Money matters: Monsanto, Indigenous companies spar on Bt cotton trait value

While eight Indian seed companies have refused to pay fixed trait value of Bt cotton technology to Monsanto citing government intervention in fixing prices, the GM technology giant calls it a betrayal. BioSpectrum reports the facts from ground zero


From its very beginning, the Bt cotton technology in India has been at the heart of controversies mostly due to allegations leveled by activists. The interesting part this time around, however, is that the companies that were once on the same side of technology transfer partnership, are now battling it out openly. So is this the end of the bonhomie or matter will be resolved? We take a look.

It all started when the group of eight companies; Prabhat Agri Biotech, Ajeet Seeds Limited, Kaveri Seeds, Ankur Seeds, Nuziveedu Seeds, Green Gold Seeds, Ram Agrigenetics and Amar Biotech decided not to pay trait value fixed over the transfer of Bt technology to Monsanto. Decision was based on their belief that earlier contract with Monsanto was no longer viable given the third party intervention in form of respective state governments who had issued price control orders. In the meantime, Monsanto India's joint venture, Mahyco-Monsanto Biotech (MMB) which of course wasn't amused at the developments, filed an arbitration petition before the Mumbai High Court for the alleged breach of contracts resulting in around Rs 400 crore payment dues.

In response, the seed companies too filed a counter affidavit mentioning the fact that payment of approximately Rs 1,300 crore has been already made to MMB for trait value since the year 2010. In fact, going a step further the companies have reportedly asked for a money back. As per a source, these companies had made a request to the MMB to reconsider the trait value fixed earlier and look into accounts from 2010 onwards as in between the price orders were determined by the state governments.

According to National Seeds Association of India, Monsanto did not adhere to the government orders. "Since 2010, the state governments have been specifying trait values (royalty) in their price orders as Rs 50/- for BG I and Rs 90/- for BG II. Since the year 2011, government of Maharashtra has considered the trait value as Rs 20/- for both BG I and BG II. In the year 2015, Telengana state government considered the trait value as Rs 10/- for BG I and Rs. 50/- for BG II. Going by the provisions of the legislations, the stakeholders that are the seed companies and the technology provider have no option except to follow the orders, as they were not set aside by the hon'ble courts, though there were stay orders in some states. On account of the pending litigations, in anticipation of favorable ruling the licensee seed companies deposited to MMB trait value (royalty) at higher rates than what was indicated in the state government price orders from 2010," said Dr Kalyan Goswami, executive director, NSAI.

Monsanto spokesperson in his reply to the BioSpectrum was very critical of the companies. In his words, "Out of 49 licensee seed companies, a small group of 9 licensees have willfully breached legally binding and extensively negotiated license agreements by refusing to pay the agreed technology fee despite continuing to profit by using our technologies. These limited number of the licensee seed companies have sought to unilaterally reduce the trait value payable under the agreements on the basis of an erroneous interpretation of applicable law. Following our discussions with such companies, several have withdrawn their contentions and agreed to pay the contractually agreed trait value."

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