Monsanto Signals India Seed Venture at Risk If Royalties Are Cutby
Country reportedly considers 70% reduction in cotton-seed fees
Company says move would override contracts with seed suppliers
A Monsanto Co. joint venture in India that licenses genetically modified cotton-seed technology said it would have to “reevaluate every aspect” of its position in the country, the biggest grower of the fiber, if the government makes a substantial cut to its royalties.
The agriculture ministry is set to recommend a 70 percent reduction in the so-called trait fees that Mahyco Monsanto Biotech receives from other seed companies for the use of its Bt cotton technology, Reuters reported Friday, citing people it didn’t identify.
Bt cotton has been developed to secrete an insecticide and has transformed Indian cotton production since its introduction in 2002. Mahyco said such an intervention by the government would override its contracts with seed companies, and undermine its operations in India.
“We sincerely hope that the government will be fair in its approach and that certain reports in the public domain are false,” Shilpa Divekar Nirula, Monsanto’s chief executive officer for the Indian region, said in an e-mailed statement Friday.
The India embassy in Washington didn’t immediately return calls seeking comment.
While seed prices are capped in some parts of the country, licensing fees aren’t. The federal government is seeking to regulate royalties amid a dispute between Monsanto and some of its licensees over payments.
Last month, India’s antitrust regulator recommended an investigation into Mahyco, whose other partner is Maharashtra Hybrid Seeds Co.
International cotton prices have fallen recently amid a global glut. Cotton futures in New York have dropped 10 percent so far this year, touching a six-year low on Feb. 29.