UPDATE 2-Monsanto touts Brazil royalty deal, some farmers resist

Wed Jan 23, 2013 5:05pm EST

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By Caroline Stauffer

Jan 23 (Reuters) - Monsanto Co and Brazil's National Confederation of Agriculture (CNA) said on Wednesday they had reached an agreement to end a dispute over royalty payments on seed technology in one of the company's largest growth markets.

But two producing groups in top soybean growing state Mato Grosso, where farmers are challenging Monsanto in local courts, said they did not accept the agreement.

As the world increasingly turns to South America for grains to feed a growing population, producers are becoming more reliant on genetically modified seeds and biotechnology, leading to conflicts over who reaps the ultimate profit.

Producers in 10 Brazilian states, but not Mato Grosso, accepted Monsanto's proposal in exchange for the suspension of royalties charged on Roundup Ready 1 soybeans starting with the current 2012/13 harvest, according to the CNA.

Farmers accepting St. Louis-based Monsanto's agreement account for 70 percent of producers in Brazil, the Confederation said in a statement.

"Those farmers will be released from payment of technology royalty fees for first-generation Roundup Ready soybeans for this and next season, while waiving all potential legal claims for payments previously made for this first-generation technology," Monsanto said in a separate statement.

In return, the farmers will secure licenses to purchase new soybean technology, known as Intacta RR2 Pro. Unlike Roundup Ready 1 technology, Intacta RR2 Pro offers protection against caterpillars that attack soybeans in Brazil.

Monsanto sells only a handful of products in Brazil, one of only a few countries with room to expand agricultural output, due in part to the long wait periods needed to obtain licenses.

Roundup Ready 1 soybeans are widely planted in Brazil, while second generation Intacta seeds are currently in a test phase.

The new seeds have not been approved by China, which purchases around 70 percent of Brazil's soybeans, though other importers have given them the green light.

Mato Grosso's state soy association Aprosoja and its powerful farming and ranching federation Famato issued a joint statement on Wednesday saying they rejected the agreement and will continue to pursue legal action against Monsanto.

Producers in Mato Grosso are still paying royalties on Roundup Ready technology, but the funds will not be released to Monsanto while the judicial process is ongoing.

Monsanto could eventually face losses if it is made to return royalties it charged farmers after 2010, when the groups say Monsanto's patent on Roundup Ready 1 expired in Brazil.

Monsanto says the patent expires in 2014.

Biotechnology has helped boost volumes in Brazil's corn and soybean crops in recent years. Genetically modified seeds now account for almost 90 percent of all soybeans planted in the country as it makes a bid to surpass the United States as the world's top grower of the oilseed.

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