Wed, Mar 07 2018

New Delhi: In an attempt to offer some respite to cotton farmers battered by repeated pest attacks and crop losses, the centre is likely to slash the price of genetically modified Bt cotton seeds as well as trait fees payable by domestic seed companies to technology developers.

The maximum sale price of a Bt cotton (Bollgard II) seed packet weighing 450g is likely to be reduced from Rs800 to Rs740, said a person familiar with the development, requesting anonymity.

The person added that the trait or royalty fee included in the sale price (which domestic seed companies pay to the technology developers) is likely to be reduced from Rs49 per packet to Rs39 per packet.

The committee has unanimously recommended that the government slash seed prices to Rs740 per packet and the agriculture ministry is expected to take a final call soon, said a member of the price control committee, who did not want to be named. With 50 million packets usually sold in a year, the losses to the industry will be around Rs300 crore (at a revenue loss of Rs60 per packet).

In March 2016, the agriculture ministry, on the recommendation of a nine-member panel, slashed prices to Rs800 per packet—compared with Rs830-1,000 charged earlier—and cut royalty fees sharply by 74%, from Rs163 per packet to Rs43 (excluding taxes). Last year, prices were not changed. While the move will benefit nearly 8 million cotton growers in India, domestic seed companies will see their earnings fall by at least Rs50 per packet.

Technology developer Monsanto Mahyco Biotech (India) Ltd will earn Rs10 less for each packet of cotton seeds sold in India. “In the last six years, the domestic seed industry has seen a huge increase in labour and other costs and there is hardly any margin left to continue with cotton seed production,” said Kalyan Goswami, director general of the National Seed Association of India (NSAI), an industry lobby.

Goswami added that NSAI has advocated (to the agriculture ministry) for a Rs150 price increase per packet and if this measure is not taken, it would impact seed supply and availability. C.D. Mayee, former director of the Central Institute for Cotton Research, Nagpur, said that the continuous reduction in the price of Bt cotton seeds will spur the sale of spurious seeds.

“Such a drastic reduction in prices will be a wrong move as fly-by-night operators will capture the market and domestic seed companies who are in the business for many decades will see significant losses.” “Price control was a major reason why spurious seed sales rose last year and the cotton crop suffered heavy damage in Maharashtra,” he said.

Mayee, who was also the former agriculture commissioner at the centre, added that the “populist move will end up hurting farmers more than benefiting them as seed prices account for just 10% of cost of cultivation”.

India approved the genetically modified Bt cotton technology for commercial cultivation in 2002. Following the introduction of Bt cotton and its efficacy in resisting bollworm pest attacks, India became a leading exporter of cotton globally. However, in recent years, Bt cotton fields have seen repeated pest attacks and crop losses—in Punjab in 2015 and in Maharashtra last year.