Argentina may change seed law to promote new GM soy

Argentinas government is considering reforming the countrys seed law in a bid to foster use of new varieties of genetically modified (GM) soybeans and boost output in the worlds No. 3 soy supplier.

The bill, which has not yet been sent to Congress, has been drawn up in consultation with seed companies and should reduce the risk of disputes like the one Argentina sustained for years with Monsanto over Roundup Ready-resistant soy.

The introduction of the herbicide-resistant soybeans has helped Argentine farmers increase their output dramatically over the last 14 years, but the current regulations have deterred seed companies from marketing new varieties.

Under todays law, farmers are allowed to use seeds obtained from their harvests for future sowing -- thus depriving seed companies of royalties in the South American country, where almost all soy is genetically modified.

"The (new) bill sets guidelines that recognize the rights of the developer," Agriculture Secretary Lorenzo Basso told Reuters, saying the aim of the reform proposal was to ensure new GM varieties are introduced.

Argentina has lagged behind neighboring Uruguay and agricultural giant Brazil in using the latest seed technology, and analysts say reform is needed to help it catch up.

Over the last decade, Argentinas soy output has doubled -- reaching a record 52.7 million tonnes in the 2009/10 crop year. Much of the increase has come from bigger plantings.

Increased use of improved seeds could help farmers boost output through higher yields.

"If new genetically modified varieties enter the country, overall productivity levels will increase," said Pablo Adreani, director of the Buenos Aires-based consultancy AgriPAC.

"Were talking about new genetic material that is going to have a certain edge over whats gone before, such as drought-resistant soy, soy resistant to insects or with a high oil content," he added.

The governments row with Monsanto, which argued that farmers should pay royalties for seeds saved at harvest time for the next crop, dragged on for years and court injunctions held up Argentine soymeal shipments in European ports.

Monsanto has been unable to patent Roundup Ready-resistant soy in Argentina because the seeds have become so widespread.

However, farmers do pay some royalties because of an agreement between local seed distributors and Monsanto, the worlds biggest seed company. Certified seeds do include a royalty payment, although they only account for a small part of all the seeds used at sowing time.

The dispute between the government and the U.S. company ended earlier this year when Monsanto withdrew its legal complaint shortly before a European Court of Justice (ECJ) verdict was due.

The ECJ had been expected to rule against Monsantos claim against European importers of Argentine soymeal, which the company argued breached the EU patent on its Roundup Ready soy seeds.

If the government advances with the reform of regulations to guarantee seed developers patent rights, analysts think a repeat of such conflicts is unlikely.

"As long as the bill doesnt undergo significant changes in Congress, we think it provides an appropriate framework for new biotech varieties to be introduced in the country," said Miguel Rapela, executive director of ArPOV, an Argentine industry association that represents seed variety developers.