Soybean trading firms in Brazil will have to renegotiate agreements to collect royalties for seed giant Monsanto Co on genetically modified soybeans bought from farmers, the president of industry association Abiove said. Monsanto's demands that soya buyers police farmers' royalties payments on its Intacta RR2 Pro technology, and trading houses' belief they should be compensated for the service, had caused fears that traders would refuse to buy soybeans last year.
"They are going to have to go back to the table. The agreements in 2014 did not generate profits for the soya industry," Abiove's Carlo Lovatelli told journalists. Soya trading houses negotiated with Monsanto for months last year. Abiove's efforts to broker a deal for all its member firms broke down and individual companies worked out their own compensation for the service.
Abiove represents global merchants Bunge, ADM, Louis Dreyfus and Cargill as well as smaller Brazilian firms. In Brazil, where genetically modified seeds have only been legal for a decade, reusing seeds is more common than in the United States and it is easier for farmers to avoid paying Monsanto's fees after buying the seeds the first season. A Monsanto press representative did not confirm the renegotiation of the agreements, but said the system of compensating companies would continue. The representative said most farmers in Brazil pay Monsanto's royalty fee when they buy the seeds, not when they sell soya to trading houses.
Monsanto did not say what percentage of Brazil's 2015/16 soya crop would be sowed with pest-resistant Intacta RR2 Pro seeds this season. The soya crop is in its final stages of planting. Last season, about a fifth of the harvest was planted with the technology, according to consultancy Celeres. Brazil is the world's No 2 soya grower and top exporter. It is Monsanto's second-biggest market.