Monsanto sends legal notice

Mahyco Monsanto Biotech (India) Limited (MMBL), the Indian arm of the American multinational seed company, Monsanto, has sent a legal notice to the agriculture commissioner of Andhra Pradesh threatening to take legal recourse against any move to unilaterally fix the trait value or the retail price of Bt cotton seed in the state.

The legal notice sent today by Luthra & Luthra Law Offices on behalf of MMBL, said that no other person had the authority to determine the trait value to be charged by their client and any determination by the state government or the agriculture commissioner would be illegal, arbitrary and violative of the Monopolies and Restrictive Trade Practices Commission (MRTPC)'s order and would amount to contempt of the commission's order.

The company also accused the government agency of threatening its sub-licencees to reduce the seed prices.

Questioning the agriculture commissioner's action of holding a meeting with seed companies with regard to fresh fixation of price of Bt cotton seed a couple of days ago, the law firm said that MRTPC in its order passed on May 11, 2005, had directed their client to fix the trait value.

Efforts to contact Poonam Malakondaiah, commissioner of agriculture, for her comments on the legal notice proved futile.

While the MMBL has got 10 more days to come out with a new price structure as per the one-month deadline given by MRTPC, the Andhra Pradesh government has initiated negotiations with the seed companies which are selling Bt cotton seed in the state to determine new prices not exceeding Rs 750 per packet before the end of this month in view of early onset of monsoon in the state. This price is less than half of the last year's Bt cotton seed price which was up to Rs 1,850 per 450-gram packet.

The state government has suggested this new retail price while fixing the trait value at Rs 195 per packet in the light of the RBI standing instructions, which, according to sources, say the royalty charged by any foreign company should not exceed one-third of the retail price of the product concerned. This move, if comes into force, will adversely impact the revenues in the form of trait value to MMBL, which is said to be in the order of Rs 1,000 crore in the country.

It may be recalled that till last year, the MMBL had charged Rs 1,250 per 450 grams of Bt cotton seed and reduced it to Rs 900 in March this year following the Andhra Pradesh government's complaint to MRTPC.

The law firm in its notice, said: "Your conduct in calling for the meeting of seed producers behind our client's back and setting a price for Bt cotton seeds at Rs 775, inclusive of trait value of Rs 195, amounts to an inducement to seed producers to breach their contract with our client for which you shall be solely responsible. Further, your conduct also amounts to running parallel proceedings knowing fully that the matter is sub-judice."

While the state agriculture department made preparations to announce new prices on Monday, last minute developments forced the officials to undertake legal consultations late in the evening before making any statement.

On May 27, the agriculture commissioner took consent letters from seed companies who agreed to sell at Rs 775 per packet, containing 570 grams of seeds instead of 450 grams.

Chief minister Y S Rajasekhara Reddy in a review meeting today said the state government would not allow Bt cotton seed prices beyond Rs 750 per packet in the state. The sale of Bt cotton seed in the entire country has come to a standstill waiting for final outcome of the MRTPC orders.