Monsanto locks horns with licencee companies over royalty payments

Domestic seed firms allege MNC of charging excess trait fee on Bt cotton technology.

Written by Harish Damodaran | New Delhi | Published: October 16, 2015 1:21 am

In a dispute that could have larger implications for technology licencing agreements involving multinationals, Monsanto has taken nine domestic seed firms to court for non-payment of ‘trait fee’ on use of its proprietary Bollgard-II Bt (BG-II) knowhow in the cotton hybrids sold by them.

The US life sciences giant has claimed that these companies — including Nuziveedu Seeds, Kaveri Seeds, Ajeet Seeds, Ankur Seeds and Rasi Seeds — owe Rs 425-450 crore of trait fees to its 50 per cent-owned subsidiary Mahyco Monsanto Biotech (MMB), the official Indian licencee for BG-II technology. The due amounts are mainly on sales of genetically modified cotton seeds — incorporating the patented technology conferring bollworm pest resistance — during the recent kharif planting season.

According to Monsanto, the technology licencing agreement executed between MMB and the individual companies requires them to pay a trait fee of Rs 163.28 plus applicable taxes on every seed packet attracting a maximum retail price (MRP) of up to Rs 930. The trait value is more in case of higher MRPs.

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The nine defaulting companies account for over 60 per cent of the estimated 5.1-5.2 crore seed packets sold this season.

The licencee firms, in turn, have pleaded inability to pay, citing the price control legislations enacted by the governments in major cotton-growing states. The Maharashtra government, most recently on June 8, slashed the MRP of BG-II seeds from Rs 930 to Rs 830 per packet.

“How can we afford a trait fee of Rs 163.28 on an MRP of Rs 830 on the end product?

We, after all, also incur expenses on breeding, seed production, distribution, marketing and extension, apart from salaries and overheads,” said a domestic industry representative.

The industry has even charged Monsanto of taking advantage of its technology monopoly, so much so that “more than Rs 5,000 crore via trait fee has been collected from farmers and paid to MMB”. Seed companies don’t grudge paying royalty on a technology that has hugely benefitted farmers, “but there has to be some regulation of licencing agreements between technology providers and licencees,” the representative argued. He added that the MRP of Rs 830 fixed by the Maharashtra government factored in a royalty of Rs 20.

A Monsanto spokesperson rubbished these claims. The various state legislations have provisions only for fixation of MRP, not trait value. Besides, the companies were paying the trait value under the technology licencing agreements all these years. The current agreement between MMB and licencees was executed only in April this year. “All of them agreed to pay the trait value then. Now, they are seeking to wriggle out of contractual terms. This is a private contractual dispute and there is no public law or policy involved,” he added.

MMB has already filed an arbitration petition in the Bombay High Court on the matter, which is slated for hearing on Friday.

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  1. Mark Donners
    Oct 20, 2015 at 6:37 am
    GMO and its ociated lethal pesticides and herbicides are dangerous poisons. Eating genetically modified corn (GM corn) and consuming trace levels of Monsanto's Roundup chemical fertilizer caused rats to develop horrifying tumors, widespread organ damage, and premature death. rats exposed to even the smallest amounts, "developed mammary tumors and severe liver and kidney damage as early as four months in males, and seven months for females." The animals on the GM diet suffered mammary tumors, as well as severe liver and kidney damage. Everywhere GMO is being grown, food allergies, disorders such as autism, reproductive disorders, digestive problems, and others have been skyrocketing in the human potions. There has been a drastic decline of crop-pollinating insects all over the world, and this means a catastrophe for the future of the world's food supply. Wild pollinators like bumblebees, butterflies, and beetles are basically disappearing. GMO industrial agricultural practices are causing this insect genocide. Pollinating insects in general, which include a wide range of insects and other animals, are simply vanishing from their normal habitats and foraging areas. That lower diversity and lower abundance of wild insects means less fruits and destruction of the diversity of plants and their fruits worldwide. GMOs cross pollinate and their seeds can travel. It is impossible to fully clean up our contaminated gene pool. Self-propagating GMO pollution will outlast the effects of global warming and nuclear waste. The potential impact is huge, threatening the health of future generations. GMO contamination has also caused economic losses for organic and non-GMO farmers who often struggle to keep their crops pure. GMOs increase herbicide use. Most GM crops are engineered to be "herbicide tolerant"―surviving deadly weed killers. Monsanto, for example, sells Roundup Ready crops, designed to survive applications of their Roundup herbicide. Between 1996 and 2008, US farmers spra an extra 383 million pounds of herbicide on GMOs. Overuse of Roundup results in "superweeds," resistant to the herbicide. This is causing farmers to use even more toxic herbicides every year. Not only does this create environmental harm, GM foods contain higher residues of toxic herbicides. Roundup, for example, is linked with sterility, hormone disruption, birth defects, and cancer. GM crops and their ociated herbicides can harm birds, insects, amphibians, marine ecosystems, and soil organisms. They reduce bio-diversity, pollute water resources, and are unsustainable. For example, GM crops are eliminating habitat for monarch butterflies, whose potions are down 50% in the US. Roundup herbicide has been shown to cause birth defects in amphibians, embryonic deaths and endocrine disruptions, and organ damage in animals even at very low doses. GM canola has been found growing wild in North Dakota and California, threatening to p on its herbicide tolerant genes on to weeds. By mixing genes from totally unrelated species, genetic engineering unleashes a host of unpredictable side effects. Moreover, irrespective of the type of genes that are inserted, the very process of creating a GM plant can result in mive collateral damage that produces new toxins, allergens, carcinogens, and nutritional deficiencies. GMOs do NOT increase yields, and work against feeding a hungry world. Whereas sustainable non-GMO agricultural methods used in developing countries have conclusively resulted in yield increases of 79% and higher, GMOs do not, on average, increase yields at all. This was evident in the Union of Concerned Scientists' 2009 report Failure to Yield―the definitive study to date on GM crops and yield. The toxins ociated with GMO should never be tolerated. NEONICOTINOID PESTICIDE neurotoxins are absolutely the main factor causing the collapse of bee and pollinator potions along with other lethal chemicals, Agent Orange herbicides, glysophate, etc. When these poisons are banned as they were in Europe the bee potions start to recover. GMO neonicotinoids, roundup etc. MUST BE BANNED OUTRIGHT and all the farmers along with USDA, Biotech and chemical companies told to cease and desist from what they are doing. An even scarier prospect: the "BT" version of GMO soybeans and corn, (basically pesticides engineered directly into the plant ) The "BT toxin" gene is put into the DNA of the corn in order for it to manufacture its own toxins that kill pests. The BT gene originated from a soil bacteria that also infiltrates the microflora (friendly digestive bacteria) in your gut. The Bt gene converts the microflora in your intestine into toxin-manufacturing machines. So, to be clear, eating GMO corn products can cause your gut (which is primarily responsible for keeping you healthy) to turn into a breeding ground for tiny little pesticide factories inside your body, actively creating toxins which are designed to kill living things. These toxins are found in the blood and are readily transferred across the placenta to developing babies in the womb.