BackFirms accuse lobby of seeking price controls on cotton seeds
Eleven NSAI members, including Monsanto, say body lobbied centre for controls implemented in 7December order
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At least 11 member companies of the National Seeds Association of India (NSAI) have written to the industry body alleging motivated lobbying by it with the Union government for a price control order for cotton seeds.
This, the companies allege, will discourage innovation and deprive farmers of better seed technology.
In separate but similar letters written on 23 and 25 January, seed companies including Monsanto India, Mahyco, Bayer Crop Sciences Ltd, Syngenta India Ltd, Rasi Seeds, Sungro Seeds and Shriram Bioseed Genetics alleged that NSAI sought and defended the price control order even though it had challenged other such regulations before various courts in the past.
The letters reviewed by Mint also said that “NSAI has sought to intervene in certain contractual disputes between some of its dominant members against a technology provider".
“This appears to be a gross misuse of the NSAI platform and financial resources which is not intended for such motivated purposes," the letters added.
The reference seemingly is to an ongoing dispute between Nuziveedu Seeds Ltd (NSL) and Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL), where the former refused to pay MMBL trait or royalty fees (amounting to ₹ 138 crore) for using its proprietary Bt cotton technology.
MMBL, a joint venture between Mahyco and Monsanto, has filed an arbitration petition on the non-payment of trait fees by eight firms including NSL in the Bombay high court. The companies owe MMBL about ₹ 450 crore in trait fees on the grounds that several state governments have put in place price controls which also mandated lower trait fees than what was agreed upon bilaterally between seed companies and MMBL.
Currently, MMBL receives a trait fee of ₹ 163 per packet of Bt cotton seeds (using patented Bollgard II technology) which are sold at ₹ 930 per packet.
MMBL also terminated the contract with NSL and two of its units (Prabhat Agri Biotech and Pravardhan Seeds) on 14 November.
NSL, with a 20% market share in Bt cotton seeds, is headed by M. Prabhakar Rao, who is also the current president of NSAI.
Interestingly, the disagreement within NSAI—which has 357 members, including warring parties like NSL and Monsanto—comes into the open ahead of a crucial court hearing on 27 January where MMBL has petitioned the Delhi high court to quash the price control order issued by the agriculture ministry.
MMBL has contended in its petition that the price control order is “illegal and unconstitutional" as it regulates the contractually negotiated licence fee payable by its licencees for distributing patented Bollgard II technology.
Mint has reviewed a copy of this petition. MMBL has claimed that this is beyond the scope of price regulation under the Essential Commodities Act, 1955, as its technology does not qualify as an “essential commodity".
NSAI’s executive director Kalyan Goswami earlier this month said that the industry body has been made a party to this case, on its request.
On the present set of letters Goswami said that NSAI is yet to receive any communication signed by the 11 companies.
“I am really very sorry to say that this statement is made today (Tuesday) by Monsanto looking at tomorrow’s (Wednesday’s) hearing in the Delhi high court," he said, adding, “We would like to reiterate that the decision of advocating to the ministry of agriculture for price control was taken by the governing council (of NSAI). The council is elected by all the members, spread nationwide, and not by only selected members."
Goswami further said that firms coming forward with Monsanto (in the letter) have direct or indirect business links with it.
“They should question the drastic and discriminatory actions and exercise of dominance by MMBL. On the contrary, they have short-term commercial interests. They are not thinking of the interest of farmers," he added.
The agriculture ministry on 7 December issued a price control order to bring uniformity in Bt cotton seed prices, as several states like Maharashtra, Andhra Pradesh and Telangana had brought in price control orders. The other reason, according to the ministry, is to make Bt cotton seeds affordable for farmers.
In addition to court cases and the price control order, the ministry also wrote to the Competition Commission of India (27 November) requesting it to probe whether MMBL abused its dominant position as a technology provider for Bt cotton.
The multiple cases and disputes involving technology providers like MMBL, seed companies, industry bodies like NSAI and the ministry of agriculture will determine the future of Bt cotton in India.
The transgenic Bt technology, first allowed for commercial cultivation in 2002, catapulted India from an importer of cotton to its current position as a top producer and second largest exporter of cotton globally.
At least 6 million farmers grow cotton in India, over 95% of which is grown using the Bt technology which is licensed to 49 seed companies by MMBL.
Seed companies that wrote to NSAI also said that even though price control regulation is presently limited to cotton seeds, “it is inevitable that similar regulation will be applicable to all kinds of seeds and technology, thereby jeopardising significant investments already made by many members".
The firms observed that the NSAI should not be used for short-term commercial interests of a few dominant members whose interests were prioritized over “larger group members".
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