GM seed firm right in threatening to pull out of India
Given how finance minister Arun Jaitley has said doubling the return of farmers in the next five years is one of the government’s top priorities, you would think promoting the use of advanced technology in agriculture would be a focus area, especially since global warming is also playing havoc with the farm sector. The reality seems to be the exact opposite. Not only is the government pandering to the RSS lobby by delaying trials of genetically modified (GM) crops—Pakistan has just cleared the use of herbicide-tolerant GM corn and, apart from brinjal, Bangladesh has just approved GM potato—it is even putting the squeeze on Monsanto, the primary producer of Bt cotton seeds in the country. This is intriguing since, not only was Gujarat’s agricultural growth during the timeNarendra Modi was chief minister primarily driven by Bt cotton, the dispute was essentially one between a few seed companies and Monsanto—while the state governments in Maharashtra, Telangana and Andhra Pradesh backed the seed companies that were franchisees of Monsanto’s technology, Monsanto was fighting them in local courts. So, the Modi government didn’t really need to come into the picture.
Yet, it did, and twice. To begin with, it brought the seeds under price control and set up a committee that was supposed to fix both the price of the seeds and, within this, the royalty that Monsanto got. According to a report in Mint, the committee has recommended a 70% reduction in the royalty on Bollgard II, the main seed Monsanto sells. Given that the royalty rate is just 1-2% of the cost of cultivation, not only is Monsanto upset, its India chief has threatened to relook the company’s strategy in India. This is bad news for various reasons since, like antibiotics, the impact of Monsanto’s protein-enhancement—that’s what genetic modification boils down to eventually—wears off over a period of time; in the event, if the company does not come up with new products, farmers will find their crops being eaten up by insects all over again. To put this in perspective, at $1.7 billion a year, Monsanto’s R&D budget for GM crops is higher than that of the government of India—right now, for instance, Monsanto is in the process of getting regulatory approvals for a combination of Bollgard II with its Roundup Ready Flex herbicide and even a Bollgard III. If this wasn’t bad enough, the central government’s ministry of agriculture approached the Competition Commission of India (CCI), asking it to probe whether Monsanto was guilty of price gouging and other anti-competitive practices. While the CCI has ordered an investigation, it appears to have already made up its mind—in its ruling authorising an investigation, it said “the Commission notes that imposition of such conditions … not only discourages the sub-licensees from dealing with the competitors, but also amounts to restriction of development of alternate Bt cotton technologies”; and on the issue of royalty (trait fee, in jargon), it said “charging of trait fee … apparently has no economic justification … and appears to be unfair”. Given how the government is engaged in serious litigation with so many large firms—Vodafone Plc and Cairn Energy among the global ones and Reliance Industries among the local ones—it is difficult to see how it expects them to contribute to Make-in-India or, in the case of Monsanto, Cultivate-in-India.