The Hindu Business Line : Bt cottonseed: AP case against Monsanto undesirable

THE report that the Government of Andhra Pradesh has decided to file a case against Monsanto Biotech Ltd for charging abnormally high price for the genetically modified (GM) Bt. cottonseed should raise serious concern not only within the seed industry, but also among other stakeholders.

The State Government seems to believe that the corporate should not be charging the high rate it currently does for the GM seed it sells to farmers. The monopolies and restrictive trade practices law is likely to be invoked against the company.

It is of course for the legal experts to debate whether Monsanto operates as a monopolist in the marketplace and charges monopoly fees or whether charging a so-called `abnormally high price' amounts to restrictive trade practice.

India's seed market is a free market. There are no price restrictions imposed by the Government. Seed companies are free to sell at a price of their choice. In the same vein, farmers have freedom too. Agriculture is the country's largest private sector enterprise.

Cotton growers are free to purchase any variety of seed of their choice. Indeed, low priced seeds are often spurious and fail to perform. So long as the seed is genuine, the seed supplier does no wrong. Regardless of price, growers are free not to plant Monsanto's Bt. cottonseed, as there is no compulsion.

Until four years ago, the country used non-GM hybrid seeds to grow cotton. Now, farmers have a choice. If they find that a particular variety of seed delivers more benefit despite high cost, they would go in for it. It is perhaps for this reason that GM-cottonseeds have become popular over the last three seasons.

The State Government has not commented on the performance of the seed itself or the technology. It leads to the surmise that the attempt is to arm-twist the seed company into reducing the seed price so as to project a pro-farmerimage.

This is a dangerous trend. It would damage the very foundation of free market and informed choice that farmer as a consumer of seed can make. It is no part of Government's sovereign function to interfere in a legal free market and force price reduction.

It is no surprise that industry insiders are upset with the stand of the Andhra Pradesh Government and see it as an undesirable development that can take an ugly turn in future. "Who is the Government to decide what is the right price?" is the common refrain across the seed industry.

There is also belief the industry is being made into a `whipping boy' for political gains. Rivalry in the marketplace is also not ruled out, according to an industry representative who sought anonymity.

No doubt, the Government must protect the interest of resource-poor farmers. It is one of the reasons why minimum support price is announced every season, in addition to a few other support measures.

If the State Government was serious about protecting the interests of cotton farmers, there are ways to go about it. For instance, it can negotiate with the seed supplier for bulk purchase and bargain for bulk discount. It is then the Government's responsibility to ensure delivery of seed to farmers.

Seed price is, of course, only one aspect of agriculture. The Government must find end-to-end solutions and act to ensure expansion of irrigated areas, strengthen delivery of inputs, build rural infrastructure, strengthen marketing systems and deliver market information to growers.