Monday, June 25, 2012

Monsanto Soya sunk - Brazilian style

A court ruling in Brazil could do some serious damage to Monsanto's modified genetic seed model.
At issue is not whether farmers owe money on the original seeds, but if they owe money on later generations of seeds. 

The Brazilian soybean  crop, second largest in the world,  totals $24 billion dollars annually and 85% of that crop is produced from engineered seeds.  Originally the use of these seeds was banned in Brazil, and they had to be smuggled in from Argentina; which of course makes for a very muddled situation.

Monsanto is paid for the initial seeds, and there is a 2% royalty fee on subsequent crops, even if the seeds are second generation.

Brazilian farmers win $2 billion judgment against Monsanto
Subodh Varma, Times of India, 12 June 2012 (hat tip: NC)
Five million Brazilian farmers have taken on US based biotech company Monsanto through a lawsuit demanding return of about 6.2 billion euros taken as royalties from them.
In April this year, a judge in the southern Brazilian state of Rio Grande do Sul, ruled in favor of the farmers and ordered Monsanto to return royalties paid since 2004 or a minimum of $2 billion. The ruling said that the business practices of seed multinational Monsanto violate the rules of the Brazilian Cultivars Act (No. 9.456/97).  Monsanto has appealed against the order and a federal court ruling on the case is now expected by 2014.

Of course the value of a Euro denominated income stream may change in a future coming soon to many neighborhoods.  But the it is pretty clear that the "intellectual property" method of exporting -you pay us for our knowledge, and you give us your stuff- is not a bullet proof model for success.


PioneerPreppy said...

I have never really understood how courts can agree that farmers owe Monsanto simply because crops got cross pollinated.

russell1200 said...

PP: I am not sure what the courts have said about it. I thought the companies were claiming that cross contamination was not a problem.

It really comes down to how much of a monopoly a government is going to allow the companies. Most everything else is details.