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Government fixes uniform price for Bt cotton seeds

The government of India issued the Cotton Seed Price (Control) Order which fixed a uniform price for seeds of Bt cotton, across all cotton-growing states. Under the order, a 450-gm packet of Bt cotton seed would be capped at Rs 800 for the 2016-17 seasons, compared to the current range of Rs 830 to Rs 1,030.

But the real point of contention between seed companies and the major developer of Bt cotton technology, Mahyco Monsanto Biotech, an arm of the US seed giant Monsanto, is the royalty payment, technically known as ‘trait fees.’ This was slashed a steep 70 per cent from Rs 163 plus taxes per 450-gm packet (the standard unit for Bt seeds) to Rs 49.

Incidentally, Mahyco Monsanto Biotech, which dominates the market, has threatened to ‘re-evaluate’ its India operations. In particular, it has challenged the Centre's power to fix trait fees as being contrary to various laws - in 2009. Mahyco Monsanto Biotech has also argued that the order restricts farmers' access to the latest technology.

Things became complicated when state governments started intervening in seed pricing. The genesis of the issue was that Mahyco Monsanto Biotech was initially the sole licensed producer of Bt technology under its brand BOLLGARD I (BG I) and charged a trait fee of Rs 1,250. Inevitably, this resulted in a sharp jump in cotton seed prices from Rs 500 to Rs 1,800.

The government’s decision to step into this corporate battle is hard to explain. But it did so in December last year, with the Cotton Price Control Order, which empowered it to fix a uniform national price of cotton seeds including Bt cotton and trait fees.