Thursday, 30 March 2017

Nuzvid Seeds Vs Monsanto

  • Mr. Mandava Prabhakara Rao has been Managing Director of Nuziveedu Seeds Limited since June 16, 2010. 
  • Maharashtra Hybrid Seeds Company Limited (MAHYCO) is a pioneer and leader in the private seed sector in the country. It is the largest private sector seed company in India with a strong focus on developing quality hybrid seeds for the Indian farmers. Founded in 1962 by Dr. B. R. Barwale, the father of seed industry in India and an entrepreneur who leveraged his farming background to carry out pioneering work in seed development, the company has grown four-fold in last two decades achieving various milestones. Mahyco’s achievements have been recognized and rewarded over the years both at national and international levels. In 2001, Dr Barwale was conferred the Padma Bhushan award.
  • The PPVFRA (Protection of Plant Varieties and Farmers' Rights Authority) has a representative from the seed industry and Prabhakar Rao is there today by virtue of being the president of NSAI. In the past the industry was represented by Usha Barwale Zehr, Director of Maharashtra Hybrid Seeds Company(MAHYCO), Monsanto’s partner in the 50:50 joint venture (Mahyco-Monsanto Biotech MMBL) through which the BG-II technology is being sublicensed. Thus conflict of interest arose!
  • The government has recast the Protection of Plant Varieties and Farmers Right Authority, replaced Mrs. Usha Barwale Zehr by appointing as its member M Prabhakar Rao, chairman of Nuziveedu Seeds, the President of National Seed Association of India (NSAI) and thus eliminated conflict of interest.
  • Monsanto sells cotton seeds in India through its joint venture Mahyco Monsanto Biotech Ltd (MMBL). MMBL has sub-licensed Bt cotton seed technology since 2002 to various domestic seed companies. Monsanto has sublicensed its BG-II Bt technology — which was granted an Indian patent in February 2008 – to 49 companies including Nuziveedu Seeds Ltd.
  • In November 2015, the multinational terminated its license agreement for the technology with Nuziveedu Seeds, alleging that the latter, had pending trait value dues of over Rs 165 crore despite having collected the full retail price from farmers. 
  • The National Seed Association of India (NSAI), representing domestic seed firms such as Nuziveedu Seeds, Ankur Seeds and Kaveri Seed Company, has claimed that the power to fix royalty or ‘trait value’ payable to the developer of any plant genetic modification (GM) technology lies with the Protection of Plant Varieties & Farmers’ Rights (PPVFR) Authority.
  • Monsanto maintains that, trait fees are governed by technology licensing agreements bilaterally executed between it and individual seed companies. Bringing in the PPVFRA — when GM traits are patentable and Monsanto clearly has a patent for Bollgard-II Bt technology — is only aimed at wriggling out of payment of contractual liabilities.
  • The Competition Commission of India (CCI) has prima facie found Indian subsidiary of Monsanto (MMBL)  in violation of competition regulation and has ordered Director General (DG) to conduct detailed investigation into the matter. The CCI had initiated the investigation into the matter following November 2015 directive of the agriculture ministry to look into alleged monopoly practices by the Mahyco-Monsanto Biotech (MMBL). The complainant claims that MMBL is abusing it's position by putting, "...conditions in the sub-license agreements, charging of unfair price, discriminatory treatment, limiting and restriction of technical and scientific development relating to Bt cotton technology and cotton seeds market, denial of market access and leveraging of dominant position in the Bt cotton technology market to protect cotton seeds market." Agriculture Ministry had asked the regulator to investigate the alleged monopolistic practices of the seed company following the representations from farmer bodies and National Seed Association of India (NSAI). 
  • On Mar 06, 2016, Monsanto's joint venture firm in India MMBL said that it would be difficult to bring new technologies to India because it was becoming difficult for the company to recoup its investments in research and development of genetically modified seeds. The chief of Monsanto's India unit, said in a statement that if the committee recommends imposing a cut in the fees that local seed companies pay to use Monsanto's crop genes then the company will have no choice but to reevaluate every aspect of our position in India.
  • Around 7 million cotton farmers in India use their seeds, the company said. Over the last two decades, millions of small farmers have adopted genetically modified cotton seeds, making India one of the world's biggest producers of cotton. Genetically modified plants are grown from seeds that are engineered to resist insects and herbicides, add nutritional benefits or otherwise improve crop yields and increase the global food supply. Advocates say these new strains will boost yields and stabilize supply by also improving drought resistance. 
  • India has allowed the use of genetically modified seeds only to grow cotton. It says further study needs to be done to guarantee consumer safety before genetically modified food crops can be cultivated in the country. 
  • On Tue Mar 28, 2017, the Delhi high court ruled that MMBL should not have cancelled the contract in the first place and said it must be restored. It also said royalty payments agreed under the original contract must be reduced in accordance with a change in Indian government policy last year. “The parties shall remain bound by their respective obligations under the terms and conditions of the 2015 sub-licence agreements,” R.K. Gauba, the judge. Under the contract, Nuziveedu Seeds made genetically modified cotton seeds using Monsanto technology. 
He who has the gold makes the rules.

My View:
Not withstanding what the law says, why did Mr. Prabhakar Rao signed Monsanto agreement that included payment of "Trait Fees" and defaulted on signed agreement after BT technology was transferred for cotton seed production to his company? Having signed agreement, instead of defaulting, he should have negotiated or terminated the agreement as per provisions of the contract. Needless to say every contract will be one sided only. There is no such thing called balanced contract between two parties. 

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