Monsanto May Be Forced To Repay Brazilian GM Soybean Royalties Worth Billions Of Dollars

from the that's-gonna-hurt dept

When the history of modern Brazil comes to be written, a special place will be reserved for the soybean, the powerful farmers that grow it -- and the deforestation it is driving. And at the center of that tale will be Monsanto, with its patented "Roundup Ready" crop, so called because it has been genetically modified to withstand the herbicide glyphosate, marketed as Roundup.

A recent news story in Nature sketches the twists and turns of that fascinating tale. For example, how the growing of GM soybeans was only legalized in 2005 when it turned out that three-quarters of the crops growing in the southern state of Rio Grande do Sul were already using Monsanto's GM soybeans. Apparently, these had been smuggled in from Argentina. Monsanto claims that many soybeans still are, and uses this as a justification to impose an unusual levy on Brazilian soybean farmers: Since the legalization, Monsanto has charged Brazilian farmers 2% of their sales of Roundup Ready soya beans, which now account for an estimated 85% of the nation’s soya-bean crop. The company also tests Brazilian soya beans that are sold as non-GM -- if they turn out to be Roundup Ready, the company charges the farmers responsible for the crops some 3% of their sales. One way soybeans sold as non-GM can turn out to be the Roundup Ready variety is thanks to wind-borne GM pollen landing on non-GM crops. And yet instead of being penalized for contaminating non-GM crops, Monsanto gets paid for it -- a neat trick made possible by a crazy patent system in which even those who commit infringement unintentionally are still held liable.

Brazil is now the world's second-largest producer of GM crops (after the US), and most of them are soybeans, so this levy resulted in huge additional profits for the company down the years -- and much resentment from the farmers. This led to a legal challenge being mounted in 2009 by a consortium of farming syndicates in the Rio Grande do Sul state. Earlier this year, this was successful, not least because the key patents had expired: Giovanni Conti, a judge in Rio Grande do Sul, decided that Monsanto's levy was illegal, noting that the patents relating to Roundup Ready soya beans have already expired in Brazil. He ordered Monsanto to stop collecting royalties, and return those collected since 2004 -- or pay back a minimum of US$2 billion. Monsanto naturally appealed, and also lodged a further legal action with the Brazilian Supreme Court. But instead of overturning the lower court's judgment, as Monsanto requested, the Supreme Court has now said that whatever the result of the appeal, it should be applied to the whole country. If the appeal court rules against Monsanto, it would represent a disastrously expensive conclusion to Monsanto's Brazilian soybean adventure.

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Filed Under: brazil, gmo, soybean

Companies: monsanto