The American Soybean Association (ASA) is calling for Monsanto Company to remedy inequities that are disadvantaging U.S. farmers in the global marketplace. ASA is concerned with the large disparity of Roundup Ready® soybean seed prices and business practices between the United States and Argentina, which was highlighted in a U.S. Government Accounting Office (GAO) report released today.

“U.S. soybean farmers are being charged more than twice the amount for Roundup Ready soybean seed than growers in Argentina paid last year,” said ASA President Marc Curtis, a producer from Leland, Miss. “According to the GAO report, a bag of Roundup Ready soybean seed sold for about $9 in Argentina and about $21.50 in the United States in 1999.”

One of the reasons that the price of Roundup Ready soybean seed is higher in the U.S. is because only U.S. growers are charged a technology fee of $6.50 per 50-pound bag on top of the price of the seed.

“ASA understands that companies need to earn a return on their investment in research and development to continue investing in new traits and technologies. ASA strongly objects, however, to U.S. farmers alone being required to pay for these technologies while farmers in other countries have access to the same technology without paying for it,” said Curtis.

Also, the base price of Roundup Ready soybean seed is lower in Argentina because growers there are allowed to save seed harvested from one year’s crop to sow the next year’s crop, a common farming practice. The Argentine farmer’s ability to save seed has put downward pressure on the price of new Roundup Ready soybean seed sold by Argentine seed companies. To remain competitive, seed companies must reduce the farmer’s incentive to replant last year’s soybeans. In contrast, U.S. soybean growers are required to sign a grower agreement with the seed company that prohibits U.S. growers from saving seed harvested for planting the next year.

“Monsanto has told us that they can’t charge the technology fee and enforce the restriction on saved seed in Argentina because Argentina’s patent and plant variety protection laws differ from U.S. laws,” Curtis said. “The GAO report also indicates a large portion of Argentina’s soybean seed is sold on the black market and not through commercial firms. In the future, seed companies should consider their ability to protect intellectual property rights and enforce contracts in potential overseas markets before they decide to commercialize products in those markets. Otherwise, companies should amend their U.S. business practices so they don’t treat U.S. farmers less favorably than farmers in other countries.”

Prior to 1998, the price charged for Roundup Ready soybean seed in Argentina was high enough so that the grower’s total cost was about the same as it was in the U.S. Over the past two years, however, the price of Roundup Ready soybean seed dropped to the equivalent of about $9 per 50-lb. bag from about $25 in 1997.

Now that the price has dropped dramatically in Argentina, U.S. growers are caught in a situation that places them at a competitive disadvantage. Using seed prices contained in the GAO report and a seeding rate of 1.3 bags per acre (seeding rates in the U.S. and Argentina are similar), U.S. growers’ per acre Roundup Ready soybean seed costs in 1999 were $27.95 per acre versus $11.70 for Argentine growers. Assuming an average 40-bushel per acre soybean yield, the disparity in Roundup Ready seed costs puts U.S. growers at a 41-cent per bushel price competitive disadvantage.

“Monsanto has the ability to quickly eliminate a large portion of this competitive disadvantage for U.S. growers by adjusting its business practices in the U.S. market,” Curtis said. “ASA is urging Monsanto to quickly resolve the current price inequity on Roundup Ready soybean seed by discontinuing and refunding technology fees for the 2000 soybean crop, dropping restrictions that prevent farmers from planting their own saved seed, or implementing other changes that will eliminate the disparity that exists between the seed prices paid by U.S. and Argentine growers.”

“ASA continues to be a strong supporter and advocate of new soybean seed technologies—be they the result of biotechnology or convention breeding programs,” Curtis said. “There is no doubt that the introduction of Roundup Ready soybeans, developed via modern biotechnology, has benefited soybean growers in both the United States and Argentina.”

Producers have rapidly adopted Roundup Ready soybean technology since it was commercially introduced in 1996. One only has to look at the responses of growers in the U.S. and in Argentina, who planted 55 percent of U.S. soybean acres and an estimated 90 percent of Argentina’s soybean area to Roundup Ready varieties, to know that farmers welcome this technology.

“ASA’s objection is that beginning in mid-1999, only U.S. growers are being asked to pay for the research and development costs for the Roundup Ready technology,” Curtis said. “That just isn’t fair, and that’s what ASA is asking Monsanto to remedy.

Argentina, the world’s third largest producer and exporter of soybeans and soybean products, competes directly with the United States for overseas markets. Access to new soybean technologies has helped Argentine farmers increase their yields to a point where they are comparable with U.S. yields. With fields located in the Southern Hemisphere, Argentine farmers are now preparing to harvest the soybean crop they cultivated from seeds purchased in mid-1999.

“ASA views this situation as an opportunity for Monsanto to take a leadership position and alter those business practices it has under its control in order to treat U.S. farmers as equitably as Argentine growers,” Curtis said. “ASA will work with Monsanto and other technology companies to aggressively identify solutions that will promote the development of new seed technologies and meet the challenges of international patent laws while maintaining the competitiveness of the U.S. soybean industry.”