Argentina's Agroindustry Ministry this week suspended the testing system through which Monsanto collects royalties on its Intacta RR2 Pro soybean technology post harvest.
The decision, coming in the middle of the 2015-16 harvest, represents a victory for the farm lobby, which argues most of these royalties are collected illegally.
After seeing its first-generation Roundup Ready technology pirated on a massive scale in Argentina, Monsanto was keen to establish its system to collect royalties on its second-generation Intacta RR2 Pro technology, which stacks insect resistance on top of glyphosate resistance.
To that end, the St. Louis-based biotech giant has sought to close loopholes this time, including clauses in seed sales contracts demanding payment of royalties on home-produced seeds with Intacta traits and obliging exporters and elevators obliging them to test for Intacta.
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This controversial system whereby royalties of approximately $15 per metric ton are charged, has been in place since last year when Intacta planting first started on a large scale in Argentina.
The decision also hits the Bolsatech system, which Monsanto was setting up with grain exchanges, as alternative system of payment.
The suspension will not have a massive initial impact on Monsanto. That's because royalties were paid at time of purchase on 70% of Intacta seeds used in Argentina, where the technology has not spread as quickly as in Brazil, where about 40% of production is Intacta. But given that only around 15% of Argentine soybean seeds are bought from commercial sources -- the rest are produced on the farm or bought on the black market -- post-harvest royalty collection is a key issue.
Argentine farm groups claim that the country's 40-year-old seed law says they only need to pay royalties on the original seed purchase.
Monsanto disputes that.
In a press release in response to the decree, the company said: "Recognition and respect for intellectual property rights is key to maintaining the cycle of agricultural innovation across the industry to attract the necessary investment and ultimately support the continued introduction of new technologies such as Monsanto's Intacta RR2 PRO soybeans."
The Agroindustry Ministry decision doesn't enter into that discussion but clearly leans towards the farm group's position.
According to news reports, the ministry has made this move ahead of introducing new, more modern seed legislation designed to resolve this issue once and for all.
Alastair Stewart can be reached at Alastair.email@example.com
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