MONSANTO IS THE EYE OF THE STORM
By Ruma Dubey
On 1st Dec’17, newspaper Mint had published a story that Competition Commission of India (CCI) had imposed a fine of Rs.2 crore on Monsanto. The stock exchanges had asked for a clarification and the company had replied, saying, “ the above published news has no connection with Monsanto India” and went on to say that it had no information which is otherwise required to be disclosed to the stock exchanges.
All hunky dory after that and the stock price of Monsanto climbed back into the green.
Now, yesterday, Reuters reported that Monsanto has been fined Rs.1.50 crore or $233,000 for being too slow in replying to questions in a competition probe into the U.S. seeds company.
There has been a probe into the company by CCI since last year, trying to investigate whether the company was exploiting its monopolistic status as a supplier of genetically modified (GM) cotton seeds. CCI is yet to complete this probe but the fine was imposed because the company takes its own sweet time to revert to CCI with answers to its queries.
CCI has stated that Monsanto replied back in August'17 only after eight reminders were issued between April 2016 and May’17.
On the other side, Monsanto has challenged the very role of CCI and its probe and it too has filed two cases with the Delhi High Court. And its main battle is with Rao, the owner of Nuziveedu Seeds, one of the complainants at CCI.
Prabhakara Rao. This name would be uttered like a curse in the offices of Monsanto, which till now was having a jolly good run on the Indian fields. Commanding a monopolistic 90% market share, this 59-year old individual has literally cut the ground under Monsanto’s feet.
Rao is not small person – he is the owner India's largest seed company Nuziveedu Seeds (NSL) and the President of India's largest domestic seed industry body, National Seed Association of India (NSAI).
It all began in 2015 when Rao, who was also supplying seeds across India through his contract with Monsanto; he demanded a 10% price cut in royalty paid to Monsanto and naturally, Monsanto refused. He along with eight more companies, accounting for 53% of India’s cotton market, stopped paying the royalty or the trait fees. This led to Monsanto cancelling their contracts and the demanded that these companies clear-up the payments, billed at around Rs.500 crore. When no payment came forth, Monsanto filed a case against these companies in Mumbai and Delhi high courts.
Rao, who is stated to have the full support of the RSS, surely got things moving. Around the same time when all this was unfolding, the Govt announced a cut in price of genetically modified (GM) cotton seeds - maximum sale price of genetically modified Bollgard II cotton seeds was reduced to Rs.800 (per 450gm packet) from Rs.830-1,000 earlier. It also announced a deep 74% cut in the trait fees - from Rs.163 per packet to Rs.43 (excluding taxes). This price was cut despite Monsanto already warning the Govt that it would pack its bags and leave if a price cut was even considered.
Monsanto and all the other MNCs are crying fowl that this is a breach of Intellectual Property Rights (IPR) as this was an arbitrary decision; no method or processes were discussed on how this price cut was arrived at. Those supporting are naturally happy was Monsanto has been supplying technology which is fast becoming redundant and offering no protection against bollworms. Of course Monsanto will cry loud as it collected a hefty Rs.4,479 crore in royalty between 2005-06 and 2014-15. And despite the price cut, it is yet to leave India!
This is going to be a long drawn battle and Monsanto is accusing Rao of breach of trust, defaulting on payments and abusing IPRs. But because this affects so many farms across India, a fast resolution is a must. Hope Monsanto begins with at least replying. Why this shirking if it has nothing to hide?