On May 18, 2016, the agriculture ministry issued an order that makes it mandatory for the GM [genetically modified] technology provider to license the technology to any seed company that approaches it. If the former does not give the license in 30 days, it is ‘deemed to have been given’ and the latter can use.
At the same time, the order also makes it mandatory for the seed company to pay the trait license fee or royalty to the technology provider. Further, it caps the maximum royalty at 10% of the maximum retail price [MRP] for the first 5 years to be reduced by 10% from 6th year. It prescribes a 10-year life for every GM trait which implies that from 11th year, no fee is payable.
Following protests from stakeholders, though the order was withdrawn and put up for consultations, it speaks volumes about the mind-set of mandarins in the ministry.
Earlier in December 2015, the ministry had issued a Cotton Seed Price Control Order under which it fixed the price of cotton seed sales all over the country at a ‘uniform’ level besides the max trait fee (royalty) payable to the technology provider. Considering that Bt cotton account for 98% of total cotton seeds used in India, the decision was directed primarily at this segment.
The ministry also ordered a probe by the national regulator – Competition Commission of India [CCI] – in to alleged ‘monopolistic’ practices by Mahyco Monsanto Biotech [India] Private Limited [MMBL] – a 50:50 joint venture between US biotech giant and Maharashtra Hybrid Seed Company [Mahyco].
The above decisions to control the MRP of cotton seed, max trait fee and its calibration over its entire life, fixing trait life in an ‘arbitrary’ manner [at 10 years against a normal 20 years] ‘uniformly’ for all types [even as actual varies] and even infringing on the rights of technology provider to determine whom to give the license and on what terms seem to be born out of a perception that Monsanto being sole provider of technology incorporated in Bt cotton seed is out their to exploit its alleged monopoly to the detriment of seed companies and farmers. The perception is myopic and seriously flawed.
Bt [Bacillus thuringiensis] cotton is genetically tweaked to kill bollworms that ravage cotton crops. It offers the possibility of substantially enhancing return by saving on pesticide use on the one hand and increasing yield on the other. At the price paid for Bt cotton seed [including technology fee which is less than what Monsanto charges even in China], farmers get handsome returns.
Since, Bt cotton was introduced in India in 2002, its use has increased phenomenally with area under coverage leapfrogging from a mere 50,000 hectare to 11.6 million hectare [2014] covering major states such as Gujarat, Andhra Pradesh, Maharashtra etc. Its widespread adoption by millions of farmers would have been unthinkable if the access to the technology was restricted or price was exploitative.
Clearly, what we have on the ground is a market driven system wherein farmers on their own volition have adopted Bt cotton technology and benefited hugely by increasing their income manifold besides boosting exports [fibre derived from Bt cotton is of super fine quality meeting international specifications] and earning valuable foreign exchange for the country.
The seed companies and farmers need not even fear that the technology provider would exploit patent right as protection of transgenic variety under the Plant Variety Protection & Farmers Rights Act [PVPFRA], 2002, overrides the patents granted to the biotech traits under the Indian Patent Act. Since, the seed is the only carrier for biotech traits, the trait patents automatically become infructuous.
The actions of government are out of sync with ground realities. If, farmers had found the cotton seed price to be exorbitant, this would have got reflected in reduced demand for it as no farmer would go for it only to incur loss. If, MMBL had followed restrictive trade practices, CCI would have taken note suo motu. It is evident that politicians are needlessly interfering with free market principles.
By bringing in controls when these are untenable, they are neither doing good to technology supplier nor to farmers. A company spends millions of dollars in discovery, development and commercialization of new trait. It needs a reasonable opportunity to recuperate the investment by licensing it in various jurisdictions. While, fixing the fee undoubtedly, it has to keep in mind the paying capacity of farmers [it would be ignoring this basic fact at its own peril] but, any external diktat by the state in this regard is completely un-called for.
The technology developer has also to perform the critical role of Stewardship viz., making farmers aware and ensuring proper and scientific use of the trait which entails substantial investment in training and services infrastructure. It helps in getting the best out of technology and to avoid its misuse. If, licensing is made free for all [as contemplated under the May, 2016 Order], it will not be possible to prevent misuse of the technology.
The interventions not only violate market principles [denting Modi’s reform credentials], but also act as a strong dis-incentive to R&D companies [including Indian companies] from investing in research and stewardship. It will discourage them from coming up with new solutions to meet farmer’s growing needs. It won’t be possible to commercialize new traits – currently under development – such as resistance to drought, salinity tolerance and nitrogen-use efficiency etc.
While, farmers have nothing to fear from un-fettered operation of market forces, if, government still feels that they could be taken for a ride [just because, there is only one technology supplier], then the best way to address this concern is to put in place a regulatory environment in which R&D based companies and research institutions get an opportunity to undertake research, conduct trials and come up with alternative solutions. Unfortunately, this is an area where state efforts are woefully lacking.
The National Biotechnology Development Strategy [NBDS] 2015-2025 [unveiled by Prime Minister on December 30, 2015] had languished for almost a decade. That apart, even field trials for various GM crops [including by public research institutions] – forget their launch for commercialization – has been held hostage to widespread propaganda against this technology based on presumptions and myths.
And, whatever limited efforts made during early 2000s came to halt in 2010 when, then environment minister, Jairam Ramesh under UPA -dispensation put an embargo on commercialization of Bt brinjal followed by suspension of all trials on GM crops. The recommendations of parliament’s standing committee and a technical committee set up by Supreme Court opposing such trials only compounded the woes. Last year, Genetic Engineering Appraisal Committee [GEAC] under Modi – government approved trials for a dozen of traits. But, there is stiff resistance at state level.
The decision of agriculture ministry to scuttle freedom of R&D companies with regard to pricing and licensing has made matters worse. This is completely out of sync with Modi’s intention to give a big push to Agri Biotech to catapult Indian agriculture on an accelerated growth trajectory. Such controls also impair the capability of government’s potential partners under PPP [including Monsanto] to contribute to achieving the goal.
Modi should goad agriculture ministry to rescind all its retrograde moves and tell states to follow suit.