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Wednesday, Aug 23, 2006

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Monsanto anxious over pricing of Bt cottonseed

G. Chandrashekhar

Company could delay bringing in second, third generation technology products

Wary scenario
MRTP found the pricing of Bt. Cottonseed too high for the Indian market
Monsanto fears possible backlash from other countries if prices are lowered here

St. Louis , Aug. 22

Monsanto Company has turned wary of Indian approach towards promotion of biotechnology products in a free-market environment. The global life-sciences leader is rather anxious about the ongoing legal tussle over pricing of Bt cottonseed, the first generation genetically-modified cottonseed that has revolutionised cotton cultivation in India in a short span of three-four seasons.

Earlier this year, on a complaint by the Government of Andhra Pradesh, the Monopolies and Restrictive Trade Practices Commission (MRTP) found the pricing of Bt cottonseed that included a certain `technology fee' too high for the Indian market. The Supreme Court did not stay the MRTP Commission's order. The company was forced to reduce the selling price by effecting a substantial cut in its fee.

Market Potential

Together with its marketing partners, Monsanto had the choice to pull out of the Indian market, but did not do so. Queried by Business Line, Mr Jerry Steiner, Executive Vice-President, Commercial Acceptance, said: "We decided to stay on because we have been in India last 50 years and we see big market potential."

It is also widely believed that with the onset of the season in May-June, Monsanto's local partners in India too exerted pressure to continue seed sales even at lower prices, as the marketing firms did not wish to antagonise the Government.

However, marketing freedom is not something the American trans-national corporation is willing to compromise on. Sounding categorical, Mr Steiner said unless marketing freedom was restored and "no official interference" assured, Monsanto might have second thoughts on bringing second and third generation technology products to India.

A major apprehension of the company is the possible backlash from other countries if Bt cottonseed prices are lowered by law in India. Growers in other countries, too, could start demanding lower prices or agitate against discriminatory pricing.

The company spokesman said huge investments were involved in developing technology products and users (mainly, growers) enjoy the benefit of such products.

Other products

In addition to ongoing research on soyabean and corn (maize), Monsanto's second-generation technology products portfolio includes drought-tolerant cotton and dicamba-tolerant cotton. The company is also working to broaden the spectrum of insect control.

According to Mr Steiner, in future, technology product pricing may depend on specific agro-climatic conditions of regions and benefits that accrue to farmers. Citing an example, he said, in the US, rainfall increases from west to east, and therefore, drought-resistant seed will deliver higher benefit to farmers in the west, more than those in the east.

"So, farmers in the west should be in a position to pay a higher price for higher value derived," he reasoned.

Whether the forced reduction in Bt. Cottonseed prices is a short-term victory for India or whether it will have medium-to-long term consequences in terms of further technology products infusion remains to be seen.

More Stories on : Outlook | Bio-tech & Genetics | Cotton

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