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Protecting the cotton farmers of Andhra Pradesh

LOK SATTA petitions High Court against
Monsanto's Bt Cotton seeds' pricing

The Background:

Cotton farming forms an important part of the agricultural scenario in India: our country has the world's largest cropped area under cotton (20-25%) and is the third largest producer (12%). Cotton forms the backbone (at 70%) of our textile industry and textiles are the largest exported commodity from India (worth Rs. 42,000 crores annually). Nearly half of the cotton cultivated in our country is composed of hybrid varieties and increasingly, these hybrids are of the Genetically Engineered (GE) varieties. This has resulted in the increased dependency of the farmers on the seed producing/selling companies.

In total, 60 million people across India are dependent on the production and processing of cotton. There are over 4 million cotton growers in our country of whom 70% are small and marginal farmers. A large number of ryots who have committed suicides in the past years, especially in Andhra Pradesh, are from this community of small and marginal cotton farmers.

Given the above scenario:

Monsanto, a company incorporated in USA has developed the genetically modified 'Bt Cotton' hybrid variety (in 1996) which reportedly has the trait of being inherently resistant to the bollworm insect. Monsanto incorporated Mahyco Monsanto Bio-Tech (India) Ltd. (MMBL) and has transferred the 'Bt' technology to it. However, it is contended that neither MMBL nor its parent company Monsanto, hold patent(s) in India over the 'Bt' Cotton technology or the seeds, as per the Indian Patents Act (Sections 2 and 3; prior to the 2003 amendment). In spite of this, MMBL has ensured that domestic seed companies were directed by the Union Government's Genetic Engineering Advisory/Approval Committee (GEAC) to obtain 'no-objection' certificates from them and subsequently become 'sublicencee' companies.

MMBL is now charging Rs. 1250 as 'trait value' (can be understood as 'royalty fees') per 450 gm package (termed one 'unit') of Bt hybrid cotton seed, in addition to the domestic seed companies' earlier price of less than Rs. 450 - 500 per unit of bare seed. As a result, the selling price of Bt hybrid cotton seeds, even from the domestic seed companies, has steeply jumped to Rs. 1700 to Rs. 1800 per unit.

The same parent company Monsanto is charging a royalty/trait value of a mere Rs. 40 - 45 per unit in China and Rs. 108 - 120 per unit in the USA. While this royalty fees/trait value is almost three times the market price of the bare seed in India, it is one-third the unit seed price in the USA. There is no convincing explanation behind why the seeds are exorbitantly expensive in India and relatively very cheap in China or the USA.

Further, the agreements between the domestic seed companies and MMBL have several clauses which give MMBL the sole right to fix/revise these trait values/royalty fees, at their choice, each year. All the while, the Union and State Governments, which have adequate powers to prevent such price fixing (under the Monopolies and Restrictive Trade Practices (MRTP) Act / Patents Act), have remained effectively mute spectators.

It is contended that Monsanto Mahyco Bio-Tech Ltd. (MMBL) has taken undue advantage of its monopoly over the genetically modified 'Bt' hybrid cotton seed technology and has resorted to several illegal acts of monopolistic and restrictive trade practices resulting in the blatant manipulation and fixing of prices to the severe detriment of our farmers. These business and trade practices adopted by MMBL and the named domestic seed companies (their 'sublicencees') are in violation of the Contract Act, Monopolies and Restrictive Trade Practices (MRTP) Act and the Consumer Protection Act.

If left unaddressed, these developments could, very likely, severely impact the livelihoods of lakhs of small cotton farmers in this State. It is high time for our authorities to establish a rational seed pricing regulatory mechanism that offers win-win solutions to all stakeholders.

Therefore, LOK SATTA has filed a Public Interest Litigation (PIL) Writ Petition on behalf of the cotton farmers of Andhra Pradesh, before the AP High Court, naming the MMBL, involved domestic seed companies and the Union and State Governments as respondents.

The Honourable AP High Court, having received the writ petition, directed the Central and State Governments, apart from Monsanto/MMBL and other domestic seed companies named in the petition, to file counters and posted the case to the 27th of April (2006) for hearing. A. Prabhakar Rao (Advocate) and D. Prakash Reddy (Advocate) filed the said writ petition on behalf of LOK SATTA.





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