Dec 04, 2009
Brazilian Farmers Now Paying Royalties For GMO Seed
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
While the prices for some of their inputs, such as fertilizers, have fallen this year, that has not been the case for seed costs in Brazil and farmers in Brazil will be paying even more for their GMO soybean and corn varieties next year. The seed companies contend that for each fifty cents extra in seed costs, the farmer receives one dollar of added value in return.
The current royalty for the use of Roundup Ready soybean seed in southern Brazil is R$ 0.44 per kilo or US$ 12.94 per 50 pound bag (an exchange rate of 1.7 Brazilian reais per U.S. dollar was used for this conversion). The royalty is scheduled to rise slightly to R$ 0.45 on January 20, 2010. Roundup Ready soybeans have been used in Brazil for a number of years, but only recently has Monsanto been allowed to charge the royalty up front at the time the seed is purchased.
The advantage of using Roundup Ready seed is not that the soybean varieties have higher yields; its advantage is that it reduces cost and adds more flexibility to the management of the crop. The use of Roundup Ready soybeans allows the farmer to plant the soybeans as quickly as possible while not having to worry about when to apply the herbicide. Instead of having a specific window of application, Roundup can be applied to Roundup Ready soybean varieties at any time to control the weeds. This allows farmers much greater flexibility in their planting schemes.
This was the first growing season in Brazil where farmers were allowed to purchase large quantities of GMO corn hybrids. The GMO trait available in Brazil this year is the Bt trait, which makes the corn plant resistant to insect attack. Farmers in Brazil routinely apply 3-5 applications of insecticides per growing season in order to control pests and the hope is that they can reduce that to only one application by using Bt corn. The seed companies are confident that their technology will actually work, but it still needs to be confirmed on large-scale corn production in Brazil.
The royalty paid for the Bt trait is approximately R$ 100 per each sack of seed corn (US$ 58.80 per sack). In north-central Brazil for example, a sack of Bt corn, which is enough seed to plant approximately one hectare, sold this year for R$ 380 per sack vs. R$ 280 per sack for conventional corn hybrids (US$ 223 for Bt corn vs. US$ 164 for conventional corn). Prices vary by corn hybrid and the farmers are hoping that the extra cost will be more than compensated for by the reduced need for insecticide applications.
For the 2009-10 growing season in Brazil, Monsanto sold Roundup Ready soybeans as well as MON 810 corn hybrid. Syngenta sold the Bt 11 corn hybrid and DuPont/Pioneer sold Herculex corn hybrids.