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Indian Seed Industry Association and Bt Cotton Economics
Prof. C. Kameswara Rao
Foundation for Biotechnology Awareness and Education,
Bangalore, India
krao@vsnl.com, www.fbae.org, www.fbaeblog.org, chaakaaraav@yahoo.com

China is now the rallying point and model in all discussions on Bt cotton in India.  While identifying the ills of Bt cotton economics in India, the President of theIndian Seed Industry Association (ISIA) made certain incongruous remarks citing China as an example.

He stated that affordable prices of Bt cotton technology in China had helped it become a global leader in cotton production, with almost twice the average yield of India.   This is wide off the mark, since it is the profitability to the farmer and the business community, and not yields, which is linked to technology costs.  

A farmer determines the acreage under Bt cotton basing on anticipated returns and not on just seed costs.  Yield depends upon the potential of the basic plant variety, its suitability to the soil type, control of pests and diseases, adequate and appropriate inputs of fertilizer, irrigation, weeding, and proper and timely advice given to the cultivators.   If the Indian cotton varieties are deficient in yield potential, only the seed developers are to be blamed.  Growing cotton as a rain fed crop on red soils increases acreage under the crop but brings down averages of quality and yield. 

The cost of seed is an investment and should be weighed against returns.   Considering the many advantages of Bt technology, the difference of Rs. 1350 per acre between Bt and non-Bt seed, even at last year’s prices is not a crushing burden.   Now this difference is Rs. 430, which is certainly affordable.  If the ISAI is so strongly concerned about farmers’ burden, it should sell Bt cottonseed at the same price as non-Bt cottonseed, to help the poor farmer.  

ISIA appealed to the Government to source technology for commercial use in India by making a one-time payment to the developer and make it available to the farmers at an affordable price.  A farmer cannot use the technology without the intervention of the seed developer.   In the end, the Government would bear technology costs, while the seed industry and rich farmers reap the benefits.   A better option would be for the Government to buy Bt cottonseed at the market price and either distribute it free of cost to the poor farmers, or subsidize it. 

It is true that Bt technology costs mounted up due to avoidable delays of the Indian regulatory regime.   The monopoly of Mahyco-Monsanto Biotech (MMB) until recently was not due to any machinations but due to the failure of the other players in both the public and the private sectors, unlike in China.  

The Monopolies and Restrictive Trade practices Commission (MRTPC) has insisted that India should fix a lower technology fee as in China.    MRTPC’s assumption and the persistent claim of the activists that a packet Bt cottonseed costs far less (around Rs. 34) in China and in the US (Rest. 108), appear to be incorrect.  Chandrashekhar (Business Line, June 4, 2006) analyzed the issue of Bt cottonseed costs in China.

Cottonseed is sold by weight or as a requirement to plant on one acre (or hectare). As the quantity of cottonseed required per acre varies significantly depending upon if they were hybrids or varieties, plant type, plant density, agronomic practices such as drill sowing and broadcasting and soil type, direct comparisons are illogical, but approximations are possible.

In China, the Biocentury Transgene Technology Company (BTC) and Monsanto, jointly offer Bt technology. BTC also uses the indigenous technology developed by the Chinese Academy of Agricultural Sciences (CAAS), which was sold to over 30 seed companies.   The technology fee is charged by the BTC.   The Chinese Government being a major shareholder in BTC, is a party to cost fixation and profits.   Contrary to the assertion of the ISIA, there is no mentionable competition in the market place in China, as BTC is the only virtual player, with nearly 80 per cent market share of Bt cottonseed. 

In China, the price difference between Bt and non-Bt cottonseed is high as in India.   The farmer pays 360 Renmibi or Yuan (RMB or CNY, Rs. 2088) for Bt cottonseed per acre as against 72 RMB (Rs. 418) for non-Bt cottonseed, which means that Bt technology cost is 288 RMB (Rs. 1670.oo). In the US, the technology costs are $ 64 (Rs. 2880).  In India, non-Bt cotton seed costs around Rs. 450 while Bt cotton technology cost was around Rs. 1350 last year, which is now Rs. 880

Cotton technologists recommended 450 g of Bt cottonseed per acre.   To this 120 g of non-Bt seed is added for the refugium.   There is no special merit in selling cottonseed in 350 g or 500 g packets, as suggested by the ISAI, basing on the Chinese practice.  

The ISAI should note that the cost of non-Bt cottonseed between Rs. 450 to 600 per packet being marketed by the Indian seed industry is higher than in China.

ISIA suggested a lump sum annual payment of royalty as in China.   This will help the big companies but is not in the interests of small companies, as royalty is not linked to their turn over.   Royalty charged per packet sold is in the interests of the small companies. 

June 21, 2006