Heading backwards

The cotton revolution is in danger of being reversed by government control over GM seed pricing.

Written by Ashok Gulati , Shreya Sarkar | Published:March 14, 2016 2:10 am
gm crops, bt cotton, india gm crops, genetically modified crops, gm seeds, india cotton production, india bt cotton, india gm cotton, india news Illustration by C R Sasikumar

It was March 26, 2002, when NDA I, under the visionary leadership of then PM Atal Bihari Vajpayee, took a bold decision. It approved the use of genetically modified (GM) seeds of cotton. India was the 16th country to do so, despite opposition from political parties and NGOs. But Atalji was quite clear and convinced about the role of science in shaping agriculture. In one of his speeches, he stated, “The next big revolution that is unfolding in the world is the biotechnology revolution. This too is going to touch the lives of ordinary people in ways that we cannot even fully imagine today. We must not lag behind others in this revolution. Indeed, India should aspire to be one of the leaders of this revolution. We must plant its healthy saplings in different parts of the country so that we can reap their fruits soon.” No wonder, Atalji also added science in the famous slogan of “Jai Jawan, Jai Kisan, Jai Vigyan”.

What were the results? India witnessed an astounding revolution in the cotton sector, not seen for another crop. Cotton production shot up from 14 million bales in 2000-01 to 39 million bales in 2014-15, a 178 per cent increase (Cotton Advisory Board estimates). Cotton yields rose by 84 per cent, from 278 kg/ ha to 511 kg/ ha during the same period. Consequently, India emerged as one of the largest global players in cotton. From a net importer in 2000-01, India became a net exporter (the second-largest after the US) in 2014-15 as well as the largest producer (surpassing China’s 38.4 million bales).

If Atalji hadn’t taken this bold decision, and if India had continued in a business-as-usual (BAU) scenario, projecting from the trend since 1990-91, India’s cotton production wouldn’t have been more than 21 million bales by 2014-15, way below its consumption needs. It would have made India one of the largest importers of cotton. In reality, the net benefit of the Bt cotton decision was that, cumulatively, India produced 140 million bales “extra” (compared to BAU) during 2002-03 to 2014-15.

Let’s try to see this counter-factual in terms of foreign exchange savings and earnings. Had cotton production not dramatically increased, India would have been importing cotton to meet its domestic consumption each year. At unit value of imports, this aggregates to an import bill of $24.2 billion, cumulatively, in 2002-15 that India saved. Besides, due to surplus production, India’s exports of raw cotton soared and added around $21.2bn to our export earnings. Further, India earned about $9.3bn from the “extra” yarn exports, made possible by enhanced cotton production. All combined, the introduction of Bt cotton has so far helped India to the tune of about $55bn, a bonanza we owe solely to Atalji’s vision and courage.

Interestingly, while Atalji’s vision sowed the seeds of this revolution, Gujarat under then CM Narendra Modi harvested the largest fruit. From 2001-02 to 2013-14, Gujarat’s agriculture grew at 9.7 per cent per annum, spearheaded by cotton. In 2002-03, Gujarat, with three million bales, produced 22 per cent of India’s cotton, which rose to 11.6 million bales and a 31 per cent all-India share in 2013-14. Cotton yields grew by 131 per cent in Gujarat, way above all-India gains, over the same period. Of course, complementary infrastructure in terms of irrigation, roads, etc also played its role, but the catalyst was the Bt cotton seed. This presumably also contributed to Modi’s back-to-back victories in state elections.

However, today, as PM Modi leads NDA 2, the government is becoming control-centric in Bt cotton seeds pricing, including trait fees between the parent company (Mahyco Monsanto Biotech Ltd) and licensee companies, which have entered into private contracts. This would be the first death-knell for the cotton revolution. The government’s gazette notification of March 8, 2016 brings down the price of Bollgard II seeds from Rs 830 to Rs 800 per packet (450 grams), and reduction in the trait fee from Rs 163 to Rs 49. So, while the cost of seed to the farmer has reduced by only 4 per cent, the royalty being paid by domestic licencees to the parent company goes down by a whopping 70 per cent! As they say, you follow the money trail, and even a blind man can see who’s driving this change.

What will happen now? Most probably, the case will go into litigation. A government order overriding private company contracts is a fertile area for corporate lawyers. The Vodafone case is still fresh. This one will hit India’s credibility in protecting IPR and, no wonder, most global seed companies feel hesitant in bringing their latest technologies to India precisely for this reason. Our public research is pitiable. Look at the entire ICAR budget for the country, which was around Rs 4,840 crore ($0.8bn) in 2014-15. But Monsanto alone spent $1.7bn in R&D in 2014. It’s clear that future agri-wonder seeds are going to increasingly come from global private players, and India must learn to acquire them amicably. Look at how China has acquired Syngenta for $43bn. There’s something to learn from that.

If Monsanto decides to quit India, Bollgard III may not come, and Bollgard II will wear off its potency in the next three to five years. The cotton revolution will be buried forever and the biggest losers will be Indian farmers. Is this what the Modi government wants? Only the PM knows.

Gulati is Infosys chair professor for agriculture and Sarkar a research assistant at Icrier, Delhi.

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  1. T
    Thondaiman
    Mar 13, 2016 at 11:17 pm
    So it is actually the old bstrd Vajpayie who killed millions of farmers in Maharashtra.
    Reply
    1. V
      Vipul.Sharma
      Mar 14, 2016 at 5:01 pm
      Monsanto is an illuminati controlled and operated company.
      Reply
      1. A
        Anil B
        Mar 21, 2016 at 12:19 pm
        Let's not be again dependent on Somebody, its not that Indian scientists are not capable in developing technology, its only rest in accepting proven Scientists work in this direction and harness it at commercial level.
        Reply
        1. A
          Anil Chauhan
          Mar 14, 2016 at 5:47 am
          Thats a bad personal comment. It should be deleted.
          Reply
        2. A
          Anil Chauhan
          Mar 14, 2016 at 5:44 am
          Well researched and factual article and I hope the current government takes heed. Don't kill the Goose it will be counterproductive. Learn to look beyond like Atalji did.
          Reply
        3. D
          dines
          Mar 14, 2016 at 3:55 am
          The authors have written an article focusing on the price of GM seeds, but when calculating the net profits of the country, they totally forgot to take into account the price of seeds we import and any other costs to import the technology and then the price we pay when natural soil/seeds get destro because of GM.
          Reply
          1. D
            Dinesh
            Mar 19, 2016 at 4:03 am
            India has come to a stage where it should choose between the two alternatives : 1. Keep paying high royalties to MNCs and keep undermining farmers' interests. 2. Try developing alternatives themselves. This is a right step in direction 2 by restricting 1.
            Reply
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              Anil Kumar
              Mar 14, 2016 at 6:49 am
              This is what is called propaa funded by MNCs without understanding the basics of science,economics and ground realities. It is the adamant position taken by Monsanto which has precipitated this crisis. Let us say you buy a laptop or tablet and for benefit of all Government has fixed a minimum price of tablet as Rs 10000/-. There is a component in the laptop say Graphic Adapter manufactured by a monopolistic MNC and MNC is charging this at Rs 2000/- for it (Initially it was charging 12000/- for it). Now the domestic laptop or tablet manufacturer who also has other components to develop will not be able to sell the laptop for the Government fixed Rs 10000/-. Further the domestic manufacturer who integrates the technology of MNC is helpless and an overall market failure condition has been created by the MNC and thus rendering the Government fixed pricing ineffective. Now in case of laptops and tablets the pricing is fixed by free markets and because of Standard essential patents (SEPs) based technology licensing, there is a free flow of technologies in India and elsewhere which is the cause for digital revolution and smart phone revolution which is happening. All these SEPs are based on F technology licensing which is about Fair Reasonable and non-discriminatory terms of licensing which curtails monopolies and enables fair pricing. In case of seeds and agriculture, free market operation is not in force and since 2006 the State seed control acts are in operation. These have come into force only due to the arbitrary pricing of the trait for Rs 1200/- when total seed price was Rs 1750/-. Also everyone needs to remember that its not only Monsanto which involves in D and innovation. It is also the Indian seed companies and Public sector which have developed blockbuster hybrids which can carry any technology or traits(Bt genes). So everyone should be proud of them for their D in plant breeding. Also the Yield increment is a big myth. The yields have increased marginally only. In 2002-03 Indian yields were around 330 kg lint/ha and in 2015 they are 550 kg lint/ha. However yield in stan is 770 kg lint/ha and China is 1400 kg lint/ha. Yields in Cotton are a complex outcome of several factors including Agronomy, Overall seed potential, climatic conditions, inherent genetic superiority of the seeds, etc. The genetic superiority of the seed is created by the domestic seed company and not Monsanto technology. Monsanto also sells its own cotton hybrid seeds and its Indian partner Mahyco also does the same. If Monsanto technology is so superior, why Mahyco or Monsanto hybrids are not in the leading position in the country or why they donot have wide farmer acceptance. The technology is not the differentiation here but the hybrid seed developed by the seed company. So India is not going backward by actually harmonizing the already existing State seed control orders, but is only trying to do a mid-course correction to set the expectations realistic to the trait and technology providers so that they donot continue to take Indian farmers and Government for a ride and Modi's vision certainly aligns with the vision of Shri. Atal Bihari Vajpayee.
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