The Hindu Business Line : Bt cottonseed sales continue at lower prices

Despite phenomenal success of genetically modified cottonseed in the country over last three years, life sciences major Monsanto and its licensees have got into a piquant situation. The corporate had to ride on the horns of a major dilemma over sale and pricing of its patented Bt. cottonseed.

After the country's highest court turned down the company's appeal against the order issued by Monopolies and Restrictive Trade Practices Commission in respect of what was seen as exorbitant technology fees charged for sale of Bt cottonseed, many State Governments have ganged up against the seed companies to force a reduction in price.

Govt Interference

Such solidarity shown by State Governments is rather unusual and demonstrates that, where there is political will and conviction, success can be achieved. It is, of course, an entirely different issue, whether there should be Governmental interference in a free trade environment. But, if this incident sends a strong signal to the private sector, not to take the markets for granted or exploit vulnerable consumers, and that Government would not be mute witness to such events, it is good. It would be of great service to the society.

Pricing Decision

The seed major has been under pressure to take a decision one way or the other. Whether to succumb and sell the seed at lower prices or just keep away from the market. Either way, a painful decision.

The easiest option would be to stay away from the market this season and allow demand pressure from farmers to build and gather momentum. But that would also mean loss of sales this season. Although probable, there is no guarantee that market conditions in the next season would be different.

If it is decided to sell at reduced, indeed State-dictated, prices, it will provide evidence that seed companies were fleecing customers even when they could have reduced the rates voluntarily. Price reduction at this juncture would show the corporate in poor light as if hungry for business at any cost.

Lower Prices

Of course, tactically, the company may adopt a pro-farmer stance and assert that it has decided to sell at lower prices in order to support cotton growers here. But such assertion will not help. It will be interpreted as the company's deliberate design to overcharge farmers until stopped by law.

The latest from the market is that Bt cottonseed sales are taking place at reduced prices. Many licensees have taken a decision to market the seed at a lower rate in deference to the order. Meanwhile, the southwest monsoon season has started. Cotton planting across the country has commenced in some regions. Indications are that cotton output this season too would be a bumper one and may surpass 250 lakh bales.

More Stories on : Cotton | Bio-tech & Genetics

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