JOIN USThe latest fallout of the Central Government’s Gazette notification, that came out in May 2016, reasserting its intent to fix the price of Bt cotton, is the split in the country’s largest association of seed producers, the National Seed Association of India (NSAI).
This notification does not stop with just putting an upper limit on the farmer price of the Bt cotton seed, but goes on to specify the terms for licensing the technology including limits on the royalty (trait fee) chargeable. It is widely believed that the present order, whose implementation has been temporarily suspended purportedly for getting views from stakeholders, was promulgated at the prodding by the current leadership of the NSAI.
Running fued
It is notable that most of the key office bearers of NSAI represent major seed companies, that are licensees of the BG II Bt cotton technology developed by Monsanto and licensed through Monsanto-Mahyco Biotech (MMB). For the last several years, there has been a running feud on the question of royalty payments between some of these licensees and the licensor and the matter is in courts. It is obvious that if the government order is implemented, the position of such licensees will be significantly strengthened and all of them will stand to gain financially at the expense of the licensor.
The NSAI was formed several years ago through the amalgamation of a few, then-existing seed producer’s associations in the country. Though several reasons were put forth by industry leaders, who championed such a merger, it was quite apparent to any discerning observer that irreconcilable differences between the members and the diversity of their interests would lead to factions within the NSAI.
The most apparent division was between those member companies, who were investing significantly in the development of modern agricultural technologies, including GM crops, and those who did not have the wherewithal or the inclination to take the risks associated with such research and development, not to mention the regulatory uncertainty and challenges.
While the former set was keen on recouping their investments, including the costs of failures and needless delays, the latter set of companies were more keen on getting access to the technology as cheaply as possible. It is ironic that it was some of the largest cotton seed companies, which could actually afford to invest in technology development or its licensing were in the forefront of the fight to invalidate the licensing contracts that they had willingly signed.
The licensor MMB too, did its bit to contribute to this standoff. When different state governments, starting with erstwhile Andhra Pradesh started bringing in legislation that led to progressively reducing cap on the minimum retail price (MRP) of Bt cotton seed, the licensor did not show any willingness to renegotiate the trait fee so that the burden of diminishing margins is fairly shared.
Anti market policies
Interventions by the government in fixing seed prices go against the stated policy of promoting free and fair market mechanisms and will be a disincentive for research and innovation in this sector. It is convenient to argue that such a price control is necessitated by the unaffordable prices for the Bt cotton seed because of a ‘monopoly’ on the technology. Yes, it is true that the BG II technology enjoys a virtual monopoly in the Indian cotton seed market. However, blaming the purveyor of the technology without examining the real reason for this situation would actually detract from finding the solution.
I would venture to suggest that the present situation, a monopoly for the BG II Bt cotton technology, has been largely created by a regulatory system that has lend itself to be bulldozed by activists determined to stall the introduction of competing technologies in the Indian market.
Regulatory hurdles
After the introduction of the first two versions of Bt cotton, strident activism including legal interventions has resulted in the slow-peddling of the regulatory process and the imposition of onerous conditions; all of which have significantly increased the cost and uncertainty. The field testing of the GM technologies have virtually come to a halt! The challenges in getting the regulatory approval is the biggest entry barrier today in our country to the introduction of new GM technologies. Several institutions that have developed such technologies, both in the public and private sectors, are stuck at different stages in the regulatory maze, or are forced to put them in the back-burner. On paper, our country has a fairly good regulatory system — however, it can be counterproductive if it is allowed to be swayed by political whims and misleading propaganda.
We have to push the pedal on the regulatory process to make the much needed technology infusion into Indian agriculture more predictable and at a reasonable cost. Promoting fair competition and not arbitrary price fixation is the way to address the seed affordability issue without discouraging the much needed research and innovation in the Indian agricultural sector.
Bad plight
Indian agriculture today, is beset with serious problems of low productivity and declining profitability. The gains in total food production is well below the rate of increasing demand. The volatility in food prices and rising imports, especially of oil and pulses are a sure calls for urgent action to remedy the situation. Bt cotton, in recent years, has demonstrated how modern agricultural technologies can increase productivity and farmer incomes. The present government has pledged to double farmer incomes by the end of this decade.
It may not be possible to redeem this pledge if technological options are disregarded. Notwithstanding the current churning within the seed industry, the governments, both at the Centre and the states, should focus on removing the needless hurdles to the introduction of modern technologies in Indian agriculture. The farmers of this country are no fools, they are eminently capable of assessing the worth of any technical product in their fields. Rather than artificially limiting their choices, we should allow fair and free market practices that ensure reasonable returns for investments in technology development.
(The author is Founder and former Managing Director of Metahelix Life Sciences)