April 10, 2012

Monsanto Meeting Resistance to Royalties for Intacta Soybeans

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Monsanto is set to start selling Intacta RRpro soybean varieties to Brazilian farmers for planting during the 2012/13 growing season, but the amount of royalities they will be allowed to charge is currently in dispute and in the Brazilian court system. According to Monsanto, in addition to being higher yielding and tolerant to Roundup herbicide, the new soybean varieties use the Bt gene to make the plant resistant to most of the leaf eating worms in Brazil.

Monsanto has calculated that the Intacta RRpro soybeans will result in a yield boost of 6 sacks per hectare or 5.2 bu/ac in addition to allowing the farmers to avoid applying three insecticide applications per growing season. By their calculations, this will result in an increased income of R$ 346 per hectare. They want to capture 33% of that increase and they propose charging the farmers R$ 115 per hectare for the use of the technology.

Farmers are complaining vehemently that this is five times more than the royalties they are already paying for Roundup Ready soybeans which is R$ 22 per hectare. They are willing to pay an increased royalty for the new technology, but they want to pay it up front when they purchase the seed not on the perceived increase in production that Monsanto says will occur by using the new varieties.

Farm organizations in Rio Grande do Sul have gone to court challenging the method of payment proposed by Monsanto. They feel it is unjust to charge the royalty based on a perceived increase in production because the eventual production is determined by many things such as weather, fertility, production practices, etc., and not just the type of soybeans a farmer plants.

With this new technology, a farmer will also be required to plant 20% of his acreage to non-Intacta RRpro soybean varieties as a refuge. A refuge must be planted in order to help avoid the worms from developing a resistance to the Bt gene. If a refuge is not planted, the worms can develop a tolerance to the Bt technology in as little as five or six years.

The use of Intacta RRpro soybeans must also still be approved by the main purchasers of Brazil's soybeans which are China and the Europeans.