Date:15/04/2006 URL: http://www.thehindubusinessline.com/2006/04/15/stories/2006041502261000.htm

Back Monsanto-Mahyco enjoyed monopoly, says probe panel

Our Bureau

Prices, conditions of seeds delivery depend on the trait fee

`The trait fee, being exorbitant, plays an important role for the ultimate price paid by the farmers.'

Hyderabad , April 14

In what is perceived to be a shot in the arm for those challenging the monopoly of Monsanto on its Bt cotton technology, a Government investigation panel has observed that Mahyco-Monsanto Biotech, India (MMB) enjoyed monopoly over the technology and that its moves amounted to restrictive trade practices.

The report suggested to the MRTPC that it might consider instituting an enquiry into the monopolistic and restrictive trade practice adopted by the respondent. This would help determine the reasonableness of the trait value to safeguard the interest of the farmers.

Conditions apply

"The prices and conditions of delivery of seeds depend on the trait fee being charged by it," a report by the Director-General of Investigation and Registration pointed out.

(Monsanto has, however, defended its pricing practices and said the complaints against it are without merit.)

CAP SOUGHT

The investigation was initiated following a complaint made by Mr Kolli Nageswara Rao, Vice-President of All-India Kisan Sabha, to the MRTPC (Monopolies and Restrictive Trade Practices Commission), challenging the monopoly of the company and seeking a cap of Rs 250 on trait value.

After getting responses from the respondent and the complainant, the office of D-G pointed out that the reason for charging such an exorbitant (Rs 1,250 on a 450-gm packet) trait fee appeared to be the monopolistic position enjoyed by the respondent in respect of the Bt cotton seeds. (The company reportedly reduced the trait value to Rs 900 for 2006.)

No alternative

Citing research and development efforts by other players, the report observed that the respondent was in a position to charge for this technology arbitrarily and unreasonably, as those bodies were not in a position to enter the market with an alternative.

The cost of production might vary for the seed companies for producing seeds. But the trait value charged by the MMB was uniform across the country.

`No justification'

"The trait fee of Rs 1,250 a packet of Bt cotton seeds, being exorbitant, plays an important role for the ultimate price to be paid by the farmers," it said.

It pointed out that there was no justification for charging Rs 1,250, while the seed companies spent Rs 300 to Rs 500 on each packet.

"The trait fee being charged by the respondent not only imposes unjustified costs on the farmers by way of manipulation of prices but is also unreasonable in view of lack of competition," the report said.