South America Calling

Biotech giant Monsanto and Brazilian farm groups Wednesday announced an agreement that ends a dispute over royalties on first-generation Roundup Ready soybeans (RR1) and establishes rules for the introduction of second-generation Intacta RR2 Pro soybean seeds.

But groups in Mato Grosso, Brazil's No. 1 soy state, refused to sign and vowed to continue to fight the St. Louis-based company in the courts.

Brazil's National Agriculture Confederation (CNA) and farm groups from 10 states, representing 70% of soybean output, accepted Monsanto's proposal, under which the company suspends royalties on RR1 beans for this season and next. In return, farmers agreed to waive legal challenges to the collection of royalties over the last two years.

But the real payback for Monsanto on the royalties concession is that farmers must agree to its terms for the roll out of its Intacta RR2 Pro technology, which it hopes will occur in 2013-14 but which depends on Chinese government approval.

The accord reinforces Monsanto's right to charge royalties on RR2 in accordance with the international patent and retains its right to charge royalties on production, post-harvest, a controversial system that many farm leaders claim is illegal.

Individual producers have the choice whether to sign the deal or not, but those who don't sign will be denied access to RR2 licenses.

During a recent conference call, Monsanto Chairman Hugh Grant said that the company's priority was a smooth Brazilian launch of the Intacta RR2 Pro seeds

This accord clearly reflects that thinking.

APROSOJA and FAMATO, the two main Mato Grosso farm groups, said in a joint statement that they aren't ready to make a deal and will continue legal action against the world's largest seed firm.

The farm groups argue it is the local RR1 patent, which expired in 2010, that is valid in Brazil, not the international patent, which expires in 2014, as the company claims, and therefore farmers have been wrongly charged for the last two years.

In October of last year, a Mato Grosso judge suspended royalty payments in the state until a final judgment on the case was made. But in December, another judge modified that ruling, declaring that royalties should be deposited at court.

All in all, this accord probably is good news for Monsanto, but the non-participation of Mato Grosso, which produces around a quarter of all Brazil's soy, leaves a big gap in the agreement.

It remains to be seen how effective the threat of withholding Intacta RR2 technology is in convincing Mato Grosso's farmers to fall into line.

(AG)

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