Amid Setbacks, Monsanto May Exit Argentina

Monsanto is re-evaluating the viability of continuing its biotech seed business in Argentina as conflicts remain between the Argentine government, the country’s farmers, and the company over its royalty collection methods, while a continued devaluation of the country’s currency poses an additional challenge, reports the Wall Street Journal.

In addition, Bloomberg reports that Monsanto may have to wait months before Argentina’s Institute for Property Rights will complete the process for the company to fully patent its latest genetically modified soybean technology in the country.

“The Monsanto issue is very distinctive as Argentina still hasn’t granted the company a patent for Intacta," Argentina’s Science and Technology Minister Lino Baranao told Bloomberg in a telephone interview. "A final decision must surface soon but I am not sure this will happen for the 2015-16 crop. We have asked the Institute for Property Rights to speed up the process, but it may take months.”

Aside from patenting difficulties, Monsanto still is dealing with problems regarding collecting royalties from Argentina’s farmers on its previous generation of glyphosate resistant seeds. Under the company’s terms, farmers were required to pay royalties either upon the purchase or upon the collection of their soybeans for export. However, farmers were re-using seeds from one crop season to the next creating widespread bootlegging. In its grain purchasing contracts, Monsanto has included a clause allowing the company to inspect shipments for the presence of its Intacta technology to assess royalty charges – a move that Argentina’s grain farmers, traders, and exporters oppose, calling it illegal and over-extending, according to the Buenos Aires Herald.

As complaints mounted and talks gained no understanding between the two sides, Argentina’s Agricultural Ministry under newly elected President, Mauricio Macri, moved to ban all tests and analyses on grain shipments without prior government approval. The government’s request for more time to push farmers to pay royalties was rejected by Monsanto last month.

Argentina is one of the world’s top grain producing and exporting countries and therefore a top market for the top global seed and input providers. Argentina accounted for 5.8% of Monsanto’s $15 billion in sales during fiscal year 2015, and accounted for 13.6% of all biotech crop acreage planted last year, according to the International Service for the Acquisition of Agri-Biotech Applications, reports the Wall Street Journal.

Despite this, doing business in the country has become increasingly difficult, leading Michael Frank, chief commercial officer for Monsanto to state, “We are doing a full review of our business plans there.”

In fact, business has become increasingly complicated on multiple fronts for Monsanto.

Monsanto has also said it was reviewing the possibility of pulling its genetically modified technology from India – one of the largest agricultural markets in the world, after the Indian government moved to set a cap on the price of Bt cotton seeds beginning this month, according to The Economic Times.

"By slashing trait fees the government has clearly shown that it is going for short-term populist measures rather than supporting innovation in the long term. Such a decision is a discouragement of research and is contrary to the respect for IPR in Agriculture and 'Make in India' initiative encouraged by our Honorable Prime Minister," said Shivendra Bajaj, executive director of the Association of Biotechnology Led Enterprises Agriculture Group.

In other markets, adoption by U.S. farmers of Monsanto’s newest RoundUp Ready 2 Xtend soybean seeds has been slow due to the lack of approval by the EU – a situation which farmers and traders fear will lead to a rejection of shipments. ADM, Bunge, and CHS have stated that they will refuse any genetically modified crops lacking global approval, and CHS Inc. is pushing for companies to keep new seed traits out of the supply chain until global approval is secured.

"I think that would be the safest thing for the supply chain," Gary Anderson, a senior vice president for CHS, told Reuters.

This pushback has caused Monsanto to revise its U.S. planting estimate from an original expectation of three million acres to less than two million acres, report Seeking Alpha.

As scientific advancements fuel the acceleration of the commercialization of new biotech traits, and globalization includes more and more countries onto the global market, the clash of differing governmental regulations, approval timelines, and systems is causing a headache for farmers, traders, and seed developers.

"Soybeans, once considered such a simple crop to grow and market, is becoming more complicated," Bayer said in a company statement, adding, “It’s downright confusing…”