States’ orders supersede bilateral pacts: cottonseed firms

There seems to be no end to the row over the cottonseed pricing. Even as Mahyco-Monsanto Biotech Ltd (MMBL) moves the court against top cottonseed firms over refusal to pay the trait value, the seed industry association has said that the firms are bound by the orders passed by the State governments. The trait value is the royalty fee collected by Mahyco-Monsanto, the joint venture between Indian seed major Mahyco and multinational agri-biotech company Monsanto, for providing the technology that gives cotton hybrids the internal strength to kill bollworms, the single largest reason for yield losses.

It is seeking a refund of over ₹1,300 crore paid to the firm over and above the trait value mandated by the governments. The National Seed Association of India (NSAI) has sought the intervention of the Centre to resolve the stand-off between the MMBL and the top cottonseed companies that control the market in the country, with a 65 per cent share.

Seed shortages feared

“If the disputes remain unresolved, there can be a disruption in cottonseed production, leading to severe shortages of quality seeds and difficulties to the farmers,” it warned.

Reacting sharply to the MMBL decision, the National Seed Association of India (NSAI) had contended that MMBL’s argument that bilateral agreements would prevail over the statutory orders (that prescribes seed prices) was not tenable.

“The State governments have fixed the trait value reasonably and they are not bound to consider the private agreements. Once the pricing of the product is based on a statute, the bilateral agreements get superseded,” a senior NSAI spokesperson contended.

MMBL is a joint venture between the Maharashtra seed firm Mahyco and global agri biotechnology firm Monsanto. The latter licenses the Bollgard technology to the joint venture that, in turn, sub-licenses it to the Indian seed firms after signing bilateral agreements with each one of them.

Refund sought

The NSAI argued that the seed firms might have paid over ₹1,300 crore to MMBL over and above the government stipulated trait value and wanted the joint venture to refund the same with interest after adjusting the trait value payable for the current financial year.

The venture moved the court seeking recourse against the eight firms that reportedly refused to pay dues of ₹400 crore towards the trait value. This part of the seed price has been a bone of contention between the States, seed firms and MMBL.

Backed by a recent Maharashtra High Court order upholding the State government decision to fix royalty fee at ₹20, a group of seed firms wrote to MMBL to reduce the fee.

While the technology provider charges a fee of about ₹180 (including service tax), Maharashtra fixed it at ₹20 (five per cent of the cost of production) while the Andhra Pradesh and Telangana Governments put it ₹90.