In an unprecedented move, agriculture minister Radha Mohan Singh has passed orders to control the price of cotton seed sales all over the country during the ensuing Kharif season commencing April, 2016. Considering that genetically modified [GM] Bt cotton account for 98% of total cotton seeds used in India, the decision is directed primarily at this segment.
The agriculture ministry feels that the price charged by seed companies is ‘exploitative’ besides varying from state to state; hence dire need to put a cap and make it ‘uniform’. It has also ordered a probe by the regulator Competition Commission of India [CCI] in to alleged ‘monopolistic’ practices by Mahyco Monsanto Biotech [India] Private Limited [MMBL] – a 50:50 joint venture between US biotech giant and Maharashtra Hybrid Seed Company [Mahyco].
The decision is seriously flawed. It is guided by a myopic interpretation of Monsanto being sole provider of technology incorporated in Bt cotton seed per se. Such an act cannot be construed as monopolistic especially when one considers that there are hundreds of companies selling the seed to farmers.
Bt [Bacillus thuringiensis] cotton is genetically tweaked to kill bollworms that ravage cotton crops. It offers the possibility of substantially enhancing return by saving on pesticide use on the one hand and increasing yield on the other. At the price paid for Bt cotton seed [including technology fee which is less than what Monsanto charges even in China], farmers get handsome returns.
Since, Bt cotton was introduced in India in 2002, its use has increased phenomenally with area under coverage leapfrogging from a mere 50,000 hectare to 11.6 million hectare [2014] covering major states such as Gujarat, Andhra Pradesh, Maharashtra etc. Its widespread adoption by millions of farmers would have been unthinkable if the price was exploitative as claimed by Mr Singh.
In short, what we have on the ground is a market driven system wherein farmers on their own volition have adopted Bt cotton technology and benefited hugely by increasing their income manifold besides boosting exports [fibre produced from using Bt cotton is of super fine quality meeting international standards] and earning valuable foreign exchange for the country.
In this backdrop, there was no justification for various state governments to put a cap on the price in the first place. This led to several cases filed in High Courts of respective states challenging the validity of such interventions. And now, the centre has compounded the woes by coming out with its own order. This order has been challenged by MMBL in Delhi High Court [DHC].
The actions of the political establishment – both at the state and central level – do not necessarily reflect the position of farmers on the ground level. If, they had found the cotton seed price to be exorbitant, this would have got reflected in reduced demand for it as no farmer would go for it only to incur loss. It is evident that politicians are needlessly interfering with free market principles.
By bringing in controls when these are untenable and un-called for, they are neither doing good to suppliers of seed nor to farmers. From supplier’s perspective, let us be clear that Monsanto is fundamentally a research and development [R&D] based company – its spending on R&D over US$ 1.5 billion annually exceeds the research budget of Indian Council of Agriculture Research [ICAR], latter covering all its research institutions all over India.
Therefore, it needs a reasonable opportunity to recuperate the huge investment made in discovery, development and commercialization of new technology [as also on ‘stewardship’ i.e. making farmers aware and ensuring proper and scientific use] by selling it in various jurisdictions. No doubt while, fixing the price it has to keep in mind the paying capacity of farmers [it would be ignoring this fundamental at its own peril] but, any external diktat by the state in this regard is completely untenable.
Any such intervention to cap the price/technology fee will not only violate market principles [denting Modi’s pro-reform credentials], it will also act as a strong dis-incentive to the company from investing in research and stewardship. It will also discourage other companies – be these MNCs or Indian companies – from investing in R&D and come up with new solutions to meet farmer’s growing needs.
If, the government still feels that farmers are being taken for a ride [just because, there is only one technology supplier], then the best way to address this concern is to put in place a regulatory environment in which R&D based companies and research institutions get an opportunity to undertake research, conduct trials and come up with alternative solutions. Unfortunately, this is an area where state efforts are woefully lacking.
The National Biotechnology Development Strategy [NBDS] 2015-2025 [unveiled by Prime Minister on December 30, 2015] had languished for almost a decade. That apart, even field trials for various GM crops [including by Indian research institutions] – forget their launch for commercialization – has been held hostage to widespread propaganda against this technology based on presumptions and myths.
Indeed, whatever limited efforts made during early 2000s came to a grinding halt in 2010 when, the then environment minister under UPA dispensation, Jairam Ramesh put an embargo on commercialization of Bt brinjal followed by suspension of all trials on GM crops. The recommendations of parliament’s standing committee and a technical committee set up by Supreme Court [SC] – vociferously opposing such trials – only compounded the woes of all stakeholders committed to give a push to GM crops.
NDA government has resurrected interest in GM crops with Genetic Engineering Appraisal Committee [GEAC] approving trials for a dozen of them viz., – rice, castor, cotton, wheat, maize, groundnut, potato, sorghum, brinjal, mustard, sugarcane and chickpea. But, this is meeting with stiff resistance at state level as several of them including Bihar, Tamil Nadu, West Bengal, Madhya Pradesh and Rajasthan have refused to grant no-objection certificates which is mandatory for conducting such tests. Modi will need to work at the political level to ensure that trials start in all states.
Under NBDS, the government has set an ambitious target of US$ 100 billion turnover by 2025 from current US$ 7 billion. The strategy focuses on R&D to make affordable products for Indian and global markets and towards this goal, seeks to forge global and public-private partnership. It aims at making India a world-class manufacturing hub and intends to set up Transnational Centre for Agri Biotech with State Agricultural Universities as also a Toxicological Centre to generate safety data for biological and chemical contaminants as also GM foods.
Thus, it is abundantly clear that Modi intends to give a big push to Agri Biotech to catapult Indian agriculture on an accelerated growth trajectory and is also committed to put in place a supportive institutional framework and conducive regulatory architecture. But, the decision of his agriculture minister to scuttle the freedom of R&D companies with regard to pricing is completely out of sync.
Such controls tantamount to impairing the capability of government’s potential partners [read, Monsanto] under PPP arrangements to contribute to achieving the goal it has set under the Strategy. Modi should goad agriculture ministry to withdraw the order and also prevail upon states to follow suit.