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COSTS OF Bt COTTONSEED IN INDIA: THE PRICE WAR HEATS UP
by Dr. C Kameswara Rao



The cost of Bt cottonseed in India has now become highly contentious, much more than ever before.

Making an allegedly poor performance of Bollgard in the State an issue, the Government and the anti-tech activists in Andhra Pradesh prevented three Bollgard varieties from cultivation in the State, since the 2005-06 cotton season.

In 2005, the cost of a packet of the authentic 450 g Bt cottonseed (required for an acre), whether of Mahyco-Monsanto Biotech (MMB) or their several sub-licensees, ranged from Rs. 1,600 to 1,850, including about 17 per cent trade margin on the MMB price of Rs. 1450. The illegal Bt cottonseed was sold between Rs. 800 to 1,000, and non-Bt cottonseed between Rs. 450 to 500 per packet. During the 2005-06 season, the acreage of legal Bt cotton was only nine per cent, while illegal Bt occupied 26 per cent and the remaining 66 per cent of acreage was under spurious or non-Bt cotton.

The Minister for Agriculture, Government of Andhra Pradesh, charged that Monsanto was collecting technology fee of about Rs 34 in China, Rs 108 in US and Rs 1,250 in India. There is no reliable information on Bollgard seed costs in China and US and the reasons for its being lower than in India. But the cost of Bt cottonseed required for one acre in India and elsewhere cannot be directly compared, for two reasons: a) in India cotton hybrids are used while most other countries use open pollinated varieties, each requiring a different cost inputs and seed rate, and b) in India cotton is planted in rows and elsewhere the seed is broadcast. Hence, the quantity of seed required to sow in one acre varies from country to country.

Even when developed in the public sector, technology costs of genetically engineered (GE) products do not disappear, as royalties on patented protocols used have to be paid. If developed in the public sector as some GE crops in China, the costs of GE seed can be lower to the farmer since the Governments bear the costs, which ultimately fall on the tax paying public. Undue delays in the regulatory process also add to seed development costs.

Obviously pressurized by the anti-tech activists, the Government of Andhra Pradesh approached the Monopolies and Restrictive Trade Practices Commission (MRTPC) complaining on high Bt cottonseed costs as well as certain conditions in the agreement between MMB and the sub-licensees. This petition is of interest to the Bollgard I sub-licensees, since they can avoid payment of the technology fee, if the petition were successful. This Petition has prompted MMB to reduce the technology fees by about 30 per cent (to about Rs. 900 per packet), in the cotton season of 2006.

In an interim order, the MRTPC has now asked Monsanto to reduce the price of Bt cottonseed (even lower than the new price of Rs. 900), and to fix the trait value as in China.The MRTPC also held that the MMB is indulging in restrictive and monopolistic trade practices, as Nuziweedu Seeds, a sub-licensee of MMB, is ready to sell a packet at Rs. 800 but was forced by MMB to sell at Rs. 1,818.

The Minister for Agriculture, Andhra Pradesh, hailed the MRTPC order as a 'great victory of farmers'.

The All India Crop Biotechnology Association (AICBA) described the MRTPC's order as 'highly inappropriate', and a setback to both the agricultural sector and the biotechnology industry in India. AICBA adds that in the end the Indian farmers lose out on the benefits of Bt cotton as seed companies will forced to reduce RandD expenditure on improving their product on Indian soil.

The Government of Andhra Pradesh was ready with a Caveat, to ensure that it was heard, in case Monsanto challenged MRTPC's order in the Supreme Court of India.

Monsanto has now moved the Supreme Court of India (Deccan Herald, May 17, 2005), seeking a stay on the implementation of MRTPC's order. Monsanto questioned the jurisdiction of MRTPC to adjudicate the issue, because 'licensing of technology does not fall under the classification of goods or services.' Monsanto denied that the fee charged in India was royalty. It also considers that MRTPC should have stayed its order in view of a NGO petition pending in the High Court of Andhra Pradesh.

The outcome of the current tussle could be implemented only during the 2007-08 cotton season. Nevertheless, the costs of Bollgard I will have to come down drastically in the future for two reasons: a) there is now tough competition with about 40 varieties of Bt cotton being available in India and more will be added soon, many containing non-Monsanto events, and b) for the next season, two gene stacked Bt varieties with Cry1Ac and Cry2Ab (one is Monsanto's Bollgard II and the other Chinese) will be available and these will shift the farmers' preference from Bollgard I and similar varieties.

What is missed in these projections is that in the absence of patent protection, and administrative and political will to take decisive action against infringements, every developer of GE crops is likely to face the same situation as Monsanto with Navbharat's illegal Bt cotton. If recovery of investment were at risk, the Indian agribiotech industry, the farmer and the country are bound to suffer.

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