Price war for GM seeds on the cards

Indian farmers will soon have enough to cheer about as competition between the local and multinational seed and technology suppliers is likely to cause a price war for higher-yielding genetically modified (GM) seeds.

Multinational seed producers are facing their fiercest competition in India till date because of the growing influence of domestic seed producers. The multinational technology suppliers charge 70 per cent royalty on the profit generated by local seed selling companies. This is therefore a bone of contention between multinationals and local seed suppliers.

"The life cycle of the GM seeds has come down to three years now from 5-7 years four years back. Companies thus never let others to score through innovations," said an analyst with a renowned bank, who tracks the Indian seed sector closely.

"You need to have germ plasm (hereditary material-genes) suited to regional climatic conditions, based on which the multinational companies employ technology to improve yield. Although the Indian seed companies have proved their expertise in such technologies, multinationals have an edge in certain areas such as Bt."

The seeds introduced by Indian companies are manpower-intensive, while those of multinationals are technology driven. But Indian companies have introduced seeds suited to the Indian climatic conditions. Andhra Pradesh is the best suited region for field trials of seeds, with almost all Indian seed companies having set their bases there in order to have better access to the market.

Monsanto, the licensed owner of BT technology, has indicated that it is facing its fiercest competition from local seed producers. The company has about 20 licensed seed sellers in India.

Explaining the competition, V R Kaundinya, CEO & MD of Advanta India said that there are two types of GM companies. There are those who own GM traits (Monsanto and Syngenta) and those who license the traits from the owners (Advanta, JK Seeds, Nuziveedu Seeds and Rasi Seeds). In the area of GM, the seed companies are partners with the GM trait owners.

So, the competition could be among the owners of different GM traits (competition between Monsanto Bt and Chinese Bt and IITKharagpur Bt), he added.

"In the area of seed companies, Indian companies are competing with Monsanto in Corn crop. The competition is on the basis of genetics and the performance of products."

According to a Rabobank report, the Indian seed sector, growing at 12-13 per cent, has matured over the last couple of years with the introduction and broad acceptance of technologically superior transgenic hybrids of cotton crops. The Genetic Engineering Approval Committee (GEAC), the regulatory authority for biotechnology crop in India, recently announced that farmers increased the area planted with GM insect-protected cotton to 3.2 million hectares in 2006, up from 1.2 million hectares in 2005.