Monsanto to earn Rs 340 cr tech fee for Bt cotton

Monsanto will gross roughly Rs 340 crore from licensing its proprietary Bollgard (BG) gene traits to Bt cotton hybrid seed firms in India this fiscal.

In the recent 2009 planting season, 270-275 lakh packets of Bt cotton seeds were sold across the country. Of this, 250 lakh incorporated Monsantos BG-I or the second-generation BG-II gene constructs. The balance 20-25 lakh were based on the alternate Bt technologies of JK Agri-Genetics, Nath Biogene and the public sector Central Institute for Cotton Research.

Bt cotton is a genetically modified plant harbouring foreign genes from a soil bacterium, Bacillus thuringiensis, which produces proteins toxic against various bollworm insect pests.

MRP Range

In 2009, 35-40 lakh out of the 250 lakh BG Bt seed packets were sold in the northern markets of Punjab, Haryana and Rajasthan, with BG-I accounting for 60 per cent (24 lakh) and BG-II 40 per cent (16 lakh). The maximum retail price (MRP) charged here was from Rs 750 a packet for BG-I to Rs 925 for BG-II.

In other regions (Maharashtra, Gujarat, Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Karnataka), controls by State governments meant lower MRPs of Rs 650 for BG-I and Rs 750 for BG-II. Also, in these States, BG-I constituted only 40 per cent (84 lakh) of the 210-215 lakh packets sold, with BG-II making up 60 per cent or 126 lakh packets.

What was the technology fee that the BG-licensee seed companies had to fork out from their total sales? It varied depending on the MRP, the gene construct and also the region.

“In the North, our trait fee was Rs 144 for every packet of BG-I, excluding a four per cent value-added tax (VAT) of Rs 5.76. For BG-II, it was Rs 225, besides a 10.3 per cent service tax of Rs 23.175,” informed Mr Jagresh Rana, Director of Mahyco Monsanto Biotech India Ltd (MMB).

MMB, the licensor for Bollgard technology in India, is a 50:50 joint venture between Monsanto and its 25 per cent-owned local partner, Mahyco.

Legal battle

In States, where the MRPs were fixed at a lower range – on which a legal battle is ongoing – the trait fee was Rs 96.15 (plus four per cent or Rs 3.85 VAT) on BG-I and Rs 150 (plus 10.3 per cent or Rs 15.45 service tax) on BG-II.

If the above rates are computed against the number of packets sold, the technology fee component accruing to MMB from this seasons Bt cotton plantings comes to slightly over Rs 340 crore. That would be nearly a fifth of the Rs 1,800 crore worth of seeds (MRP value) sold by the 21 BG technology-using companies.