Brazil: Monsanto Reaches Agreement with Transgenic Cotton Producers
Brazil
Posted: Mar 17, 2006
The agreement establishes the value of royalty payments for the next season.
In the middle of a judicial battle in the US between Delta Pine Land and Monsanto, this week the latter company signed an agreement with the Brazilian Association of Cotton Producers (Abrapa), which defines the cost of the royalties that will be collected for the use of the company's Bollgard cotton seeds. This transgenic variety is the only cotton variety approved for commercial use by the CNTBio for the 2006/07 harvest season.
Ten years ago, the two multinationals had signed an agreement which gave Delta Pine Land exclusive rights over the sale of Bt Cotton seeds in certain countries, including Brazil. In this country, Delta has set up a company, the MDM, in which it continues to hold a controlling interest (51% of the shares). On March 1, Delta took legal action against Monsanto in Delaware, claiming that Monsanto had broken the contract guaranteeing the company's exclusive rights over the sale of Bollgard cotton in Brazil, by "implementing a parallel system of licensing" for its technology, which would allow Monsanto to sell its technology, contrary to the terms of agreement signed with Delta a decade ago.
The exclusive rights agreement was signed in the 90’s. At the time, Monsanto had made an offer to buy Delta Pine. However, the acquisition had not been authorized by the US government, which had forced the two multinationals to cancel the operation. Unsatisfied, Delta Pine claimed in its filing that it sustained financial damages estimated at one billion of dollars, asking Monsanto to cover this loss. The Court has not yet reached a decision, even though some of the contracts signed between the two firms are still valid, including the one which gave Delta exclusive rights to produce and to commercialize the Bollgard variety in Brazil.
The present agreement between Monsanto and the cotton producer defined the cost of the indemnification for the illegal use of its technology which has been fixed to US $ 67.77 per hectare. The multinational will collect a royalty of US $ 37 per hectare for the use of certified Bt seeds during the next season. Already, ten percent of the total cotton area is estimated to be planted with illegal Bt cotton. This estimate could rise up to as much as sixty percent during the next harvest.
Some observers believe Monsanto is playing on dangerous ground because the collection of an indemnification for the illegal use of its technology could push producers to plant non-certified seeds and because its aggressive action could be seen by the US Court has an attempt to force a decision on the unresolved arbitration.
More information. e.evernet@terra.com.br
Ten years ago, the two multinationals had signed an agreement which gave Delta Pine Land exclusive rights over the sale of Bt Cotton seeds in certain countries, including Brazil. In this country, Delta has set up a company, the MDM, in which it continues to hold a controlling interest (51% of the shares). On March 1, Delta took legal action against Monsanto in Delaware, claiming that Monsanto had broken the contract guaranteeing the company's exclusive rights over the sale of Bollgard cotton in Brazil, by "implementing a parallel system of licensing" for its technology, which would allow Monsanto to sell its technology, contrary to the terms of agreement signed with Delta a decade ago.
The exclusive rights agreement was signed in the 90’s. At the time, Monsanto had made an offer to buy Delta Pine. However, the acquisition had not been authorized by the US government, which had forced the two multinationals to cancel the operation. Unsatisfied, Delta Pine claimed in its filing that it sustained financial damages estimated at one billion of dollars, asking Monsanto to cover this loss. The Court has not yet reached a decision, even though some of the contracts signed between the two firms are still valid, including the one which gave Delta exclusive rights to produce and to commercialize the Bollgard variety in Brazil.
The present agreement between Monsanto and the cotton producer defined the cost of the indemnification for the illegal use of its technology which has been fixed to US $ 67.77 per hectare. The multinational will collect a royalty of US $ 37 per hectare for the use of certified Bt seeds during the next season. Already, ten percent of the total cotton area is estimated to be planted with illegal Bt cotton. This estimate could rise up to as much as sixty percent during the next harvest.
Some observers believe Monsanto is playing on dangerous ground because the collection of an indemnification for the illegal use of its technology could push producers to plant non-certified seeds and because its aggressive action could be seen by the US Court has an attempt to force a decision on the unresolved arbitration.
More information. e.evernet@terra.com.br