Monday, June 28, 2010

Quality seed at affordable prices

Recently we have witnessed the high drama and tussle between the state governments of Andhra Pradesh, Gujarat & Maharashtra and the MNCs & Indian seed majors on the issue of increasing the prices of Bt cotton seeds.

For the 2010 sowing season, Andhra Pradesh, Maharashtra and Gujarat have fixed an unchanged maximum retail price (MRP) of Rs 650 for every packet of Bt cotton seeds incorporating Monsanto's ‘Bollgard-I' (BG-I) trait and Rs 750 a packet in the case of second-generation ‘Bollgard-II' (BG-II) technology. Whereas Punjab, Haryana and Rajasthan governments have not enacted price control legislations or issued any formal orders. In 2002, when Bt cotton was first introduced in the country, a packet of BG-I seeds was being sold at Rs 1,600. Of this, the trait fee accruing to the technology provider, Monsanto alone constituted Rs 725. Since then, the MRPs have dropped to Rs 750-925 even for BG-II packets. Monsanto has also been forced to slash its trait fee to Rs 144 for BG-I and Rs 225 for BG-II in North India, where MRPs are higher and to Rs 96 for BG-I and Rs 150 for BG-II in other States. The price fixed by the Government will force the industry to cut down production. MMB, JK Agrigenetics and Nath Biogene filed separate petitions in the Andhra Pradesh high court last month to stop the government from capping royalty charged on seed technology transfer. Only MMB's petition has been heard as yet.

Even Union Agriculture Ministry has given up the arms and is not in favour of any sort of curbs of the seed prices. Their grouse of the Seed Bill, which aims to regulate the quality of seeds, does not monitor their prices, crucial for farmers. But the ministry assures to redraft the bill following complaints by MPs, states and farmer groups giving a thought to the price issue and compensation clause. The seed sector is governed by State's rules and it has to be aptly respected by the ministry and the stance should not to be diluted without the consent of all the states and stakeholders. At present, most states do not control the prices of seeds sold by hybrid seed companies. The companies fix their own prices and the growers are often been exploited on the falsified promises by the companies.

The MNCs have indirectly issued even a warning that seed price controls may impact the availability of quality seeds on time. These words are derogatory and are too mean in a democracy like India. We can’t allow the Corporations to hijack the whole agricultural system of a country like India where about two thirds of the population derives their income from farm activities.

But the apprehensions, expressed by corporates about hampering of investment in R&D and eventually seed shortage can be well taken care of and given consideration in the Seed Bill amendment as price limitation would hamper future advancements in germplasm enhancing technologies resulting in non-availability of good quality seeds to the farmers in the future. Hybrid seeds production is a very labour-intensive affair and the labour costs have almost doubled in the last 2-3 years and added with the inflationary pressure, the prices should be revised by at least 30- 35%. Otherwise, it is difficult to expect seed growers to keep supplying adequate material, as expressed by Industry persons. Keeping these views in mind, the affordability issue should also be given a consideration by the Ministry or, Court. The upward price revision has a bearing on various stakeholders including seed growers, seed companies, farmers and lastly in price control. Therefore, the Government could consider a mutually agreeable formula that is linked to market driven prices.

Experts agreed that fixing prices wasn’t a viable option for keeping seed prices affordable to farmers, but regulation was necessary to prevent cartelization. Seed prices aren’t completely determined by market forces. There are political factors at play too. But there has to be a balancing act somewhere and government must ensure that competition prevails, without resorting to blanket price fixing. As seed is the primary vital input for a successful agricultural production, its timely and qualitative supply at an affordable price can only usher in production at sufficient levels.

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