Argentina Plans New Biotechnology Law in Bid to Tempt Monsanto

--Argentina says it is working on new seed law to protect agricultural biotechnology

--Reform aimed at enticing Monsanto to bring in its new soybean seeds

--Monsanto was unable to collect royalties on first-generation soy seeds in Argentina

By Shane Romig

BUENOS AIRES--Argentina is working on a new seed law to protect intellectual property rights for agricultural biotechnology in a bid to lure Monsanto Co. (MON) to bring its second generation of transgenic-soybean seeds into the country.

"We've decide to move forward on a seed law draft, as corresponds in a country that aspires to be a leader in food production," agriculture minister Norberto Yauhar said in a press release Tuesday.

"We're looking to protect intellectual property in the development process," Mr. Yauhar said, adding that the bill will be sent to congress for debate in the coming months.

Argentina is the world's top soymeal and soyoil exporter, and ranks third behind the U.S. and Brazil in soybean exports.

Agricultural-biotech-company Monsanto is planning on selling its second-generation of transgenic-soybean seeds in Argentina in 2014 despite struggling for years to collect royalties on the first-generation seeds.

The U.S. patent for those first-generation soybean seeds, which are genetically modified to resist the herbicide glyphosate, runs out in 2014. The new seeds, will add insect resistance as well.

Monsanto failed to obtain a local patent for the genetically modified soybean seeds it introduced in Argentina 15 years ago and its efforts to collect royalties have been foiled by local regulations.

However, Monsanto says it is making progress in reaching an agreement with growers to pay royalties before introducing the new, improved strain of soybean seeds.

Monsanto has a patent for the new seeds in Argentina, but under current local law, farmers aren't required to pay royalties on the seeds they hold back for the next planting season.

Virtually all of the soybeans grown in Argentina are based on Monsanto's technology and the company is hoping that the potential yield increase for the second generation seeds will entice Argentina to get serious on ensuring it can collect royalties.

The new seeds have show yields up to 15% higher than the earlier strain in Brazil, Pablo Vaquero, Sustainability and Corporate Affairs Director for Southern Latin America told local news station C5N Tuesday.

The yield boost could increase Argentina's annual soybean output by 5 million metric tons and boost the country's competitiveness, Mr. Yauhar told the same channel following an event hosted by Monsanto to promote the new soybean seeds.

The U.S., Brazil and Argentina dominate global soybean sales, while China is the world's top importer. Demand for soybeans has surged in recent years for use as animal feed to sate the world's growing hunger for meat.

Argentina already ranks No.3 in the world behind Brazil in the area planted with genetically modified seeds, according to the International Service for the Acquisition of Agri-Biotech Applications.

In its annual report, the trade group, whose backers include Monsanto and the U.S. Department of Agriculture, said that Argentina planted about 23.7 million hectares with genetically-modified soybean, corn and cotton in 2011.

Despite the problems collecting royalties in Argentina, Monsanto continues to press forward with expansion plans in Argentina.

In June, the company said it plans to invest over $355 million to build a massive new corn-seed-production plant in the heart of the country's corn belt in Cordoba province.

Monsanto already has a huge facility for producing corn seed in Buenos Aires province.

Monsanto doesn't face the same problem with corn seeds as it did with soybeans. The corn pollination process dilutes the transgenic traits quickly and farmers need to buy them directly from the company each year to enjoy the yield-enhancing benefits.

Write to Shane Romig at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires