Source: Reuters via Checkbiotech

A Brazilian court has temporarily suspended royalty payments to Monsanto Co. (MON.N) by farmers using the company's Roundup Ready soy seeds in Rio Grande do Sul state, court officials said on Wednesday.

"We've obtained a favorable decision. The money will be deposited in escrow until the merit of the case is decided," Flavio Luz, the lawyer representing the Cooperativa Triticola Campo Novo farmers group, said.

The injunction favors only some 8,700 farmers that belong to the cooperative in the northern part of the state. In 2003, the cooperative produced 102,000 metric tons of soy, nearly all of it from genetically modified (GMO) seeds.

Officials at biotechnology giant Monsanto said they would study the decision once formally informed of it and study whether they might appeal.

The cooperative argues that Monsanto should be allowed to charge royalties only on GMO seeds, but not on the amount of soy produced.

Monsanto reached an accord with producers in the state during the last harvest period allowing it to charge royalties of 1.20 reais ($0.44) per 60-kilogram bag of soybeans.

Luz said other cooperatives in the state have contacted him about pursuing a similar legal strategy.

The GMO seeds used by farmers in the region were allegedly smuggled into Brazil from Argentina several years ago. Farmers used the original seeds to propagate their own GMO seeds.

Monsanto has not obtained authorization to produce GMO soy seeds in Brazil. While there exist laws here permitting the planting of GMO seeds already in the hands of farmers, the sale of GMO seeds is illegal.

A biosafety bill under consideration in Brazil's Congress, if approved, would potentially legalize the sale of GMO seeds like Roundup Ready.

Rio Grande do Sul is the third biggest soy producing state in Brazil. It is forecast to produce 9.2 million tons of soy this harvest. About 90 percent of the output is expected to come from GMO seeds. Brazil is the world's second biggest soy producer after the United States. ($1=2.70 reais).

© Reuters 2005