Monsanto, cotton seeds firms at war

Both sides make claims and counter claims over who owes money to whom in plea filed before Bombay HC by Monsanto

The rising dispute between Monsanto and the Indian seed companies over the quantum of trait value being fixed towards the transfer of BT Cotton technology reached to a peak with both the parties making claims and counter claims over who vows the money to whom in a petition filed before the Mumbai High Court by Monsanto.

Monsanto India's joint venture MMBL has filed an arbitration petition against 8 domestic seed companies, which account for 65 per cent of cotton seed produced in India, for the alleged breach of contracts resulting in around Rs 400 crore payment dues.

In response, the seed companies have filed a counter affidavit, arguing among other things, that they have paid more than Rs 1,300 crore to MMBL over and above the government stipulated trait value since the year 2010 and they want that money back.

In the run up to this dispute several companies have also made similar representations to MMBL to reconcile the accounts from 2010 onwards considering the price orders and trait values determined by the state governments. A senior member of the National Seed Association of India(NSAI) confirmed these developments.



The dispute started when the eight licensees have decided to stop paying the trait value to Monsanto citing the price control orders issued by the respective state governments. These companies are Prabhat Agri Biotech, Ajeet Seeds Limited, Kaveri Seeds, Ankur Seeds, Nuziveedu Seeds, Green Gold Seeds, Ram Agrigenetics and Amar Bio tech, according to MBBL.

The MBBL chief executive officer Shilpa Divekar Nirula in an interview yesterday said that there was no law or notification under which the trait value has been fixed and therefore the trait value as agreed under the contract between two parties is liable to be paid.

Till last year the companies have paid Rs 122.96 per packet for Bollgard (BG) 1 and Rs 183.46 per packet for Bollgard 2 technologies towards the trait value to Monsanto even though the governments of Telangana, Andhra Pradesh, Maharashtra and Karnataka continued to fix trait value and the sale price of cotton seed on their own terms. The trait value charged by MMBL was as high as Rs 1,200 per packet in 2005 before the state governments had entered the scene.



The gap between the government-determined trait value and the Monsanto determined trait value further widened with Maharashtra government, which had fixed the trait value component at just Rs 20 per packet for both the technologies, also got a stay order vacated in a related case heard in Mumbai High Court earlier this year. Maharashtra government has also reduced the sale price of 450 gram packet to Rs 830 this year from Rs 930 in the last year.

"We, a group of 10 seed companies have written to MBBL requesting for a joint meeting to find a practical solution to this problem. But Monsanto did not responded to our request. Instead, it had approached the court under section 9 of the Arbitration Act alleging the breach of contracts. We have no problem pursuing the issue even through a legal means"said G V Bhaskar Rao, chairman and managing director of Kaveri Seeds Limited.

The seed companies maintain that the issue was ceased to be as a private contract between the technology provider and the licensee as soon as the governments intervened and started fixing the trait value and the sale price of cotton seed in the country.

"We have reiterated that, It is important for the seed Industry, farming community and the agriculture sector to have a harmonious collaborative effort between technology developer and seed companies. The dispute has arisen due to the non existence of a Regulator," Kalyan B Goswami, executive director of National Seeds Association of India(NSAI) said.

Speaking to Business Standard on the ongoing dispute, he said as a national platform of seed companies the association was still open for negotiations with MBBL to find a solution.

Since 2010, the state governments have been specifying trait values or royalty in their price orders as Rs 50 for BG1 and Rs 90 for BG 2. Since the year 2011, the Maharashtra government has considered the trait value as Rs 20 for both BG1 and BG 2. In 2015 Telangana government has considered the trait value as Rs 10 for BG1 and Rs 50 for BG 2 in its orders issued in March this year.

According to Goswami, any royalty should be within the range of 3-5 per cent of the sale value even under the Indian patent laws. He said the Union Agriculture Ministry has also taken note of the matter seriously and they expect some action from the Ministry in addressing the ongoing dispute very soon.