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Monsanto plans crackdown on unlicensed soy in Brazil

(Sunday, June 15, 2003 -- CropChoice news) -- Jonathan Karp and Miriam Jordan, the Wall Street Journal: SAO PAULO, Brazil -- Piqued by years of piracy, Monsanto Co. is cracking down on the farming and exporting of its patented Roundup Ready soybeans with the apparent aim of prodding the Brazilian government to legalize the genetically modified seeds. But its move is sowing resentment among multinational traders such as Cargill Inc. and Archer Daniel Midlands Co. and confusing an already-muddled market.

Brazil, the world's second-largest soy producer after the U.S., is one of the main battlegrounds over genetically modified crops. Despite a government ban on planting, Roundup Ready soybeans -- which are modified to reduce the need for pesticide -- represent as much as 20% of Brazil's soy crop, according to estimates by the U.S. Department of Agriculture. Monsanto receives no royalties for the seeds, which are smuggled in from Argentina and reproduced by Brazilian farmers.

The St. Louis biotechnology company announced this week a plan requiring exporters in Brazil to sign license agreements by July in order to ship Roundup Ready soy and to begin paying royalties next year. Monsanto said it will notify customs officials in countries that recognize the Roundup Ready patent, hoping unauthorized shipments will be barred.

"The area planted by illegal soybeans has grown so much that we couldn't wait any more," said José Carlos Carramate, manager of Monsanto soy operations in Brazil. "Monsanto isn't trying to confront anybody," he said, denying the move was meant to pressure the Brazilian government. "We are trying to present the issue and gain the support of all players so that everyone can win."

Still, Monsanto's move, which followed two months of negotiations with exporters, rankled soy traders and growers. Major exporters such as Cargill and ADM, along with the association that represents the Brazilian soy industry, declined to comment. But other industry players criticized Monsanto's scheme as politically ill timed and difficult to implement.

"Monsanto has a right to charge royalties, but with this decision, they could be shooting themselves in the foot," said Anderson Gomes, a soy analyst at Celeres Consultancy in the Brazilian state of Minas Gerais. "Exporters will have to become collection agents, a responsibility that isn't theirs." What is more, it will be difficult for traders to monitor the origin of genetically modified soybeans in order to pass along the royalty charges to the farmers, as Monsanto hopes, he said.

"Monsanto acted prematurely. There's no point discussing royalties until the government takes a position" on genetically modified seeds, said Carlos Sperotto, president of a farmers cooperative in the state of Rio Grande do Sul, where much of Brazil's illegal soy is grown. Like many farmers, he said he believes the government is inexorably moving toward legalizing biotech crops, but Monsanto may have delayed this.

Brazil's previous government ignored the flouting of its ban on genetically modified soy for years. Despite pressure from antibiotech activists affiliated with his leftist Workers Party, President Luiz Inácio Lula da Silva issued a temporary decree in March that effectively granted amnesty to soy farmers and traders this season, but reimposes the ban from March 2004.

To bolster its cause, Monsanto is helping to fund a trip to the U.S. this weekend for Workers Party legislators to educate them about the potential benefits of biotech. The legislators will visit Washington and St. Louis, Monsanto's headquarters.

URL for this article: http://online.wsj.com/article/0,,SB105543476658937600,00.html