MONSANTO INDIA - SOWING SEEDS OF DISCONTENT AND DOUBT

By Ruma Dubey

Monsanto is having a tough time. Or as many would say, it is reaping today what it had sowed. The very same seeds which it had sold to the farmers have come to haunt the company.

Recently the stock was beaten down to pulp, hitting a new 52-week low after the Competition Commission of India (CCI) ordered an investigation into its JV, suspecting the company had abused its dominant position as a supplier of genetically modified (GM) cotton seeds. The CCI had also asked the director general to investigate the role of executives in charge of the business if any wrongdoing is found. To add insult to injury, the Indian Agriculture Ministry imposed a 70% cut in the royalty it pays to Monsanto and its JV.

Local farmers and some of their associations, including one affiliated to PM Narendra Modi's ruling party, have complained that Monsanto overprices its products using its position as supplier of GM seeds used in more than 90% of the country's cotton cultivation.

This JV - Mahyco Monsanto Biotech (India)(MMB), is with Mahyco. The JV licenses a gene that produces its own pesticide to a number of local seed companies in lieu of royalties and an upfront payment. MMB also markets the seeds directly, though the local licensees together command 90% of the market.

Controversy surrounds this seed company, which literally monopolises India’s cotton seeds. It is blamed for making super profits, by selling seeds at high costs and earning a bounty through royalties as farmers get caught in the debt trap. The worst part- the seeds once sown cannot be reused; the farmers need to once again buy new ones and given the Quixotic moods of the weather nowadays this has also become a major bone of contention. Incidentally, the highest number of farmer suicide happens in the same belt where Monsanto enjoys a monopoly and thus indirectly, it is being blamed for the plight of the farmers. The company is blamed for genetic engineering to control seed and the food system through patents and intellectual property rights.

The parent company has been facing flak world over, even in its own home country – USA for monopolizing and overpricing. The farmers in Brazil have sued Monsanto for $2.2 billion for unfair collection of royalty. The increasing protest against holding any field trials for genetically modified (GM) crops is only growing and this is a huge uncertainty for the company. 

But more than all this, there is a bigger worry. Genetically Modified food crops or GM crops. There is now growing fear the Monsanto will start selling GM crops in India, which till date was not allowed. There was the Bt Brinjal controversy, a GM crop during the UPA regime, which banned it all. The BJP has allowed field trials of GM food crops but state Govt’s can block trials.

Environmentalists, farmers, government – all are skeptic when it comes to GM food crops. Yes, it will mean bountiful harvests and could potentially end hunger in India but the fear is the effect these GM crops will have on health. There is also the fear of what harm it could cause to the environment and more importantly, it will only push farmers further into debt if they are forced to but these high priced GM food crops. Those supporting GM food crops say that all these fears are unfounded and baseless as the US Food and Drug Administration, World Health Organization and European Commission have concluded GMOs are safe to eat.

If it is safe then why is it that over 50% of the countries in the European Union (EU) have banned GM cultivation. China does use GM food crops but is not moving to increase the use to more food crops. Why go so far? In USA itself, there is a growing voice of discontent – many firms are working towards removing GM food from their products, this includes Ben & Jerry, General Mills- a subsidiary of Unilever which started selling its original flavor Cheerios without GM products. Post Holdings Inc. took the GMs out of Grape-Nuts.  Chipotle Mexican Grill is switching to non-GM corn tortillas.

It is very good that India has decided to go slow on GM food crops. If GM food crops are harmless why can’t we produce it ourselves? And seriously, we do not have a problem of shortage; what we have is a problem of plenty. India has one of the world's highest food grain reserves but what we do not have is a proper logistics infrastructure. Pictures of rotting grains, fruits and vegetables are still so vivid in all our minds. If one part of the country has a windfall harvest, the other part has malnutrition and drought. The problem is not of food grain production again, it is of lack of transport and cold storage. Erratic electric supply also adds on to the woes.

So agreeing to Monsanto because we do not produce enough to feed our hungry is all humbug. GM foods is not the alternative. We need to modernize and innovate our ways of cultivation and not succumb to an easy way out. Let’s take the path less trodden and show the rest of the world how to grow food crops…..without GM.

PS: Monsanto India, as a stock is well fancied because it is a typical MNC - good performanc, no debt and high parent shareholding. But it is purely on an ethical ground that you need to take a call - do you want to own a part of this company or not which overprices its seeds and takes undue advantage of its monopolistic position?