Seed industry seeks refund of Rs 1,300 cr royalty from MMBL

The National Seed Association of India (NSAI) has sought refund of over Rs 1,300 crore paid as royalty to Mahyco Monsanto Biotech (MMBL) in the last five years for using the Bollgard technology in cotton hybrids.
The Hyderabad-based body said the dispute between MMBL and seed companies over payment of royalty should be resolved at the earliest to ensure smooth supply of cotton seeds to farmers.
MMBL, a joint venture arm of Monsanto India, has moved court against eight seed companies for refusing to pay over Rs 400-crore 'trait fee' (royalty) for using its technology in cotton hybrids and for breach of the contract. MMBL has sub-licensed the technology to 49 domestic seed firms.

"The seed companies are estimated to have paid more than Rs 1,300 crore to MMBL over and above the government stipulated trait value and they seek refund of the same with interest after adjusting the trait value payable for the current year," NSAI said in a statement today.
After cotton seeds were taken out of the ambit of the Essential Commodities Act, the state governments promulgated legislations to regulate prices of BT cotton seeds. The seed industry accepted the price orders passed by the respective state governments in the interest of farmers, it said.
The Association further said that the state governments insist that they have fixed the royalty reasonably and seed companies are not bound to consider the private agreements.

"Under the circumstances, it is important for MMBL and the seed companies to reconcile to the statutory orders and move forward as both are working for the welfare of the farmers," it said.

According to NSAI, "It is commonly accepted principle that once the pricing of the product is based on a statute, the bilateral agreements gets superseded."
The arguments of MMBL that the bilateral agreements prevail on the statutory orders is neither practical nor legal since the licensee seed companies were not allowed to collect the trait values as stipulated by MMBL in the agreements due to the orders passed by state governments, it said.

"If the disputes remain unresolved, there can be disruption of cotton seed production leading to severe shortages of quality seeds and difficulties to the farmers," the Association warned.