Monsanto Will Try to Collect Royalties on Brazilian Soy Imports

Monsanto eyes royalties on Latam soy imports to US
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Story by Richard Cowan

REUTERS NEWS SERVICE

USA: March 25, 2004

WASHINGTON - Biotech crop leader Monsanto Co. (MON.N: Quote, Profile,
Research), hoping to capitalize on an expected spurt in soy exports from
Brazil to the United States, will try to collect royalties if vessels are
found carrying soy or soymeal grown from pirated biotech seeds, according to
Monsanto officials.

For years, Monsanto has complained that South American farmers were planting
soybeans using the company's genetically modified Roundup Ready seeds
without paying the required royalties. Asked by Reuters yesterday whether
soymeal or other soy imports from Brazil or Argentina would be targeted for
inspection at ports by U.S. Customs officials, Monsanto spokeswoman Lori
Fisher said, "We have a number of options available and that would be one of
them."

Fisher characterized the situation as "hypothetical" for now and downplayed
the likelihood of shipments from as far south as Argentina.

Another Monsanto official was more definitive. "If they don't have a
license (for Roundup Ready soybeans) when the ship arrives at port, we'll
ask to see their documentation" that the soymeal or soybeans are
biotech-free, spokeswoman Janice Armstrong said.

"If the documents are not there, we would ask to test the shipment and if
found positive (for Roundup Ready), Monsanto would charge them a royalty,"
she added.

Roundup Ready soybeans are engineered to withstand the effects of a
herbicide manufactured by Monsanto.

Monsanto's biotech soybeans are widely used in the United States, the
world's leading producer, where about 80 percent of soybeans crops were
planted with Roundup Ready seeds.

Brazil is the second largest producer and a fast-growing competitor for the
United States in world soy markets.

U.S. soy production fell 12 percent last year due to drought, and end-season
stockpiles on Sept. 1 are expected to fall to a 27-year low of 125 million
bushels, less than three weeks' supply. Chicago Board of Trade soy futures
hit 15-year highs on Monday, underscoring world demand for the oilseed
processed into edible oil and high-protein meal for feed.

U.S. Department of Agriculture analysts currently project imports of about
430,000 tonnes of South American soymeal to sustain U.S. livestock
operations. Industry officials said imports of whole soybeans from Brazil
were also a possibility. Still unclear is whether a royalty payment on
Brazilian product, coupled with possible delays due to testing, could
discourage the trade.

In January, a deal was announced between Monsanto and farmers in Brazil's
Rio Grande do Sul and Santa Catarina states for payment of royalties of $7
per tonne to the company.

A U.S. soybean industry source, who asked not to be identified, said the
continued growth of pirated Roundup Ready soybean seed in Brazil meant that
some shipments to the United States could include non-licensed product.

The source also said Monsanto's pursuit of the royalties would not just be
to capture those revenues.

One of Monsanto's fears, he said, was that American farmers would be be
irked if competing Brazilian farmers were selling their goods in the United
States and getting the biotechnology for free. Left unchecked, that could
encourage U.S. farmers to try to skirt the royalties, the source said.

Monsanto officials declined to say whether royalties collected at U.S. ports
would be higher than the $7 per tonne charged in Brazil.

Sue Challis, a U.S. Customs spokeswoman, said Monsanto had not yet contacted
the agency about targeting Brazilian soy shipments for special inspections.

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