NEW DELHI: The government slashed Bt cotton seed prices, including trait value or tech fees to support distressed farmers hit by frequent pink bollworm pest attacks and crop losses. The move was criticised by Monsanto’s India unit and seed associations but hailed by farmers.

The price of Bollgard II has been cut by 7.5% to Rs 740 per packet of 450 grams each. This includes a reduction in trait value, from Rs 49 to Rs 39, which seed companies pay to the technology provider--Monsanto Mahyco Biotech (India). The price of the Bollgard I seed has been left unchanged at Rs 635 with no trait value charged for it. Farmers will start planting cotton in June during the kharif season.

Cotton seed associations, which have been asking the government to increase seed prices, say they will not be able to sustain their businesses and supplies might be hit this year.

India is the world’s biggest cotton producer with 8 million farmers buying 50 million seed packets of 450 gm each annually to plant on 12.26 million hectares of land.

“In exercise of the powers conferred by sub-clause (1) of clause 5 of the Cotton Seed Price (Control) Order, 2015, the central government, after consultation with the committee referred to in sub-clause (2) of the said clause to recommend the maximum sale price of cotton seed, hereby declares the maximum sale price of Bt Cotton seed packets (450 grams of Bt Cotton seed plus 120 grams refugia) for the financial year 2018-19 for the whole of India,” said the Ministry of Agriculture notification.

The government had capped the price of Bt cotton seeds in 2016, rebuffing US giant MonsantoBSE 0.92 %, which had threatened to review its business plans and withhold new technology if curbs were imposed on the tech fee it charges. In 2017, the prices remained unchanged.

“It is unfortunate that today’s order further erodes trait fees, which are now less than 0.5% of the cost of cultivation, while the technology continues to provide value to farmers across India,” said a Mahyco Monsanto Biotech (India) spokesperson. “The path to India’s future success as a globally competitive agricultural producer can be found in the cotton success story of the past 17 years. However, a proven combination of collaboration and a predictable business environment will be essential to attracting future investment into agricultural innovation. This approach will also be crucial to the government’s admirable vision of doubling farmers’ income and generating inclusive and sustainable economic growth.”

The spokesperson said that the technology was introduced in India and broadly licensed by the technology provider to seed companies through mutually agreed private contracts.

“However, the Cotton Seed Price Control Order (CSPCO) was issued in 2015 against the backdrop of a bilateral dispute, in which a few licensee seed companies withheld from MMB contractually agreed-upon fees,” he said. “These fees were less than 1.5% of the cost of cultivation for farmers.”

The Monsanto spokesperson added that since the introduction of Bollgard technology in 2002, India had progressed from being a net importer of cotton to becoming the world’s largest exporter in 2015.

“This remarkable transformation was largely achieved through cotton farmers’ widespread adoption of Bollgard technology, which modernised how they protected their crops from damaging pests,” said the spokesperson.

The measures will impact seed supply and availability this year, said National Seed Association of India director general Kalyan Goswami.

“The next year's seed production will also be impacted. Many of our members may not take up seed production this year. A few of the members are even thinking to move a writ petition in the court against the illogical price fixation,” he said. “Last six years, the seed Industry has seen huge increase in labour cost, supply chain cost, electricity, fuel cost. Practically, there's no business margin left to continue cotton seed production anymore.”

The association, which has 534 seed companies as members, had asked the government to increase prices by 12.5% to Rs 900 per seed packet.

“Reducing cotton seed price doesn’t augur well for the industry,” said the Federation of Seed Industries of India. “With the reduction in seed price, despite inflation, it will put pressure on seed companies. Further, if we reduce trait value, then we send a negative message to R&D prospect of seed industry, which in long run will hurt farmers.”

The association had recommended an increase in seed prices by 10% to Rs 870 per packet and status quo for trait value.

Mohini Mohan Mishra, secretary at Bhartiya Kisan Sangh, the farmers’ association affiliated to the Sangh Parivar, welcomed the move, arguing that input costs had to be reduced to increase farm income.

“In Rs 16-50 a kg, a farmer can get good rice seed, soyabean for Rs 120-130 a kg, so why should he pay so high for cotton seed,” he said. “We have asked the government to ensure that such high prices are not charged and it should also look at high vegetable seed prices.”