A regulatory battle is brewing in India’s cotton sector, with agriculture minister Radha Mohan Singh hardening his stand on what he says are “exploitative” seed prices and taking an unprecedented step to control them from the next season.
Singh’s ministry has passed orders for a price cap on cotton seeds from March in the world’s second largest exporter of the fibre — the first time such a control is being clamped by the Centre on the seed business that is worth Rs 5,000 crore.
“Cotton farmers are going through distress. Just look at cotton seed prices. Why should they vary so widely from state to state? This is exploitation of our farmers,” Singh told HT.
The move, in large part, is aimed at Bt cotton, the only genetically modified crop India has allowed so far. A vast majority of seven million growers prefers Bt cotton, hailed as a yield and income booster.
The country’s output jumped fourfold since genetically modified cotton was introduced in 2002, making India one of the largest growers. Almost 98% of the cotton is of the GM variety.
A key concern of the farm ministry was that Mahyco-Monsanto Biotech (India) Private Limited (MMBL) — a 50:50 joint venture of US biotech giant Monsanto — seemed to enjoy a virtual monopoly in Bt cotton seed market, an official said, requesting anonymity.
The ministry has already sought a probe into the US firm’s “domination” by anti-trust regulator the Competition Commission of India.
Bt cotton is genetically tweaked to kill bollworms that ravage cotton crops.
The ministry’s price-control move is being stiffly resisted. The MMBL has already moved court, while the Association of Biotech Led Enterprises (ABLE), a GM industry advocacy body, says the move violates free-market principles.
“One company owns 97% of the Bt cotton seed market. So, there is no free market situation anyway,” the official said.
“Hybrid prices vary so much. Partly to set right this confusion, given the complete monopoly of one company and keeping all that in mind, we passed the order to bring about some uniformity in prices,” the official said.
Maharashtra, Andhra and Telengana were individually trying to fix prices, he said.
Critics argue that prices are such because of demand and supply conditions, as it ought to be. The controls would hurt profits, investments and RD and India had the lowest cotton technology prices, ABLE chief VR Kaundinya said.
“We also reinforce the views of Hon. Prime Minister during his recent trip to the US to respect intellectual property rights in agriculture,” Kaundinya wrote in a letter to the PMO.
The ministry claims the concern was that rather than fair play, a monopoly was taking root in India’s Bt cotton market.