in 2013.