Burkina Faso settles dispute with Monsanto over GM cotton

Burkina Faso's cotton sector has settled a dispute with U.S. seed maker Monsanto over what it said were revenue losses caused by the introduction of genetically modified cotton, the head of the country's main cotton company told Reuters.

The agreement, which includes the dividing up of royalties withheld by Monsanto's Burkina Faso partners, brings definitive closure to a collaboration that had promised to offer the company a foothold in Africa but ended in dispute.

"In doing this, we think that a bad deal is better than a bad court case. We have closed the Monsanto dossier. There is no longer a demand for compensation," Wilfried Yameogo, managing director of SOFITEX, told Reuters in an interview on Tuesday.

SOFITEX is part owned by the Burkinabe state and accounts for over 80 percent of national cotton output.

Burkina Faso is Africa's top cotton producer but among the world's poorest countries. It began the nationwide introduction of a variety of cotton containing Monsanto's Bollgard II trait in 2008 to fight against pests.

However, the Inter-professional Cotton Association of Burkina (AICB), which groups together the three cotton companies and the national farmers union, said that quality was damaged when Monsanto introduced the gene into its cotton.

In particular, they said fiber length, one of the chief measures of quality, was reduced, causing Burkina Faso's cotton to fetch lower prices on the world market.

The AICB demanded over 48 billion CFA francs ($76 million) in compensation from Monsanto last year. It had meanwhile withheld royalties worth around 15 billion CFA francs owed to Monsanto for the 2014/15 and 2015/16 harvests.

"We reached an agreement on the division of the royalties with the Burkinabe side retaining 75 percent of the royalties and Monsanto accepting 25 percent of royalties," Yameogo said.

That represents 3.7 billion CFA francs for Monsanto and 11.3 billion for the Burkina Faso partners, he added.

The head of Monsanto's Africa division Gyanendra Shukla said he was not immediately able to comment on the settlement but said the company would issue a response.

Monsanto had previously acknowledged that changes in fiber length had been observed, but stated fiber quality is influenced by both environmental conditions and genetic background.

Monsanto is currently the subject of a $66 billion takeover by Germany's Bayer AG.

Cotton production represents around 4 percent of Burkina Faso's GDP and is the second-biggest source of state revenue after gold.

Burkina Faso did not renew its contract with Monsanto last year and this season it abandoned the use of the GM variety in favor of a return to its conventional cotton strain.

Agriculture Minister Jacob Ouedraogo told Reuters this week that the country was expected to produce around 600,000 tonnes of cotton in the 2016/2017 season, roughly on a par with the previous harvest.

Yameogo said quality controls indicated that the reintroduction of Burkina Faso's conventional cotton had eliminated the quality issues.