Brazil is set to break a global moratorium on genetically-modified "terminator" seeds, which are said to threaten the livelihoods of millions of small farmers around the world.

The sterile or "suicide" seeds are produced by means of genetic use restriction technology, which makes crops die off after one harvest without producing offspring. As a result, farmers have to buy new seeds for each planting, which reduces their self-sufficiency and makes them dependent on major seed and chemical companies.

Environmentalists fear that any such move by Brazil – one of the biggest agricultural producers on the planet – could produce a domino effect that would result in the worldwide adoption of the controversial technology.

Major seed and chemical companies, which together own more than 60% of the global seed market, all have patents on terminator seed technologies. However, in the 1990s they agreed not to employ the technique after a global outcry by small farmers, indigenous groups and civil society groups.

In 2000, 193 countries signed up to the UN Convention on Biological Diversity, which recommended a de facto moratorium on this technology.

The moratorium is under growing pressure in Brazil, where powerful landowning groups have been pushing Congress to allow the technology to be used for the controlled propogation of certain plants used for medicines and eucalyptus trees, which provide pulp for paper mills.

The landowning groups want to plant large areas with fast growing GM trees and other non-food GM crops that could theoretically spread seeds over wide areas. The technology, they argue, would be a safeguard, ensuring that no second generation pollution of GM traits takes place. They insist that terminator seeds would only be used for non-food crops.

Their efforts to force a bill to this effect through Congress, ongoing since 2007, have been slowed due to resistance from environmentalists.

The proposed measure has been approved by the legislature's agricultural commission, rejected by the environmental commission, and now sits in the justice and citizenship commission. It is likely to go to a full Congressional vote, where it could be passed as early as next Tuesday, or soon after the Christmas recess.

Environment groups say there would be global consequences. "Brazil is the frontline. If the agro-industry breaks the moratorium here, they'll break it everywhere," said Maria José Guazzelli, of Centro Ecológico, which represents a coalition of Brazilian NGOs.

This week they presented a protest letter signed by 34,000 people to thwart the latest effort to move the proposed legislation forward. "If this bill goes through, it would be a disaster. Farmers would no longer be able to produce their own seeds. That's the ultimate aim of the agro-industry," she said.

The international technology watchdog ETC, which was among the earliest proponents of a ban on terminator technology in the 1990s, fears this is part of a strategy to crack the international consensus.

"If the bill is passed, [we expect] the Brazilian government to take a series of steps that will orchestrate the collapse of the 193-country consensus moratorium when the UN Convention on Biological Diversity meets for its biennial conference in Korea in October 2014," said executive director Pat Mooney.

But Eduardo Sciarra, Social Democratic party leader in the Brazilian Congress, said the proposed measure did not threaten farmers because it was intended only to set controlled guidelines for the research and development of "bioreactor" plants for medicine.

"Gene use restriction technology has its benefits. This bill allows the use of this technology only where it is good for humanity," he said.

The technology was developed by the US Department of Agriculture and the world's largest seed and agrochemical firms. Syngenta, Bayer, BASF, Dow, Monsanto and DuPont together control more than 60% of the global commercial seed market and 76% of the agrochemical market. All are believed to hold patents on the technology, but none are thought to have developed the seeds for commercial use.

Massive protests in the 1990s by Indian, Latin American and south-east Asian peasant farmers, indigenous groups and their supporters put the companies on the back foot, and they were reluctantly forced to shelve the technology after the UN called for a de-facto moratorium in 2000.

Now, while denying that they intend to use terminator seeds, the companies argue that the urgent need to combat climate change makes it imperative to use the technology. In addition, they say that the technology could protect conventional and organic farmers by stopping GM plants spreading their genes to wild relatives – an increasing problem in the US, Argentina and other countries where GM crops are grown on a large scale.

A Monsanto spokesman in Brazil said the company was unaware of the developments and stood by a commitment made in 1999 not to pursue terminator technology. "I'm not aware of so-called terminator seeds having been developed by any organisation, and Monsanto stands firmly by our commitment and has no plans or research relating to this," said Tom Helscher.

On its website, however, the company's commitment only appears to relate to "food crops", which does not encompass the tree and medicinal products under consideration in Brazil.

• Additional research by Anna Kaiser

Background to a controversy

Ever since GM companies were found to be patenting "gene-use restriction" or "terminator" technologies in the 1990s, they have been accused of threatening biodiversity and seeking to make farmers dependent on big industry for their livelihoods.

In many developing countries, where up to 80% of farmers each year choose their best plants and save their own seed, terminator technology is a byword for all genetic modification, raising fears that sterile GM strains could contaminate wild plants and regular crops – with devastating consequences.

The GM companies, which claimed in the 1990s that they wanted to introduce the seeds only to stop farmers stealing their products, were forced to shelve the technology in the face of massive protests in India, Latin Amercia and south-east Asia.

In the face of growing international alarm, the 193 countries signed up to the UN Convention on Biological Diversity unanimously agreed in 2000 that there should be a de facto international moratorium. This was strengthened at the Conference of the Parties in 2006, under the presidency of Brazil.

Since then, the moratorium has held firm. But the GM companies have shifted their arguments, saying that gene-use restriction technologies now allow seeds to reproduce, but could "switch off" the GM traits. This, they argue, would reduce the possibility of the seeds spreading sterility. In addition, they say the technology could protect organic and conventional farmers from the spread of transgenes to wild relatives and weeds, which plagues GM farmers in the US and elsewhere.

The fear now is that the global moratorium could quickly unravel if Brazil, one of the most important agricultural countries in the world, overturns its national law to ban terminator technology. Other countries, pressed strongly by the powerful GM lobby, would probably follow, leading inevitably to more protests.