Need for Government Intervention in Regulating Seed Sale Price and Trait Fee: A Case of Bt Cotton

Abstract

Seeds Bill 2004 is not yet enacted (into an Act), even ten years after its first introduction in the parliament. This study was aimed at finding the opinion of various stakeholders on three most contentious issues which have stalled the bill, viz., regulation of sale price of seed, regulation of trait/royalty fee and granting state governments the powers to regulate seed prices. The study was conducted in Andhra Pradesh (AP) and Bihar states covering 240 farmers and 30 respondents each from researchers, Agriculture Department Officials (ADOs), Civil Society Organizations (CSOs), Private Seed Companies (PSCs) and seed dealers with a total sample size of 390. The farmers, CSOs, ADOs, researchers and seed dealers strongly demanded for regulation of retail price and trait/royalty fee over seeds by state governments, especially in case of hybrids and proprietary technologies such as Bt cotton. PSCs held a view that only market forces (demand and supply of seeds) and farmers’ preferences should determine the sale price of seed. However, market forces did not operate in case of Bt cotton seed market because of monopoly market conditions. All the Bt cotton cultivars approved for commercial cultivation were hybrids developed by PSCs. Out of all the Bt. cotton cultivars in market, 88% of them have been developed using two genes patented by Mahyco-Monsanto Biotech (MMB). PSCs charged royalty fee as high as 67 per cent of retail price of Bt cotton seeds until government intervention. The monopoly of MMB was attributed to economic and legal barriers for competitors and deliberate action of misinformation on legal patent rights. Farmers had no choice of non-Bt cotton hybrids or traditional varieties. Based on the study, it is suggested that regulation of retail price and trait/royalty fee of seed is scientific under monopoly market conditions for proprietary technologies involving royalty component.