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Argentina to propose new royalty payment rules for GM seed
Buenos Aires, Argentina
January 27, 2005

Checkbiotech staff

Argentina’s Agricultural Secretary will soon announce new guidelines for genetically modified seeds that are to take effect before the 2005-2006 harvest, much to the disaccord of the industry. Monsanto has been pushing for solution for the 2004-2005 harvest, with a deadline of this coming March, something that the secretariat was not willing to allow.

The announcement, made by Daniel Bamaceda, the sercretariat’s spokesman, is intended to be a compromise between Argentine agricultural unions and the agricultural industry. For some time now, Monsanto has been trying to work out a royalty payment plan for its seed technologies that are patented in many countries, however, not in Argentina.

The new rules will allow companies to benefit from royalties for seven years after they are first introduced on the Argentine market. This raises some area of uncertainty, since Monsanto has been selling some of its GM seeds in Argentina since 1996, which could suggest Monsanto is no longer entitled to royalty payments for some of its genetically engineered seeds.

"It's not clear how this will apply to Monsanto," Biolcati said to the Dow Jones International. "They have had distinct germoplasms in the market. We'll have to see how this applies in the case of Roundup Ready soy."

Siding in favor of agribusinesses, the government will issue fines that total five times the original market value of the seeds to farmers who refuse to pay royalty payments. In addition, farmers will be allowed to save their seeds and replant them for three years on 65 hectares worth of crop or less. Currently, farmers can save their seeds for unlimited use, and often re-sell their saved seeds on the market.

"Nobody is going to be completely happy with this," replied Hugo Biolcati, vice president of Argentina's Rural Society to the Dow Jones International. "Monsanto wasn't at the meeting and these rules were not designed for them. They were designed for everyone. The Secretariat has done a pretty good job of trying to meet a number of varying interests."

Balmaceda responded similarly to the Dow Jones International, "These rules were not designed to satisfy Monsanto. They were designed to make sure we have an efficient system that allows for royalties to be paid."

About a year ago, Monsanto announced it was going to stop selling its transgenic seeds in Argentina, because there were no laws in place regarding seed re-use. Monsanto cited non-profitability as the reason for pulling its GM seed business out of Argentina.

However, this proved quite costly to a country that produces a soybean harvest, of which 95% stems from genetically modified seeds, such as those sold under the Roundup Ready brand from Monsanto. As a result, the Argentine government quickly stepped in and opened talks between agribusinesses and farmers.

Monsanto devised a plan that called for a 2% per-ton licensing fee on soybean exports, which estimates to $ 3 a ton at current prices. Factoring in that estimates predict that Argentina will produce 35 million tons of soybean this year, the proposed plan would translate into slightly over $100 million in royalty payments for Monsanto. Similar arrangements have been agreed upon in Brazil and Paraguay. However, Argentine farmers have vowed to not to back this plan.

Although Monsanto’s seeds are not protected by patent law in Argentina, it has been granted patent rights in several of the countries that buy soybeans from Argentina. If a fair solution to royalty payments is not found, Monsanto could bring lawsuits against Argentine soybeans once they reach their destinations.

Sources: Dow Jones International, Reuters, Monsanto and Checkbiotech

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