Indian hybrid seed makers want Monsanto to return excess royalties

Several large Indian hybrid seed makers recently had agreements with Mahyco Monsanto Biotech (MMB) for Bollgard technology (BT) cotton, have sought to amend royalty amounts trait value, citing price caps being fixed by various state governments. 

 

A group of hybrid seed makers has also obtained legal advice to move higher courts against Mahyco Monsanto if it refuses to downwardly revise royalty arrangements and return excess payments. Pointing out that many key cottongrowing states including Maharashtra, Andhra Pradesh and Telangana were fixing trait value and MRP for hybrid cotton seed for past few seasons, the hybrid seed producers said courts refused to intervene. 

 

The seed makers cite the recent orders of the Nagpur bench of Bombay High Court on June 17 refusing to interfere with the Maharashtra government's move to fix BT trait value and MRP for hybrid cotton seeds. Hybrid cotton seed makers claim that trait value and MRP being fixed by various state governments was turning statutory, thereby over riding the contracts that seed producers entered into with Mahyco Monsanto. 

 

In a letter to Mahyco Monsanto recently, a group of hybrid cotton seed producers accused the multinational hybrid seed giant of failing to get any order from the courts "upholding consideration of royalty as per our agreements in the price orders so far". Accordingly, the hybrid seed makers have sought downward revision of royalties since they were unable to re unable to recover their investments given the statutory price ceilings being fixed by the state governments. 

 

India's hybrid seed industry is growing at 10-15 per cent a year and is now estimated at around $2 billion ( Rs 12,600 crore), with the Bt cotton segment accounting for around 45 per cent of it. The cotton crop acreage stood at a record high of 13 million hectares last year, where hybrid seed makers sold 5.3 crore packets (450 grams each) of seed. Pointing out that they have been paying royalties to Mahyco Monsanto from 2010 significantly higher than the ones being fixed by various state governments, the hybrid seed makers urged it "to charge us the trait fee accordingly from 2010". 

 

Kailash Gandhi, seed analyst and director at KRG Strategy Consultants, said Bt cotton accounts for nearly 95 per cent of cotton seed market in India now and Mahyco Monsanto is sole provider of approved Bt technology. "So, cotton hybrid seed makers (sub-licence holders) have very little scope to sell cotton seed with sizable scale without Bt cotton," he said, adding that the government should intervene to accelerate indigenous Bt research and approval process, apart from reviewing their price moratorium in the interest of viable cotton seed industry. 

 

Pointing out that trait fee should not be collected for more than seven years after the seed's launch, the All India Kisan Sabha's president Sarampally Malla Reddy wanted the government's intervention to stop royalty collections to help farmers get seeds at low cost. 

 

Chief executive of a hybrid seed maker, who is a signatory to the letter, told ET that they wrote to Mahyco Monsanto only after obtaining legal advice on the issue of royalty payments.