Monsanto Tries to Force Farmers to Stop Saving Their Seeds in Argentina

Monsanto Exits Argentina Soy Biz Despite Soy Boom

Article from Reuters. Date: 18 January 2004
Hilary Burke
http://www.forbes.com/business/newswire/2004/01/18/rtr1216109.html

BUENOS AIRES, Argentina (Reuters) - Soy's star may
be rising in Argentina but Monsanto Co., the U.S.
pioneer in agricultural biotechnology, has stopped selling soybean seeds
in the world's No. 3 producer, because it can't make a buck.

The company says a huge black market for the genetically modified seeds
makes it impossible to recoup its investments.

Until that changes, Monsanto Argentina said, it won't sell
new-and-improved soy seeds or carry out research to develop new
varieties tailored to local conditions.

The move has fueled fears that farmers will lose out on biotech advances
and new seed varieties, and that other businesses may pull out of
Argentina -- which has been struggling to recover from an economic
collapse that sparked the world's biggest debt default in 2002.

"The last thing you want to see in your country is investment in research being cut off. That undermines the future of the whole agriculture industry," said Arturo Vierheller, a former agriculture department official.

Monsanto told Reuters it stopped selling the seeds last month.

GM soybeans, which are popular with farmers because they save money on
herbicides, have become Argentina's top crop and biggest source of
foreign currency, despite opposition from consumers and environmentalists,
especially in Europe, who demand more safety tests.

The European Union effectively banned the growth and importation of
biotech foods and crops in 1998, although some GM soybean varieties had
already been approved and can still be imported.

The sale of GM soybean seeds is still illegal in Brazil -- the world's
No. 2 producer after the United States -- but the government is allowing
farmers to plant GM soybeans during this season until a broader law to
regulate GM crops is passed.

Officials say Brazilian farmers are planting seeds originally smuggled in from Argentina and Paraguay.

Some 50 percent to 60 percent of all soybean seeds in Argentina are
bought on the black market, said Federico Ovejero, a spokesman for
Monsanto Argentina.

Seeds from soybeans, like wheat, can be culled from newly planted plants
and reused without any significant drop in the yields of soybeans.

Argentine farmers don't have to pay royalties to Monsanto when
replanting its GM Roundup Ready seeds due to a widely exploited
exemption in the law. And many farmers cull the seeds just to sell them
illegally, Ovejero said.

This black market is known as the "bolsa blanca," because farmers and
farm-goods stores sell the saved seeds in large white bags that have no
labels.

Monsanto Argentina said it will concentrate instead on Roundup Ready
corn, which the government has yet to approve, and new varieties of
sunflower seeds and sorghum.

Although these crops have been losing ground to soy, their seeds cannot
be reused without risking wildly variable yields.

That means each year, farmers will have to buy new seeds -- presumably
from authorized seed dealers.

"A SHAME"

"It is a shame for us to be putting on hold such technology as Insect
protected soybeans," Monsanto Argentina said, referring to
insect-resistant seeds developed especially for Latin America.

Monsanto had about 15 percent market share in the soybean seed business,
industry sources say. Now that it has withdrawn, just three major
companies remain -- Netherlands-based Nidera and Argentina's Asociados
Don Mario and Relmo.

But Monsanto, which is based in St. Louis, Missouri, is still the
world's leader in biotech crop development. All other seed companies pay
Monsanto to sell soy containing its Roundup Ready gene, designed to resist
harm from its top-selling Roundup weed killer.

"The biggest risk is that Argentina loses access not only to
biotechnology but to improved varieties generally ... This will mean
lower yields and could also increase plants' susceptibility to new
diseases," said Gerardo Bartolome, president of the Argentine
Association for the Protection of New Plant Varieties.

Farmers could lose up to $78 million a year due to lower yields if they
are unable to buy new soybean seed varieties, Bartolome said.

Monsanto does not rule out re-entering the market, however, if
government efforts to combat illegal seed sales bear fruit.

The agriculture department said it aims to reduce the number of farmers
saving and replanting seeds by more strictly defining an exemption in
the law, which was originally meant to protect small farmers.

"I think the government is aware that if this doesn't get solved, the
country and the farm sector are in serious trouble, but no concrete
action has been taken yet," Bartolome said.