Argentina To Fight Monsanto In Court, Suspend Soybean Talks
Dow Jones, USA, by Taos Turner
(http://money.cnn.com/services/tickerheadlines/for5/200507011624DOWJONESDJONLINE001149_FORTUNE5.htm)
1 Jul 2005
Argentina To Fight Monsanto In Court, Suspend Soybean Talks
BUENOS AIRES -(Dow Jones)- Argentina, a leading soybean exporter, has
decided to suspend talks with biotechnology giant Monsanto Co. (MON) over
the design of a payment system that would allow the company to collect
royalties on the pervasive use of its popular soybean seeds, Agriculture
Secretary Miguel Campos said Friday.
“Monsanto has shown that it continues to be a national embarrassment,”
Campos said angrily at a press conference. He met with journalists to
discuss lawsuits recently filed by Monsanto in Denmark over the shipment
of Argentine soybean products to the country.
Campos said the lawsuits have already harmed Argentina’s farmers and
exporters.
“This has already created a chain reaction in the entire grain market,”
Campos said. “Importers are already trying to have any costs associated
with this type of suit transferred to exporters. And we obviously know
that any additional cost will end up being paid for by farmers. We will
fight this and we’ll use the best lawyers we can get to defend ourselves.”
Tests carried out on the products showed that they were made with
Monsanto’s genetically modified Roundup Ready seeds, which are used to
plant 95% of Argentina’s soybeans.
Monsanto has a patent on Roundup Ready in Denmark and in most other E.U.
countries, but it has never been able to patent the seeds in Argentina.
This has made it hard for the company to get farmers here to pay for the
right to use the seeds.
Monsanto says it filed the lawsuits “to clarify its intellectual property
rights since some parties (in Argentina) have expressed doubt about those
rights.”
Those rights, and what they imply legally in Argentina, have been the
center of heated and often bitter public talks between Monsanto,
Argentine officials, farmers and soybean exporters.
At issue is how, and how much, Monsanto should be able collect for the
use of its seeds.
Monsanto says Argentines properly pay for certified seed only 17% of the
time, down from 50% in 1996, when Roundup Ready was introduced in the
local market.
Campos said Friday that around 30% of the seeds used are legally certified.
Monsanto said earlier this week that the suits are merely meant to
support its claim that it has a legal right to collect royalties on its
seeds. Moreover, the company says it wants to keep talking with officials
and farmers to reach a consensus solution to the problem.
“This (legal action) does not mean that we don’t want to continue
searching for a local solution and a local agreement,” said Monsanto
Argentina spokesman Federico Ovejero. “This is our commitment and we are
still willing to sit down and find an agreement.”
But Campos made it clear Friday that he will not resume talks unless
Monsanto backs down.
“The only kind of negotiation I’ll accept now is for Monsanto to withdraw
its lawsuits,” he said.
The lawsuits, Campos said, amount to extortion, endanger fair trade and
call into question Argentina’s ability to exercise its sovereign rights.
“How are we going to keep talking while we’ve got these suits?” he asked.
“I’m very angry.”
The Agriculture Secretariat has asked Argentina’s Foreign Ministry to
assist it in defending Argentina’s interests in any court where Monsanto
has or might file a lawsuit.
“The Argentine government will act as a third party in these lawsuits,”
Campos said. “We think we have a perfectly winnable, or at least
debatable, case,” he said.
To support his argument, Campos noted that Monsanto doesn’t have a patent
on Roundup Ready in Argentina and that Argentine law allows farmers to
repeatedly use Roundup Ready seeds they have properly paid for. In
addition, he said there is a legal difference between the patented seed
that Monsanto has sold here and the products that derive from it.
“It’s very difficult, but possible, for us to lose this case,” he said.
“If we do lose, then we’ll have to pay.”
However, it’s not clear exactly what Argentina would have to pay.
Monsanto has declined to discuss the details of its suit, and it is not
clear if the company is seeking specific financial damages or if it is
simply trying to strengthen its hand at the negotiating table.
Also, it’s unclear, even if Monsanto’s did win its lawsuits, what this
would mean.
Not long ago, Monsanto told exporters that it wanted to collect a $15 fee
for every metric ton of soybeans or soybean products shipped abroad.
Monsanto says such a fee is negotiable. But if the company is unable to
negotiate with farmers or the government, this could mean that such a fee
would be decided by a European court.
“This is a complicated problem,” said Jose Frogone, a grain trader and
analyst at the Buenos Aires-based brokerage Cortina Beruatto. “This is
the only country in the world where Monsanto can’t collect royalties. The
majority of producers believe that to continue receiving technology like
this, one has to pay for it. The problem is (figuring out) how much
should be paid and in what way. If a court allows (Monsanto) to collect
fees on soybean shipments, exporters here will be in a complicated situation.”
Argentina exported about 10 million tons of soybeans, soyoil and soymeal
to E.U. countries in 2004, according to Agriculture Secretariat data.
A rough calculation of the value of these exports, based on current
prices, would put the annual value of soy-based exports to the E.U. at
around $1.7 billion.
Around 20% of Argentina’s agricultural exports go to the E.U., and about
70% of these are soybeans or soybean products, Campos said.
An Argentine official familiar with the issue told Dow Jones Newswires
the E.U. is largely dependent on Argentina as a supplier and that this is
likely to limit its ability to turn away from Argentina in case of legal
problems.
Even so, the official said Monsanto’s lawsuits will likely hurt Argentine
farmers.
“The situation in Denmark, by going to trial, obviously creates concern
among European importers, but it is also true that Argentina today
provides 90% of the soybean meal – used to feed animals – that is
imported by the 25 countries of the E.U.,” the Argentine official said.
“What will probably happen is that the judge will rule in favor of the
company and set a value for compensation. That cost will be paid by the
exporters and they will pass it on to farmers. This will set a precedent
for futures shipments.”
Earlier this week Monsanto said it and other companies need to be
compensated for their innovations and that they will not sell new
products in Argentina if they are not paid properly.
Campos said Friday that this not a concern for now. He said Argentina is
capable of inventing new biotech products on its own.
Moreover, Campos also said, given the problems Monsanto has caused, he
would not be inclined to approve of any new products designed by the company.
“Argentina has been a strategic partner in the development of Roundup
Ready and this should be of interest to Monsanto,” Campos said. “Instead,
Monsanto looks at Argentina as if it were just an Excel spreadsheet,
forgetting about everything Argentina has done to advance biotechnology.
If there has been a real strategic ally of biotechnology, it has been
Argentina.”