Non-payment of Rs 450-cr royalty: Bombay HC to hear Mahyco plea

By: |
October 16, 2015 12:48 AM

Biotech firm claims non-payment of ‘trait value’ by nine Bt cotton seed manufacturers for using its Bollgard-II tech

The Bombay High Court will hear a petition by Mahyco Monsanto Biotech (MMB) on Friday against non-payment of around R450 crore in royalty fees (trait value) by nine Bt cotton seed manufacturers for using its Bollgard-II technology.

MMB is a joint venture between US-based agricultural bio-technology firm Monsanto and Maharashtra-based Mahyco.

Sources told FE that the nine seed companies including Nuziveedu, Rasi, Kaveri and Ajeet, which had in-licensed the technology from MMB, have not paid the trait value to MMB for the seeds these firms sold to farmers in the current and last kharif seasons. This is despite the fact that these firms have sold the Bt seeds to farmers at prices inclusive of the cost of the trait value. The MMB charges a trait fee of R183 per each 450-gram packet of the Bollgard-reinforced Bt cotton seeds. Including the trait fee, the seeds would cost R930.

A total of 49 seed companies, including these nine, use MMB’s Bollgard-II double-gene technology, which provides in-built protection for cotton against the destructive American bollworm.

An MMB spokesperson said: “In partnership with seed companies, we have made available innovative insect resistant technologies to India’s cotton farmers that have transformed cotton farming. The farmers have consistently chosen our Bollgard technologies on account of their superior performance, despite having other options.”

Prior to the kharif season, MMB and the seed companies enter into agreements on the payment of trait value to the latter. “Some of the seed companies feel that the MMB’s royalty-pricing strategy for the technology has resulted in the state governments concerned regulating the prices of cotton seeds via legislation (Andhra Pradesh and Gujarat have regulated the prices),” Kalyan Goswami, executive director, National Seed Association of India, said. He, however, added that considering the way Bt cotton contributed to the country’s cotton production, a conciliatory approach among the concerned parties would be desirable. The Bollard-II double-gene technology was approved by the Genetic Engineering Approval Committee in 2006. The first generation Bollard-I was approved in 2002.

The Bt gene is derived from a soil bacterium and is named after its initials. It is toxic to Bollworms which are stealthy and stubborn pests.

The use of Bt cotton in the country has grown exponentially since its introduction in 2002. At present, Bt varieties are cultivated in more than 90% of the area under cotton in the  country.

“Over the last decade, these technologies have helped increase cotton yields by over 1.8 times from 302 kg per hectare in 2002-2003 to 552 kg per hectare in 2013-2014. This has led to significant increase in farmer incomes from higher yields and reduced usage of insecticides thereby helping generate an additional farm income of over R42,300 crore,” an MMB spokesperson said.

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