​​​
  1. Government cap on GM tech royalty hurt the farmer; here’s how

Government cap on GM tech royalty hurt the farmer; here’s how

The ministry’s decisions reflect a mindset that views MMBL as an exploitative monopoly. This perception is flawed and out of sync with ground realities

By: | Updated: September 5, 2016 7:15 AM
Under CSPCO, the ministry fixed the price of cottonseed sales at an ‘uniform’ level and the maximum trait-fee payable to the technology-provider (TP). Given GM Bt cotton accounts for 98% total cottonseeds used in India, the decision was directed primarily at this segment.

On July 6, 2016, Mahyco-Monsanto Biotech India (MMBL) withdrew its application for environment clearances for commercial cultivation of cottonseeds carrying its Bollgard II Roundup Ready Flex (B-II-RRF) technology, which uses genes that not only kill pests but also imparts resistance to the herbicide, Roundup. MMBL has attributed its decision to the “uncertainty in business and regulatory environment which include regulation of trait fee and introduction of draft compulsory licensing guidelines.” Specifically, this is a reaction to two orders of Union agriculture ministry, the Cotton Seed Price Control Order (CSPCO), released in December 2015, and another on May 18, 2016, regarding licensing of technology.

Under CSPCO, the ministry fixed the price of cottonseed sales at an ‘uniform’ level and the maximum trait-fee payable to the technology-provider (TP). Given GM Bt cotton accounts for 98% total cottonseeds used in India, the decision was directed primarily at this segment.

The May 2016 requires the TP to license technology to any seed company that approaches it. If the licence is not given within 30 days, it is “deemed to have been given.” It also requires the seed company to pay a royalty to TP, but it is capped it 10% of the MRP for first five years, and is to be further reduced by 10% successively from the sixth year onwards. It also prescribed a 10-year life for GM traits. This meant that from 11th year, no fee would be payable.

Following protests, the order was withdrawn, but the sword of Damocles still hangs over the heads of TPs even as licensing guidelines are up for public feedback. Besides, the December 2015 order—cutting Bollgard II seed price from Rs 930 per bag of seed (450 gm) to Rs 800, with the trait fee slashed from Rs 163 to Rs 42—is very much intact.

The ministry’s decisions reflects a mindset that views MMBL as an exploitative monopoly. This perception is flawed and completely out of sync with ground realities. Bt cotton is genetically tweaked to kill bollworms that ravage cotton crops. It offers the possibility of substantially enhancing return by saving on pesticide use on the one hand and increasing yield on the other. At the price paid for Bt cottonseed, including royalty, farmers get handsome returns. Ever since Bt cotton was introduced in India in 2002, its use has increased manifold with area under coverage leapfrogging from a mere 50,000 hectare to around 11.8 million hectare (2015-16). Domestic cotton production has increased from 13.6 million bales in 2002-03 to 30.1 million bales in 2015-16. These would not have been possible if access to technology was restricted or the price was unaffordable for farmers. Even patents granted to the biotech traits under Indian Patent Act 2005 are redundant. This is because seed is the only carrier of biotech traits and protection of transgenic variety under the Plant Variety Protection & Farmers Rights Act, 2002, overrides the Patent Act. Close to 50 seed companies are licensed to use the current Bt technology.

A company spends millions in discovery, development and commercialisation of a new trait. It needs a reasonable opportunity to recuperate the investment. True, while fixing the royalty, it should also keep in mind paying capacity of farmers but any diktat by the government in this regard is completely uncalled for. The TP also performs the critical role of stewardship, i.e. ensuring proper and scientific use of the trait and preventing its misuse. If licensing is made free for all, overriding even the choice of innovator, it will be impossible to prevent misuse of the technology.

Any state intervention will stymie commercialisation of new traits under development, such as resistance to drought, salinity tolerance and nitrogen-use efficiency, etc. Already, it is showing up in Monsanto’s decision to withdraw B-II-RRF. It will also act as a strong disincentive to companies for investing in research and stewardship.

The National Biotechnology Development Strategy—unveiled by Prime Minister Narendra Modi on December 30, 2015—aims at increasing the turnover from $7 billion to $100 billion by 2025. The strategy focuses on R&D to make ‘affordable’ products for Indian and global markets and seeks to forge public-private partnerships. In the agri-segment, it proposes to set up a transnational centre for agri-biotech with state agricultural universities. The agriculture ministry should move in step and that is best done by leaving things to market forces.

The author is a policy analyst

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top