NEWS : Feel Free To Leave India, Says Government to Monsanto In GM Cotton Row

 Agencies | Last Updated: March 16, 2016 20:18 (IST)

profit.ndtv.com

 

US seed company Monsanto is welcome to leave India if it does not want to lower prices of genetically modified cotton seeds as directed by the government, a minister said on Wednesday, in a sign the rift between New Delhi and the firm is widening.

The comments come as the government expects to develop its own genetically modified (GM) cotton varieties early next year to end Monsanto's dominance; it controls over 90 per cent of cotton seed supply.

Sanjeev Kumar Balyan, Minister of State for Agriculture, told news agency Reuters that the government is trying to rectify what he called past mistakes that allowed a foreign company to dictate seed prices and stifled local crop research.

"It's now upon Monsanto to decide whether they want to accept this rate or not," Mr Balyan said. "If they don't find it feasible, then they are free to take a call. The greed (of charging) a premium has to end. We're not scared if Monsanto leaves the country, because our team of scientists are working to develop (an) indigenous variety of (GM) seeds," he said

The introduction of Monsanto's GM cotton seeds in 2002 helped turn India into the biggest producer of the fibre. Despite the gains GM cotton brought for more than 7 million cotton farmers in India, some of them and their associations have complained Monsanto overprices its products.

Under pressure to assist farmers hit by three straight crop failures due to bad weather, Prime Minister Narendra Modi's government has imposed a cut of around 70 per cent in royalties that local firms pay Monsanto for its cotton technology. Monsanto has taken the government to court over the royalty.

India's anti-trust regulator is also investigating whether the company misused its near-monopoly to jack up rates. A Monsanto joint venture with a local company says it is confident the allegations will be proved groundless.

Monsato said in a statement this month it would have to reevaluate its India business, because it was difficult to bring in new technologies in an "environment where such arbitrary and innovation-stifling government interventions make it impossible to recoup research and development investments..."

A Monsanto spokesman declined to comment beyond the statement, but analysts said it was unlikely to withdraw from India lightly given the huge size of the market and its strategic importance now that China has bid to snap up the company's biggest rival, Syngenta, for $43 billion.

The emphasis on home-grown technology could be good news for a GM mustard variety developed by Indian scientists and being considered by the government.

A committee of government and independent experts will have their fifth meeting this year in April to evaluate trial results on what could be India's first lab-altered food crop.

Monsanto is also developing GM corn varieties to be sold in India if allowed, which analysts cite as another reason pulling out would be difficult.       

Story first published on: March 16, 2016 19:52 (IST)

 
SOURCE : http://profit.ndtv.com/news/corporates/article-feel-free-to-leave-india-says-government-to-monsanto-in-gm-cotton-row-1287871

NEWS : RSS Stand on Bt Cotton Forced Government’s Hand on Monsanto

By Bhavdeep Kang on 13/03/2016 • 2 Comments

RSS-affiliates Swadesh Jagran Manch and Bharatiya Kisan Sangh have pushed the government to cut royalty on Bt cotton seeds and the cap on the price of the seeds

New Delhi: The hand of the Rashtriya Swayamsevak Sangh (RSS), detectable in various aspects of policy-making, on occasion curls into an uncompromising fist that stops the Central government in its tracks, as in the case of the Land Acquisition Bill and more recently, on genetically modified (GM) seeds.

Monsanto, the controversial munitions manufacturer-turned-multinational seed giant, had threatened to quit India if the agriculture ministry capped royalty on its Bt cotton seeds – currently the only GM seeds available commercially in India. In response, RSS-affiliates Swadeshi Jagran Manch and Bharatiya Kisan Sangh said farewell and godspeed. They cheered as the ministry cut royalty on Bt cotton seeds by over 70% on March 9 and capped the price of the seeds – which earlier retailed at 1,000 rupees or more – at 800 rupees per 450 grams. A miffed Monsanto-Mahyco Biotech India (MMBL), which licensed its Bt seeds to 28 Indian companies, has moved court.
Home Minister Rajnath Singh, regarded as a competent agriculture minister in the previous NDA regime, is believed to have played a significant role in moderating the Modi government’s stand on GM technology. Singh is on the same page as the RSS with regard to GM technology and while in the opposition, he had questioned the Seed Bill proposed by the then Minister of Agriculture, Sharad Pawar, on the grounds that it allowed a loophole for registration of GM seeds.

The RSS battle against GM seeds goes back to the introduction of Bt cotton in 2002. The RSS’s aversion to GM technology is by no means shared by the government. As chief minister of Gujarat, Narendra Modi encouraged Bt cotton. As prime minister, his signature Make in India programme touts the country as a GM destination. He has even said, “Hybrid seeds, including GM seeds, represent new business opportunities in India” and “India has the potential to become a major producer of transgenic rice and several genetically modified or engineered vegetables”.
But his view does not quite keep with the BJP’s election manifesto in 2014, which says “GM food will not be allowed without full scientific evaluation” – a nuanced statement arrived at after a prolonged tussle between pro- and anti-GM factions in the Sangh.

Environment minister Prakash Javadekar took shelter behind the “scientific evaluation” clause when the Genetic Engineering Approval Committee approved field trials of 13 GM crops, including mustard, brinjal, rice and chickpea, in July of 2014.

A few months later, he told parliament, “The Union government is of the view that research in GM and confined field trials for generating bio-safety data with all due precautions should be allowed to continue in the national interest.” Most state governments, including BJP-ruled ones, refused permission for field trials.

In a lateral move, the anti-GM lobby launched an offensive against Monsanto. “We attacked on several fronts,” said the Swadeshi Jagran Manch’s Ashwini Mahajan. First came the Competition Commission of India’s observation that MMBL was “abusing” its dominance of the Bt cotton market. Then, farmers’ groups lobbied for the regulation of cotton seed prices, which led to the setting up of a committee under the agriculture ministry for that purpose. The National Seeds Association of India (NSAI) questioned MMBL’s monopoly and restrictive licensing norms in the cotton seed sector and supported the regulation of cotton seed prices. It came down hard on the Big Seed MNCs – who are members of the NSAI – for opposing price regulation.

MMBL was further cornered when research found that its GM cotton seeds, Bollguard 1 and Bollguard 2, had failed. The USP of these seeds was that they would be a pest-proof version the cotton crop, at least from the pernicious pink bollworm. But the Central Institute of Cotton Research found that these seeds did not work. On a complaint from the BJP’s Kisan Morcha, the commerce ministry’s Department of Industry Policy and Promotion served a notice to MMBL, asking why its patent should not be revoked. Bt cotton, it now turns out, is a self-limiting technology, effective only for a few years, until the target pest develops resistance. Besides, it is ineffective against other major cotton pests, such as the mealy bug and white fly, which have heavily damaged Bt crops in recent years.

India has always been opposed to an intellectual property rights regime in agriculture, maintaining that seed sovereignty is undermined by proprietary technologies. Also, GM and hybrid seeds – developed in labs rather than by farmer-breeders on the field – eventually displace traditional varieties. Bt cotton is a shining example, now sown in over 90% of the land under cotton.
The RSS-BJP meetings of December 2015 and January 2016 are believed to have sharpened the budget’s stated focus on agriculture. Specific items on its wishlist – such as crop insurance, the U-turn on MNREGA and the emphasis on micro-irrigation – were accepted, as were recommendations on the Dalit entrepreneurship fund, which dovetails with its “samajik samrastha” campaign, and on the Deen Dayal Upadhyay centenary. On GM, however, the struggle is likely to be a prolonged one.   Powerful forces are at work, with the US government – notably current president Barack Obama and presidential hopeful Hillary Clinton – nudging India towards “transformative technologies” in agriculture.

SOURCE : http://thewire.in/2016/03/13/rss-stand-on-bt-cotton-forced-governments-hand-on-monsanto-24653/

NEWS : Monsanto threatens to withdraw Bt tech after Govt panel moots cut in royalty

KV Kurmanath | The Hindu

 

Hyderabad, March 4:   

 

Global agri biotech company Monsanto has threatened to withdraw Bt cotton technology after a Union government-appointed panel reportedly cut seed price and royalty for the upcoming kharif season.

In a veiled threat, the Indian arm of the St Louis-based firm said that Mahyco Monsanto Biotech (India) would have no choice but to re-evaluate every aspect of “our position in India”, if the committee recommends a sharp, mandatory cut in the trait fee.

“It is difficult for MMB to justify bringing new technologies into India in an environment where such arbitrary and innovation stifling government interventions make it impossible to recoup research and development investments,” Shilpa Divekar Nirula, CEO, Monsanto India Region, said in a statement.

Lower royalty

Monsanto licenses the Bt technology to MMB – a joint venture it formed with Mahyco – which in turn sub-licenses it to seed companies, charging a trait fee or royalty. The Union government panel has reportedly recommended cutting the price BG-II cottonseed by about ₹130 from ₹930 a packet (of 450 gm) last year to ₹800 and ₹635 (₹830) for BG-I for the upcoming kharif season.

Bulk of the reduction comes in the form of a lower royalty to MMB that is put at ₹49. This component varies from State to State. While it is ₹50 in Telangana, Andhra Pradesh puts it at ₹90.

The committee, which met in Delhi on Thursday, had submitted its recommendations to the government for a final decision. Amidst litigations and requests from farmers’ organisations, the government has decided to announce a uniform price for the cottonseed for all cotton-growing States.

The committee, with representatives from various stakeholders, was formed after the government issued Cotton Seed Price Control Order (CSPCO). MMB has moved the Delhi High Court challenging the move.

Industry and media reports suggest that CSPCO plans to recommend an imposition of 70 per cent reduction in the trait fees paid on Bt cottonseed. Fixing of the fees will affect MMB’s business in the country.

The Centre is attempting to reduce the farmer’s expenditure on cottonseeds by controlling its prices. On an average, a cotton farmer spends three per cent of his total farming cost on seeds.

MMB, in a statement, said that the Centre’s intervention and any recommendation to reduce trait fees, if made, comes against the backdrop of a bilateral dispute where few licensees refused to honour their commitments to pay MMB, over ₹450 crore. They have collected these amounts from the cotton farmers in Kharif of 2015.

Pricing row

The prices of BG-I and BG-II vary in different States, with local governments issuing orders every year giving a break-up of actual seed cost and the royalty, which has become a bone of contention between the States and farmers’ organisations and seed companies on the other.

This row has resulted in a virtual split in the seed companies, with Monsanto and MMB and nine other firms supporting their view and a host of others in the National Seed Association of India (NSAI) that backed the Central government price order.

“Such a drastic intervention overrides existing private bilateral commercial contracts, and undermines the overall operating environment in India,” the Monsanto official said.

ABLE-AG reaction

The Association of Biotechnology Enabled Enterprises Agriculture Group (ABLE-AG), which comprises 11 seed firms including Monsanto, MMBL, Syngenta, has opposed the recommendation.

“If the reports come true, it will not be in favour of the farmers in the long run and will violate the principle of free market economics. When the cost of producing cotton runs in several thousands, saving hundred rupees will not benefit the farmers,” Shivendra Bajaj, Executive Director of ABLE-AG, said.

(with inputs from Our Mumbai bureau)

(This article was published on March 4, 2016)

 

SOURCE : http://www.thehindubusinessline.com/companies/monsanto-hints-at-reviewing-its-position-in-india-as-panel-cuts-royalty/article8314193.ece

 

NEWS : Delhi HC sets stage for price controls on Bt cotton seeds

Last Modified: Sat, Feb 06 2016. 09 56 AM IST

Delhi HC declined to grant a stay moved against the govt’s decision on 27 Jan to set up a central price control panel which would regulate the Bt cotton seeds price

Sayantan Bera &Priyanka Mittal

New Delhi: The Delhi high court on Friday cleared the way for the Union government to impose price controls on Bt cotton seeds by declining to stay its 27 January decision to set up a central price control committee.

The committee is tasked with regulating prices of Bt cotton seeds and payment of royalty to technology providers.

The court’s decision is a setback to Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL), a joint venture between Mahyco and Monsanto, a global technology provider of genetically modified seeds.
The development pertains to a case where MMBL petitioned the court to quash certain provisions in the price control order, specifically those allowing the centre to determine trait or royalty fees.

The price control order was issued by the agriculture ministry on 7 December 2015 and the nine-member committee was set up as a consequence.

The central price control order aims to keep Bt cotton seed prices affordable for farmers and bring uniformity in prices across states.

Around eight million farmers grow cotton in India and the double gene Bt cotton technology supplied by MMBL accounts for 95% of the seed market.

MMBL supplies the genetically modified Bt cotton technology to 49 seed companies in India in exchange for a trait or royalty fee.

While refusing to grant a stay until 4 March, the date of the next hearing in the case, Justice Manmohan said that any further action by the government would be subject to future orders of the court.

MMBL counsel Sandeep Sethi told the court that the centre only had jurisdiction to fix seed prices and not the technology fee that seed companies pay to MMBL.

“While we do not have an objection with price regulation of cotton seeds, but it must be seen that under the Essential Commodities Act, 1955, only the price of commodity—the cotton seed—can be regulated. The technology supplied by me (MMBL) is covered under the Patents Act, 1960, and cannot be fixed by the committee,” Sethi argued.

According to the order notifying the setting up of the committee, the price control committee will fix the maximum sale price of cotton seeds, including royalty fees and dealers’ margins before 31 March—ahead of the kharif season.

The first meeting of the committee is likely after 10 February, but by this month-end, after all stakeholders (such as seed associations, farmers and technology providers such as MMBL) submit their inputs, an official with the farm ministry said, requesting anonymity.

The centre earlier told the court (on 23 January) that the efficacy of the genetically modified Bt cotton to resist pest attacks has declined over the years and therefore, royalty or trait fees must also come down.

Besides, on 27 November, the centre wrote to antitrust regulator Competition Commission of India (CCI) to probe if MMBL, which licenses its patented Bollgard II technology to seed companies in India, abused its dominant position in the market.

Presently MMBL charges trait fees of Rs.163 and Rs.175 for Bollgard II Bt cotton seed packets (450 grams) that are sold to farmers (by different seed companies) at Rs.930 and Rs.1,100, respectively.
However, prominent cotton-growing states such as Maharashtra, Telangana and Andhra Pradesh have mandated trait fees be kept at Rs.20, Rs.50 and Rs.90, respectively.

“If they (the government) are interested in setting the price, then they should have first regulated the end price. That’s the one that concerns the farmers. Regulating technology fees should be the last resort,” said an intellectual property expert who did not want to be named.

“Once you regulate the end price, the other players will start renegotiating their prices. It has a huge economic impact. Setting the technology fee will always be arbitrary, which does not take into account the research and development cost of the technology,” the expert added.

“The trait value (royalty fees) comprises only about 1-2% of the total cost of cultivation for farmers in India whereas the benefits to farmers have been transformational,” MMBL told the Delhi high court on 29 January.

“In today’s hearing, the court heard our application requesting that the price control committee avoid interfering with private arrangements between MMBL and its licensees, and asked the centre to respond in the next 10 days,” said an MMBL spokesperson. “We repose complete faith in the courts and remain confident that the government will take into account views of all stakeholders in the spirit of comprehensive consultation and will revise the contentious clauses to encourage innovation in Indian agriculture.”

The case in the Delhi high court and CCI will determine the future of India’s intellectual property rights regime and, in the near term, how the forthcoming kharif season will play out for cotton growers across the country.

Shreeja Sen contributed to this story.

Sayantan Bera &Priyanka Mittal

SOURCE: http://www.livemint.com/Politics/wRfyEO4tnX65VSGqlCMR6J/Delhi-HC-sets-stage-for-price-controls-on-Bt-cotton-seeds.html

NEWS : Centre tells Delhi high court Bt cotton’s resistance to pests has waned

Government’s response came in a dispute over an order to regulate cotton seed prices and fix royalties

Last Modified: Fri, Jan 29 2016. 12 51 AM IST
Sayantan Bera | Shreeja Sen

New Delhi: The efficacy of genetically modified Bt cotton in resisting pest attacks has declined over the years, the central government told the Delhi high court. As a result, royalties charged by a technology giant like Monsanto must also come down, it argued.

The government’s response came in a dispute over an order to regulate cotton seed prices and fix royalties. The order is being challenged by Mahyco Monsanto Biotech India Pvt. Ltd (MMBL), a joint venture between Mahyco and Monsanto.

The company petitioned the high court to quash certain provisions in the price control order, specifically those allowing the centre to determine trait or royalty fees.

“Pink bollworm, a major pest to the cotton crop, has already developed resistance in the last 2-3 years; farmers are a worried lot having sown Bt cotton seeds purchased at high price,” the government said in an affidavit.

It added, “The crop is getting damaged due to pink bollworm incidence. It is a natural phenomenon that over the years efficacy of the technology goes down, hence the royalty on technology should also be reduced.”

The centre’s affidavit, filed on 23 January, added that Bt cotton seeds are now unaffordable to farmers due to high royalties charged by MMBL which has a near monopoly on Bt cotton seeds and that this has led to a market failure.

“The regulation of Bt cotton seed prices under such situation cannot be meaningful if the trait value or licence fee or royalty is not regulated,” it added.

Around 8 million farmers grow cotton in India and Bt cotton technology supplied by MMBL makes up over 90% of the seed market.

The case arises from a price control order issued by the agriculture ministry on 7 December 2015 to make Bt cotton seed prices affordable to farmers and bring uniformity in prices.

MMBL, which licences its patented Bollgard II technology to 49 seed companies in India, said in its petition that the price control order is “illegal and unconstitutional”.

An MMBL spokesperson said the “court has permitted MMBL to file its response to the Union of India’s counter affidavit. The matter being sub judice, it would be improper to comment at this point of time”.

The Delhi high court on Wednesday said the case will be heard next on 4 March.

The government argues that its power to pass orders under the Essential Commodities Act (1955) overrides existing laws, including the Patents Act 1970. This, the government said, justifies its move to regulate royalty fees charged by patent holders like MMBL.

MMBL charges trait fees of Rs.163 and Rs.175 for Bt cotton seed packets (450 grams) that are sold to farmers (by different seed companies) at Rs.930 and Rs.1100, respectively.

On Wednesday, the agriculture ministry constituted a price control committee that will recommend the maximum sale price of Bt cotton, including royalty fees paid by seed companies to technology providers like MMBL.

The committee, according to the government order reviewed by Mint, will also suggest the format of all licensing agreements for genetically modified technology.

In support of the government’s price control order, executive director of industry lobby group National Seeds Association of India (NSAI), Kalyan Goswami said that the central order was a good move that will help all stakeholders including farmers.

“The balanced regulation might leave enough margins for the seed companies to invest in R&D and infrastructure development compared to the situation till 2015 wherein some of the cotton seed companies have even become bankrupt,” he said.

Goswami also called for reforms in the intellectual property regime for essential commodities like cotton seed.

“NSAI...believes that all GM traits and the IPR (intellectual property rights) related to them must be declared as standard essential patents (SEP) and only if the technology proponents accept this kind of governance, new GM traits may be approved in our country,” he added.

A patent is declared an SEP when the technology becomes the industry standard (like in smart phones).

Sayantan BeraShreeja Sen

NEWS : Firms accuse lobby of seeking price controls on cotton seeds

Last Modified: Wed, Jan 27 2016. 01 02 AM IST

Eleven NSAI members, including Monsanto, say body lobbied centre for controls implemented in 7 December order

At least 11 member companies of the National Seeds Association of India (NSAI) have written to the industry body alleging motivated lobbying by it with the Union government for a price control order for cotton seeds.

This, the companies allege, will discourage innovation and deprive farmers of better seed technology.

In separate but similar letters written on 23 and 25 January, seed companies including Monsanto India, Mahyco, Bayer Crop Sciences Ltd, Syngenta India Ltd, Rasi Seeds, Sungro Seeds and Shriram Bioseed Genetics alleged that NSAI sought and defended the price control order even though it had challenged other such regulations before various courts in the past.

The letters reviewed by Mint also said that “NSAI has sought to intervene in certain contractual disputes between some of its dominant members against a technology provider”.

“This appears to be a gross misuse of the NSAI platform and financial resources which is not intended for such motivated purposes,” the letters added.

The reference seemingly is to an ongoing dispute between Nuziveedu Seeds Ltd (NSL) and Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL), where the former refused to pay MMBL trait or royalty fees (amounting to Rs.138 crore) for using its proprietary Bt cotton technology.

MMBL, a joint venture between Mahyco and Monsanto, has filed an arbitration petition on the non-payment of trait fees by eight firms including NSL in the Bombay high court. The companies owe MMBL about Rs.450 crore in trait fees on the grounds that several state governments have put in place price controls which also mandated lower trait fees than what was agreed upon bilaterally between seed companies and MMBL.

Currently, MMBL receives a trait fee of Rs.163 per packet of Bt cotton seeds (using patented Bollgard II technology) which are sold at Rs.930 per packet.

MMBL also terminated the contract with NSL and two of its units (Prabhat Agri Biotech and Pravardhan Seeds) on 14 November.

NSL, with a 20% market share in Bt cotton seeds, is headed by M. Prabhakar Rao, who is also the current president of NSAI.

Interestingly, the disagreement within NSAI—which has 357 members, including warring parties like NSL and Monsanto—comes into the open ahead of a crucial court hearing on 27 January where MMBL has petitioned the Delhi high court to quash the price control order issued by the agriculture ministry.

MMBL has contended in its petition that the price control order is “illegal and unconstitutional” as it regulates the contractually negotiated licence fee payable by its licencees for distributing patented Bollgard II technology.

Mint has reviewed a copy of this petition. MMBL has claimed that this is beyond the scope of price regulation under the Essential Commodities Act, 1955, as its technology does not qualify as an “essential commodity”.

NSAI’s executive director Kalyan Goswami earlier this month said that the industry body has been made a party to this case, on its request.

On the present set of letters Goswami said that NSAI is yet to receive any communication signed by the 11 companies.

“I am really very sorry to say that this statement is made today (Tuesday) by Monsanto looking at tomorrow’s (Wednesday’s) hearing in the Delhi high court,” he said, adding, “We would like to reiterate that the decision of advocating to the ministry of agriculture for price control was taken by the governing council (of NSAI). The council is elected by all the members, spread nationwide, and not by only selected members.”

Goswami further said that firms coming forward with Monsanto (in the letter) have direct or indirect business links with it.

“They should question the drastic and discriminatory actions and exercise of dominance by MMBL. On the contrary, they have short-term commercial interests. They are not thinking of the interest of farmers,” he added.

The agriculture ministry on 7 December issued a price control order to bring uniformity in Bt cotton seed prices, as several states like Maharashtra, Andhra Pradesh and Telangana had brought in price control orders. The other reason, according to the ministry, is to make Bt cotton seeds affordable for farmers.

In addition to court cases and the price control order, the ministry also wrote to the Competition Commission of India (27 November) requesting it to probe whether MMBL abused its dominant position as a technology provider for Bt cotton.

The multiple cases and disputes involving technology providers like MMBL, seed companies, industry bodies like NSAI and the ministry of agriculture will determine the future of Bt cotton in India.

The transgenic Bt technology, first allowed for commercial cultivation in 2002, catapulted India from an importer of cotton to its current position as a top producer and second largest exporter of cotton globally.

At least 6 million farmers grow cotton in India, over 95% of which is grown using the Bt technology which is licensed to 49 seed companies by MMBL.

Seed companies that wrote to NSAI also said that even though price control regulation is presently limited to cotton seeds, “it is inevitable that similar regulation will be applicable to all kinds of seeds and technology, thereby jeopardising significant investments already made by many members”.

The firms observed that the NSAI should not be used for short-term commercial interests of a few dominant members whose interests were prioritized over “larger group members”.

Sayantan BeraShreeja Sen

SOURCE : http://www.livemint.com/Companies/0vTiyQS0BXlnoAdcD0jacI/Firms-accuse-lobby-of-seeking-price-controls-on-cotton-seeds.html

NEWS : Falling Crop Prices: Double whammy for cottonseed companies

Poor demand and price controls squeeze the once fast-growing industry.

Written by Harish Damodaran | New Delhi | Indian Express | Updated: July 2, 2015 5:16 am

Labour, fertiliser and pesticide costs have all gone up, whereas the seed price has remained the same. If our margins are going to shrink, making it difficult to pay our seed growers and invest in R&D.    

Falling crop prices isn’t good news for seed firms, given implications on demand for their product.
This is being seen in cotton, where average kapas realisations of Rs 3,900-4,000 per quintal in 2014-15, against Rs 5,000-plus for the previous year’s crop, has dampened farmers’ enthusiasm to plant. Ground-level reports suggest significant acreage diversion this time, especially to pulses, groundnut and maize whose price prospects appear more promising.

But companies selling cotton seeds are facing a double whammy, not just from lower demand, but also inability to raise prices due to controls imposed by state governments in Maharashtra, Gujarat, Andhra Pradesh and Telangana. These four states account for over 70 per cent of the estimated domestic market of 50-51 million packets, each containing 450 grams of Bt and 120 grams non-Bt cotton seeds.
(Bt refers to Bacillus thuringiensis, a bacterium that produces proteins toxic to bollworm insect pests and whose genes are inserted into crops using recombinant DNA/genetic engineering tools).


When Bt cotton was introduced in India in 2002, the seeds were sold at Rs 1,600 per packet. But in 2006, the AP government fixed the maximum retail price (MRP) for Bt cotton seeds, incorporating the US life sciences major Monsanto’s Bollgard single-gene (BG-I) technology, at Rs 750 per packet.
Other states soon followed suit, even enacting their own price control legislations. In 2008, they extended the Rs 750 rate to even seeds based on Monsanto’s more advanced Bollgard double-gene (BG-II) construct, while further slashing the MRP for BG-I packets to Rs 650.

These prices remained unchanged until 2013, when they were increased to Rs 830 for BG-I and Rs 930 for BG-II packets. The rates haven’t been revised upwards since then; Maharashtra’s BJP-led government under Devendra Fadnavis, on June 8, actually reduced the MRPs of BG-I and BG-II cotton seeds to Rs 730 and Rs 830 per packet respectively for the current year.

The above price reductions were largely enabled by a lowering of the ‘trait fee’ being paid by seed companies to Mahyco-Monsanto Biotech — a joint venture between the St Louis-headquartered firm and its Indian partner, Maharashtra Hybrid Seeds Company — for introducing the Bollgard gene construct into their own cotton hybrids. The trait fee, originally Rs 900 per packet, was brought down to Rs 122.96 for BG-I and Rs 183.46 for BG-II technologies.

The reduction in MRPs helped in the widespread diffusion of Bt cotton technology, similar to what low call charges did for mobile telephony though the latter was more a result of market competition than state fiat. Annual sales of Bt seed packets soared from 1.05 lakh in 2002 to 500 lakh-plus last year. But state-directed MRP reductions are proving increasingly counter-productive, with seed companies struggling to get farmers to produce for them.

 “India has some 70 lakh farmers who produce kapas (raw un-ginned cotton) for commercial sale. But there are also 2 lakh-odd growers who produce the hybrid cotton seeds that the former plant. We cannot ignore them,” observed Raju Barwale, managing director, Mahyco.

Hybrid seeds production is a highly labour-intensive affair, where the male part of a flower is removed one day and the resultant female parent manually pollinated with the pollen from another flower the next day. It takes 7-8 labourers working over two months to produce cottonseeds from one acre.

“A normal cotton grower would harvest 10 quintals of kapas and incur expenses of Rs 20,000-22,000 per acre. The corresponding kapas yield for the hybrid seed farmer will be 4.65 quintals, taking an average seed recovery of 300 kg (kapas contains 65 per cent seed and 35 per cent lint). Also, his expenses would work out to Rs 55,000-65,000 per acre, of which Rs 45,000-50,000 is labour costs alone,” noted Sameer Mulay, managing director of the Aurangabad-based Ajeet Seeds.

The high labour requirement also means that hybrid cottonseed cultivation is concentrated in select pockets: Gadwal (Telangana), Madanapalle (AP), Attur (Tamil Nadu), Gajendragarh (Karnataka), Idar, Khedbrahma and Sabarkantha (Gujarat), and Jalna, Buldhana and Nanded (Maharashtra).

 “In the last five years, we have had to increase our procurement price from Rs 275-300 to Rs 480 per kg of first-stage ginned seeds,” added Mulay, whose company sources cottonseeds from over 50,000 growers.

According to the industry, the cost of 450 grams of fully-processed clean Bt cottonseeds is anywhere between Rs 275 to 300. To these, if expenses towards trait fees (Rs 183), 120 grams of non-Bt seeds (Rs 45) and administrative/factory overheads (Rs 100) are added, the total per-packet cost comes to around Rs 620.

“An MRP of Rs 830 hardly leaves much for distribution, marketing and branding, leave alone undertaking R&D and extension work,” an industry representative claimed, while pointing out that seeds (assuming 1.6 packets per acre) makes up just 6-7 per cent of cultivation costs for the farmer. “Labour, fertiliser and pesticide costs have all gone up, whereas the seed price has remained the same. If our margins are going to shrink, making it difficult to pay our seed growers and invest in R&D, the ultimate sufferer will be the regular kapas farmer,” he said.

SOURCE: http://indianexpress.com/article/india/india-others/falling-crop-prices-double-whammy-for-cottonseed-companies/