The Argentine government has publicly rejected a plan by U.S.-based biotechnology giant Monsanto (MON) to collect more royalties on the use of its genetically modified soybean seeds.

In press conference Tuesday, Agriculture Secretary Miguel Campos said Monsanto's plan was unacceptable because it would set an "incalculably negative" precedent for the future of Argentina's agriculture sector.

Campos said Monsanto has a right to collect royalties, but he said the government could not accept the company's proposed methodology to do so. "We're not anti-Monsanto," he said. "Nor do we reject the collection of royalties. We reject the method they are proposing to do this."

Campos' comments come a day after Monsanto took out a huge advertisement in the country's newspapers that called for the creation of a new royalties payment system. But Campos said Monsanto has already made a good deal of money in Argentina. And while he said he wants the company to continue making a profit, he doesn't want Monsanto to unfairly impose its will on farmers.

Campos said the Agriculture Secretariat is working on a plan to allow Monsanto to collect royalties for biotech products and their use in Argentina.

"A global proposal for royalties is being discussed and it will be worked on as long as necessary (until we figure out how to implement it)," he said.

Meanwhile, Campos said Monsanto has benefited enormously from the government's willingness to approve the use of genetically modified seeds at a time when their use was still controversial in most countries.

Argentina allowed farmers to plant Monsanto's most widely used product, Roundup Ready soybean seeds, in 1996.

"It required a lot of audacity for Argentina to approve the use of these seeds," he said. "The great beneficiary of this has been Monsanto. Argentina has been the launching point for the use of this technology in the continent. This has allowed Monsanto to make advances in other countries."

Campos said Monsanto has not completely clarified its proposal, but that in general terms the company wants to collect a flat fee on every metric ton of soybeans and wheat exported from Argentina. This fee could possibly amount to between $3 and $7 per metric ton, he said.

Monsanto does not hold a patent in Argentina for Roundup Ready soybean seeds. Because of this, the company has limited options when it comes to using the court system to force farmers to pay royalties when they use the seeds.

However, Campos said Monsanto has threatened to file lawsuits against Argentine exports once they reach the shores of other countries where the company has patented its seed technology. But this would be ineffective, he said.

"I don't believe in Monsanto's threat, in the sense that they would be assured legally favorable court decisions at the point of destiny," Campos said. "If Monsanto wants to litigate, it will be on a case by case basis in tribunals of different countries."

Argentina is the world's second-ranked user of genetically modified seeds, most of which are designed by Monsanto. But in the case of modified soybean seeds, which account for an estimated 95% of the crop's planted area, Monsanto is unable to collect royalties on some seeds or their repeated use.

Unlike hybrid corn or sunseed, for example, which must be purchased anew each year, farmers can store soy seeds from one season to the next. Many local farmers say this is fine, noting that they already paid once for the seeds.

Monsanto thinks differently, saying that the repeated and unpaid use of its seeds denies the company an adequate return on its investment. Moreover, the company notes that some farmers never even pay once for the seeds. Many seeds are sold unauthorized in an underground market, depriving the company of a legitimate source of revenue.

Seeds associations here estimate that seed and biotech event sales totaled $75 million during the 2003-04 harvest. This figure could have reached an estimated $400 million if all those sales had been certified.

Absent a better return on investment, Monsanto says, there will be little incentive to invest in the kinds of new technology needed to boost crop production and quality. Monsanto says the current system, in which farmers pay a one-time sales fee when buying "certified seeds," is inappropriate for the sale of soy and wheat seeds. "It is worth noting that the certified seed market does not surpass 18% of the 14 million hectares of planted areas (of soybeans)," Monsanto said in its advertisement Monday. "Because of this, we all face a challenge."

Monsanto stopped selling GM soy seeds in January, saying it was no longer a profitable business. The company is talking with farm groups and others now about the development of a royalty collection system.

Argentina has virtually tripled its soybean output over the past decade, boosting production to 34.8 million metric tons in 2002-03 from only 11.7 million in 1993-94, according to Secretariat data.

This increase has been due mainly to the incorporation of genetically modified seeds such as those made by Monsanto.

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