Feb. 20 (Bloomberg) -- Brazilian farmer groups are opposing a contract that Monsanto Co., the world’s biggest seed company, is offering farmers to end a dispute over royalty payments on its genetically modified soybean seeds.
Monsanto is trying to resolve uncertainty over its ability to collect fees on its new Intacta soybeans, which the St. Louis-based company is scheduled to start selling in Brazil during the next growing season.
The contract would waive royalties on Roundup Ready soy, an older technology, this year and next. In return, farmers would forgo claims in a patent dispute and pay royalties on seeds not yet on the market. The future payments are opposed by the Brazilian National Agriculture Federation, a group of farming associations also known as CNA.
"We reject the individual contracts offered by Monsanto," Katia Abreu, the head of CNA, said today in an e-mailed statement. "We expect Monsanto to take back the contracts that are already signed and present a new document."
"We are working to understand CNA’s concerns," Kelli Powers, a Monsanto spokeswoman, said today by phone.
The Parana State Federation of Agriculture, known as FAEP, also said it opposed the agreement. Glauber Silveira, head of Brazil’s soybean growers association, said farmers shouldn’t sign and should continue pursuing royalty claims in court.
"We believe producers are being tricked into signing a contract that will get them trapped to Monsanto for every new technology," Silveira said today in a phone interview from Cuiaba, in the state of Mato Grosso.
Growers who sign the contract won’t pay a technology fee in the current and subsequent growing seasons on soybean seeds that are genetically modified to tolerate glyphosate herbicide, Monsanto said in a statement last month. The herbicide is marketed by Monsanto as Roundup. Farmers who sign will waive the right to try recouping royalties previously paid.
The agreement would resolve claims by growers that the patent on the original Roundup Ready soybeans expired in 2010, ending their obligation to pay Monsanto royalties on the seeds. Monsanto argues that Brazilian law extends the patent to late 2014.
The company’s Intacta seeds are engineered to produce an insecticide while also tolerating Roundup.
Monsanto suspended royalty collections in Brazil for two months last year after a court ordered a halt in Mato Grosso. The company as told investors not to count on any revenue from Brazilian soybeans this year. A forecast made Jan. 8 for profit in the current fiscal year excluded an estimated 20 cents to 25 cents a share of earnings from soybean sales in the country.
Monsanto fell 2.6 percent to $99.24 at 11:32 a.m. in New York. The shares have gained 4.8 percent this year.
--Editors: Simon Casey, Steven Frank
To contact the reporters on this story: Jack Kaskey in Houston at email@example.com; Mario Sergio Lima in Brasilia Newsroom at firstname.lastname@example.org