Brazil's confederation of Agriculture (CAN) announced on Wednesday that it had come to an agreement with global agribusiness Monsanto over a legal dispute between the company and up to five million Brazilian growers. However, farming groups in Brazil's major soy growing region have rejected the agreement.

image expired

The dispute, which came to a head last summer, is centred on royalty payments charged to farmers growing agchem giant Monsanto's genetically modified crops. Millions of Brazilian farmers had rejected Monsanto's demands for royalty payments, claiming they were being charged twice for the company's products, in violation of the Brazilian cultivars act.

They also accuse Monsanto of continuing to claim royalties on its GM seeds after their Brazilian patent ran out in 2010. The farmers' claims were upheld by the Brazilian Court of Justice in June 2012.

With the backing of Brazil's senior court, it appeared Monsanto may be forced to pay back $6.2 billion accumulated through charging a 2 percent royalty fee on its GM crops, or else pay out a minimum of $2 billion in compensation to farmers.

However, on Wednesday, representatives of producers in several agricultural regions, accounting for 70 percent of Brazilian soy production, signed an agreement with Monsanto in Brazil to suspend royalty fees for first generation GM Soy (known as RR1) "permanently and irrevocably" from seasons 2012/2013.

The agreement amounts to an amnesty; Monsanto will not pursue producers for royalties it believes are owed, for this season and next, if the producers agree not to attempt to claim back their lost royalty payments. CNA said, "On the basis of the understanding agreed between the CNA and Monsanto, all producers who adhere to the agreement individually have settled their debts regarding the use of this technology."   

The farmers will also gain licenses to grow Monsanto's next generation RR2 soybeans, modified to be resistant to both glyphosate and caterpillar pests. The beans are still awaiting regulatory approval in Brazil and a number of its trading partners, though China, the principal export destination for Brazilian soybeans, has approved the new GM variety.

However, CAN said in its statement that it recognises "Intellectual property rights on technologies applicable in agriculture and the remuneration payable to the holders of these technologies [and] the system of charging for the use of technology not paid in advance," which could cause concern for farmers signed up to the agreement, who waived their rights to "all potential legal claims for payments previously made for this first-generation technology" when they had legal backing.

Nevertheless, two producers' groups in Mato Grosso state have opposed the agreement. In response to the CAN-Monsanto announcement on Wednesday, Aprosoja and Famato two powerful organisations in Mato Grosso, announced they rejected the terms and would continue to push for restitution from Monsanto.  

Whilst some farmers in the region are still paying royalties on their GM crops, these are being held in escrow until the legal dispute with Monsanto is settled. On Wednesday, Famato president Rui Prado said his organisation and Aprosoja had "Decided unanimously not to accept the proposed agreement by Monsanto regarding the collection of royalties from RR1 soybeans."

Mr Prado went on to reiterate that the farmers opposing the agreement have the support of the authorities and that the law is on their side.