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Genetically modified BT cotton can work as a double edged sword for the small cotton farmer

M. Radhika

Is it good or is it bad? Farmers at an anti-BT Cotton rally in Karnataka
A spokesperson for Monsanto Mahyco told the MRTPC that it had the right to put its own price on its technology
In January this year, the Andhra Pradesh government filed a complaint with the Monopolies and Restrictive Trade Practices Commission (MRTPC) against Mahyco Monsanto Biotech (MMB) — the Indian subsidiary of the agriculture-biotech multinational Monsanto — accusing it of overpricing genetically modified BT cottonseeds. MMB was selling the seeds to farmers in AP and other states at Rs 1,200-1,850 for a 450-gram packet. A large part of this amount, Rs 900, was being charged as “trait value” or royalty. In its submission, the AP government pointed out that Monsanto charged only about Rs 400 for the same packet of seeds in China and only about Rs 200 in the US.

On May 10, MRTPC ruled in favour of the Andhra Pradesh government and directed MMB to reduce the trait value it charges, as farmers were being hit hard by the high price of BT cottonseeds. Following this, on May 29, the Andhra Pradesh agricultural commissioner fixed the price of BT cottonseeds at Rs 750 for a 450-gram packet, and directed MMB and its sub-licensees to comply with its order.

MMB challenged the AP government and the MRTPC’s decision in the Supreme Court, saying that the government’s move was illegal and arbitrary. The sc did not stay the MRTPC’s order and, while the appeal was pending before it, five states — Karnataka, Tamil Nadu, Gujarat, West Bengal and Madhya Pradesh — followed Andhra Pradesh’s lead and ordered that BT Cotton should be sold at a reduced price. On September 6, the Supreme Court heard the petition by MMB against Karnataka, Tamil Nadu and Andhra Pradesh, and served notices to these governments. As of now, the matter is sub judice.

MMB says that the royalty it charges reflects its research and development costs for BT Cotton. It says that the government cannot fix an arbitrary price on its products. It also argued before the MRTPC that it was not breaking any law in India by fixing a price on its products. A spokesperson for the company told the commission that it had the right to put its own price on its technology.

Monsanto Mahyco has a monopoly on the supply of BT cotton
Monsanto has challenged the MRTPC price-ceiling on its BT cottonseed in the Supreme Court
Given the higher price of BT cotton, the small farmer is at a greater risk of falling into a debt trap in event of a crop failure

The ongoing tussle between the state governments and the biotech MNC reflects the continuing controversy over the introduction of BT Cotton in India by Monsanto. The government has encouraged the introduction of genetically modified technology in India’s farms to offset the hazards of excessive pesticide use. Cotton cultivation alone consumes 50 percent of all pesticides produced in India.

In doing so however, both the Centre and the state governments did not anticipate the problems faced by the cotton farmer, mainly related to pricing. Being the only supplier of the Bollworm pest-resistant genetically modified cottonseed, MMB has the monopoly advantage in the market. The Genetic Engineering Approval Committee (GEAC) has not given approvals to private Indian companies for the high-yield strains developed by them.

In Andhra Pradesh, for instance, the government has entered into agreements with seed firms and farmers, which bypasses the certification of cottonseeds for quality and yield. Under the agreement, if they suffer any losses, farmers can approach a tripartite body comprising government officials, and representatives of the seed company and farmers, for compensation. The farmer can bypass the consumer courts and avoid a long, drawn out legal case. But the system also works in the favour of seed firms which can avoid certification on the one hand, and get away with not being pulled up by consumer courts in case the farmer suffers losses, on the other. Some experts feel that the provision is unconstitutional.

Opponents of GM seeds argue adequate testing on its effects on local crops has not been done
Over the last few planting seasons, BT Cotton has been aggressively marketed to farmers and its seeds becoming increasingly popular among them. The cultivation of BT Cotton has grown at a very fast pace as BT Cotton does not require pesticides in large quantity. Otherwise, farmers end up spending a lot on pesticides — roughly about Rs 3,000 to Rs 4,000 per crop per acre. However with BT Cotton the farmer has to pay only Rs 500 per acre for the seed.

Those opposed to genetically modified crops argue that adequate testing on its effects on existing indigenous crops has not been done. While hybrid seeds are regularly used by farmers, BT Cotton is gaining converts because of the popular notion that it produces better yield and is pest resistant.

But this is being disputed. In Andhra Pradesh farmers reported losses to the tune of Rs 4.5 crore last year after using BT Cotton. When AP asked MMB to compensate for the losses, it refused. Farmers growing BT Cotton in Madhya Pradesh have also suffered losses. Reports by state governments say that although pest attack on BT Cotton is less compared to other hybrids, regular plant protection measures are still necessary to protect the crop from attack by other minor insects. These minor insects could become major pests in the future, according to a report by the Karnataka government.

Currently, BT seeds are available to farmers through dealers and agents in the market. A farmer can always choose to buy normal hybrid cottonseed since BT Cotton is expensive. But the uncertainty of his yield, unforeseen pest attacks, and the promise that “BT will definitely bring a better harvest,” have induced more and more farmers to opt for BT cottonseeds.

According to experts, farmers have no choice but to depend on private firms like MMB for newer and better seeds unless India strengthens its indigenous agricultural research. “When there is no competition, the price trouble is bound to happen. Logically, this is a de-controlled price regime. When there is no price-control under law, that itself turns a hurdle,” says scv Reddy, Director, Seed Certification Agency, Bangalore. In China for instance, competition existed in the BT Cotton sector even before Monsanto entered the market.

Meanwhile, in the cotton growing northern districts of Andhra Pradesh and Karnataka, farmers continue to shell out high prices for seeds, which in turn leads to a high investment for every acre cultivated. Even a reduced price of Rs 750 per 450-gram pack of BT cottonseeds is higher than the price for the normal varieties of cotton. “Small farmers with land anywhere between one acre to a few cannot withstand such high prices. I have managed because our family owns 40 acres. Other villagers find it very difficult,” says Shrenikappa, a farmer from Chinnikatte village, Haveri district in Karnataka.

Monsanto is correct in pointing out that there is no clear law that allows governments to have a say on seed pricing that so crucially determines a farmer’s cost-per-acre investment. India’s seed pricing is addressed by the Seed Control Order 1983 under the Essential Commodities Act, which does not mention any government role in pricing. It allows the government to exert its weight with the seed companies indirectly through compulsory licensing though. The Seeds Bill 2004 sought more private participation in producing seeds.

India is not legally equipped to fight private monopolies in seed pricing. “The crisis surrounding BT Cotton has also to do with the liberalised environment we live in today, where anything done by private firms is perceived as legitimate,” says Kavitha Kuruganti, consultant with Hyderabad based Centre for Sustainable Agriculture. Kuruganti blames government policies for farmers’ dependency on private firms.

Krishna Prasad, an organic farmer says that governments should create space for participatory research by farmers. “Scientists and seed companies have their own lobbying. Lost in the bargain are our farmer scientists who have researched on their own, developed high-yielding varieties and also certain high return methods of cultivation,” he says. Prasad also says that the government should encourage and support “farmer scientists” who develop hybrids and experiment with high-return methods of cultivation, without the use of either pesticides or depending on the gm technology.

Private seed firms and pesticide firms have a big role to play in a farmer’s yield, because the quality of crops and amount of produce almost always rests in their hands. However, some experts caution that such mechanisms only allow the seed firms to further corner the market. They say that the direction in which the government needs to work is clear — make indigenous research more aggressive, allow farmers to research and network better, and make laws that help farmers, not ruin them.

Oct 28 , 2006

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