Monsanto Co hopes to roll out a new bioengineered, worm-resistant soyabean seed for planting in Brazil next season, the firm's local president said, but a successful launch is tied to approval from top-buyer China. So-called Intacta RR2 Pro is the first genetically modified seed Monsanto has developed exclusively for South America and as it is designed to produce higher yields, it could help Brazil surpass the United States as the world's top soyabean producer, building on this year's record crop.
But not without a green light from China, which buys 70 percent of Brazilian soyabeans and could create a major headache for Brazilian farmers and exporters next season if it does not approve the technology. More than 40 countries have approved the technology, but China has not for unknown reasons.
The situation highlights how much Brazil's giant farm sector and overall economy has become hitched to the Asian giant, which is its top trading partner but can be a fickle customer. "We expect to have Chinese approval in the coming months so that when soyabean planting starts in October or November, farmers can plant Intacta," Monsanto President in Brazil Rodrigo Santos told Reuters in an interview late Thursday.
He said the Chinese had completed technical studies on the seed and Monsanto is expecting an official sign-off from the agriculture ministry. The recent regime change in China may have slowed the process, Santos said. Intacta seeds were planted in test fields across Brazil this year and if any of them make it into cargoes bound for China, it could give the country reason to reject an entire shipment.
The Chinese have already spooked the local soyabean market this season by cancelling orders because of slow delivery from Brazil's congested ports. Futures prices fell on the news. Brazil's soyabean output has swelled thanks to ample Chinese demand and to GMO technology Monsanto began selling in Brazil in 2005, known as Roundup Ready. It is present in 85 percent of Brazil's soya fields and is designed to withstand an herbicide known as glyphosate that kills invasive weeds.
Santos said 500 producers planted test fields with Intacta last year - under strict supervision to ensure the beans were kept off the market and did not end up in soya cargoes to China. Intacta showed much higher yields than Roundup Ready, he said. Monsanto hopes an in-country Intacta launch will help avoid messy legal disputes that have cropped up around Brazil due to confusion over when Monsanto's patent in Roundup Ready expires.
Farmers say Roundup Ready's patent expired in 2010 in Brazil but Monsanto argues it should be able to charge royalties on the technology through 2014, when the US patent ends. Monsanto has invested $1 billion in Brazil in the past 10 years, where it focuses on technology for soyabeans, corn and cotton. It may also launch sugar cane biotechnology in Brazil, the world's largest sugar producer. The country is starting to ban the practice of burning cane fields, its traditional pest-control measure.
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