Monsanto’s GMO business isn’t growing in India; Indian government has cut the company’s GM cottonseed royalty fees by 70%; world markets are saturated
You only have to look a little way past the pro-GMO hype in an article from the Wall Street Journal (item 1 below) to see that Monsanto and GM crops are in serious trouble in India and worldwide.
For example, it’s been exposed that GM mustard yields less than currently available high-performing non-GM varieties, so the article’s assumption that GMOs will somehow help India's food security problems doesn't hold up.
1. Why Monsanto’s biotech-food business isn’t growing in India
2. India cuts Monsanto modified cotton-seed royalty fees by 70%
1. Why Monsanto’s biotech-food business isn’t growing in India
By JACOB BUNGE snd BIMAN MUKHERJI
WSJ, 13 Mar 2016
* Seed giant’s genetically-modified food crops stymied despite nation’s food-security needs
In a research laboratory surrounded by acres of arid land in western India, Bharat Char showed off tiny sprouts of rice, wheat and okra in glass bottles.
These plants could solve a lot of India’s food problems, he said. Because they are genetically modified to resist bugs and weed-killing sprays, said the scientist for Mahyco, an Indian firm that joined Monsanto Co. to develop biotech crops, the plants could boost impoverished Indian farmers’ profits and reduce food imports.
There is precedent: Genetically modified organisms, or GMOs, grow in an estimated 97% of India’s cotton fields and have helped India by some measures become the fiber’s top global producer.
But after a decade of Monsanto’s efforts with Mahyco to win Indian-government approval for biotech food crops, seeds for plants like Mr. Char’s remain in limbo, stymied by environmentalist opposition, farmer skepticism and bureaucratic inertia. Despite dozens of biotech-food-crop trials in India, the country has approved none for commercial cultivation.
“What greater case study in terms of food security than a country that will soon have more people than any other country in the world?” said Robert Fraley, Monsanto’s chief technology officer. “To see a country that has the potential and intellectual ability to be a leader in these biotech advances, to be stymied politically, I think it’s a tragedy.”
India’s Agriculture Minister, Radha Mohan Singh, said the government was waiting for India’s Supreme Court to rule in a case opposing genetically modified food crops before deciding on their commercial cultivation.
Meanwhile, Monsanto’s established cotton business in India faces new threats, including new government price controls around seed genetics and an antitrust probe into pricing practices, prompting Monsanto on March 4 to warn that it could withdraw its biotech crop genes from the country.
Monsanto’s experience is part of a broader backlash against genetically engineered crops from a mix of environmentalists, consumer groups and nationalism thwarting the technology’s expansion after years of growth. Biotech-crop opponents say they can damage the environment, burden poor farmers with high-price seeds and potentially harm health.
GMO proponents reject such assertions, and the U.S. Food and Drug Administration, World Health Organization and European Commission have concluded GMOs are safe to eat.
Yet pushback has swept the world. More than half of European Union countries have moved to bar GMO cultivation. Russia hasn’t approved any biotech crops. China, which allows cultivation of some, isn’t expected to approve new ones soon. In the U.S., where GMO crops are widespread, some food brands are stripping GMOs from their products.
The backlash has slowed global-sales growth of genetically modified seeds. Sales grew 4.7% to $21 billion in 2014, compared with 8.7% growth in 2013 and average annual growth of 21% from 2007 through 2012, according to research firm PhillipsMcDougall Ltd.
Monsanto, a top global seller of biotech seeds, in 2015 made an unsuccessful $46 billion bid for Syngenta AG, a top pesticide seller, partly for access to more countries’ fields than biotech seeds give it. Syngenta last month agreed to a $43 billion takeover by China National Chemical Corp.
Biotech seeds have nearly saturated major markets where approved, said Mike Mack, who retired in October as chief executive of Syngenta, also a GMO-seed seller. “Show me the new markets or the new crops that are going to bring the sort of wave that we saw in the last decade,” he said in September. “I don’t see how it’s going to pick up in a material way anytime soon.”
India appeared fertile ground for Monsanto two decades ago. Once a pesticide giant, the company had introduced the world’s first genetically modified cotton in the U.S. in 1996.
India cultivated the world’s largest cotton-growing area, yet produced among the fewest bales per acre. Four million Indian cotton farmers battled many of the same pests that U.S. farmers did—pests resisted by a gene Monsanto created with a bacterium called Bacillus thuringiensis, or Bt, that lets plants secrete a bug-killing protein. Monsanto in 1997 formed a joint venture with Maharashtra Hybrid Seeds Co., or Mahyco, to pair its biotechnology with Mahyco seeds suited to India’s soil.
When Mahyco won permission to sell India’s first biotech cottonseed in 2002, scientists and staff threw a party at its research center in Dawalwadi, said Mr. Char, who joined Mahyco in 1999.
“It was like India winning the cricket world cup,” said Monsanto Treasurer D. Narain, its India unit’s chief financial officer in the late 1990s.
Monsanto’s success seemed to augur well for GMOs in India, which boasts the most arable land of any country and is projected to surpass China as the world’s-most-populous by 2023.
India had a history of pioneering agricultural methods. The so-called Green Revolution in the 1960s and 1970s revamped Indian farms with high-yielding wheat and rice supported with fertilizers, pesticides and irrigation. Government officials credited it with saving millions from starvation.
By late 2006, Monsanto’s Bt genes blanketed about 40% of India’s cotton fields, according to the International Service for the Acquisition of Agri-Biotech Applications, or Isaaa, a nonprofit funded by governments and companies that tracks and promotes agricultural biotechnology.
“I had gravitated to Bt cotton because my yields used to be poor,” said Dheeraj Chhaganbhai Wadodariya, a farmer in India’s Gujarat state. Genetically modified seeds increased his earnings so much, he said, he can now buy cattle, do up his home and occasionally travel.
But clouds were gathering over the field. Fears that India’s government relied too heavily on biotech companies to research safety and that GMO plants would mix with wild versions prompted nutritionist Aruna Rodrigues to seek out independent scientists and compile data to challenge the government over its handling of biotech crops.
In 2005, she filed a petition with India’s Supreme Court seeking a moratorium on GMO field trials, arguing that such crops would damage the nutritional qualities of the food. The court accepted her petition, which is still winding its way through India’s notoriously slow judicial system.
As public pushback increased, India in 2010 placed a surprise moratorium on an insect-resistant brinjal, or eggplant, which had been set for approval.
India’s potential nevertheless persuaded Monsanto to continue research here and it continued to get approvals for trials, including biotech corn. Other companies pursued rice, mustard, peanuts, potatoes and sorghum.
“We never lost hope that things were moving,” said Mr. Narain, who led its India business from 2010 to 2013.
Globally, pushback was spreading. In America, where the Agriculture Department says GMOs represent more than 90% of corn, soybeans and cotton acres, opponents launched state-by-state efforts to require GMO-food labeling. Following the USDA’s 2015 approval of genetically modified apples and potatoes, companies including McDonald’s Corp. and Wendy’s Co. said they didn’t plan to use them, saying they were happy with non-GMO suppliers.
The EU unveiled a new opt-out program in 2015. Ukraine and Russia have also ruled out using GMO seeds. China, which permits some biotech cotton, papaya, sweet peppers and tomatoes, isn’t expected to approve new GMO crops until the domestic seed industry shows it can compete against Western rivals, the USDA and seed-industry officials said. Chinese government officials didn’t respond to inquiries.
India’s food-security concerns may lead it to soften its stance, seed industry officials say. The country is a big importer of edible oil and lentils — protein sources for many mired in poverty — and has high child-malnutrition rates. GMO proponents say biotech seeds would increase production of protein-rich crops on India’s mostly small farms, which the United Nations numbers at 138 million.
The 2014 election of Prime Minister Narendra Modi, who supported GMO crops as chief minister of Gujarat state, encouraged biotech-seed makers. India has since approved field tests for biotech crops, although state governments can block trials.
India’s Supreme Court is expected to rule soon on the petition to bar GMO-crop cultivation. But Monsanto faces more immediate challenges in cotton, after India’s agriculture ministry this month imposed a 70% cut in the royalty fees that Monsanto and Mahyco had charged for their crop genes. The companies also face an inquiry from India’s antitrust enforcer over pricing of their pest-resistant cotton genes, and some Indian seed companies have withheld tens of millions of dollars in royalty payments according to Monsanto.
The price controls on crop biotechnology - which Monsanto and Mahyco license to about 50 Indian seed companies - may force the companies to reassess all aspects of their joint venture in India, they say. Officials for India’s Ministry of Agriculture said in a court document that Monsanto and Mahyco’s dominance in supplying biotech cotton genes requires curbs on royalties, which ministry officials called “exorbitantly high.”
“We need innovation in agriculture in the country,” said Shilpa Divekar Nirula, chief executive of Monsanto’s India unit. “The government seems intent on promoting innovation… but something like this is at cross-purposes with what the government is seeking to do.”
2. India cuts Monsanto modified cotton-seed royalty fees by 70%
Bloomberg, 9 Mar 2016
* Government makes move despite opposition from Monsanto venture
* Venture had said it would ‘reevaluate’ position in India
India cut royalties for genetically-modified cotton seeds, defying Monsanto Co., which has said such a move would cause it to reevaluate its business in the country, the largest grower of the fiber.
The agriculture ministry said Tuesday that so-called trait royalties will be capped at 49 rupees (73 U.S. cents) per 450-gram pack of so-called Bt cotton seeds, a 70 percent reduction from current levels. It also set the maximum sale price at 800 rupees.
St. Louis-based Monsanto sells cotton seed in India via Mahyco Monsanto Biotech, or MMB, a joint venture with Maharashtra Hybrid Seeds Co. The venture licenses Monsanto technology to seed companies and then collects trait fees. MMB said March 4 it would have no choice but to “reevaluate every aspect” of its position in India should the government make a substantial cut to royalties, saying such intervention would override its contracts with seed companies and undermine its operations.
Monsanto had no comment Wednesday as the company is still examining the government notification in detail, spokeswoman Christi Dixon said. Shares of Monsanto India Ltd. climbed 3.5 percent to 1,671.3 rupees in Mumbai on Thursday.
The decision to set a uniform price for Bt cotton seeds across the country was taken “to safeguard the interest of the farming community,” India’s Agriculture and Farmers Welfare Minister Radha Mohan Singh said in a statement on Wednesday.
The government action follows a dispute between Monsanto and some licensees over payments. While some Indian states have capped seed prices, licensing fees previously haven’t been controlled. Last month, India’s antitrust regulator recommended an investigation into MMB.
Bt cotton secretes an insecticide and has transformed Indian production of the fiber since the technology’s introduction in 2002. International cotton prices touched a six-year low in February amid a global glut. Futures in New York have dropped 11 percent so far this year.
India’s average per-hectare yield jumped almost 70 percent to 503 kilograms since it allowed farmers to use genetically modified seeds for the first time in 2002, according to the nation’s Cotton Advisory Board. Production will drop 7.4 percent to 35.2 million bales of 170 kilograms each in 2015-16 after the first back-to-back shortfall in monsoon rain in three decades forced farmers to reduce planting, the board estimates. The U.S. Department of Agriculture on Wednesday also cut its estimate for cotton production in India by 1 million bales, partly because pests damaged crops in northern states.
Higher output has boosted exports to countries including China, Pakistan and Bangladesh, with overseas shipments expected to gain 21 percent to 8 million bales in the 12 months through September, board data show.