Why Monsanto’s Biotech-Food Business Isn’t Growing in India
Seed giant’s genetically-modified food crops stymied despite nation’s food-security needs
US-based Monsanto and its partners in India have been selling farmers genetically modified seeds for cotton crops for years. Now the companies want to sell GMO seeds for food crops as well. Photo: Karan Deep Singh/The Wall Street Journal
In a research laboratory surrounded by acres of arid land in western India, Bharat Char showed off tiny sprouts of rice, wheat and okra in glass bottles.
These plants could solve a lot of India’s food problems, he said. Because they are genetically modified to resist bugs and weed-killing sprays, said the scientist for Mahyco, an Indian firm that joinedMonsanto Co. to develop biotech crops, the plants could boost impoverished Indian farmers’ profits and reduce food imports.
There is precedent: Genetically modified organisms, or GMOs, grow in an estimated 97% of India’s cotton fields and have helped India by some measures become the fiber’s top global producer.
But after a decade of Monsanto’s efforts with Mahyco to win Indian-government approval for biotech food crops, seeds for plants like Mr. Char’s remain in limbo, stymied by environmentalist opposition, farmer skepticism and bureaucratic inertia. Despite dozens of biotech-food-crop trials in India, the country has approved none for commercial cultivation.
“What greater case study in terms of food security than a country that will soon have more people than any other country in the world?” said Robert Fraley, Monsanto’s chief technology officer. “To see a country that has the potential and intellectual ability to be a leader in these biotech advances, to be stymied politically, I think it’s a tragedy.”
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India’s Agriculture Minister, Radha Mohan Singh, said the government was waiting for India’s Supreme Court to rule in a case opposing genetically modified food crops before deciding on their commercial cultivation.
Meanwhile, Monsanto’s established cotton business in India faces new threats, including new government price controls around seed genetics and an antitrust probe into pricing practices, prompting Monsanto on March 4 to warn that it could withdraw its biotech crop genes from the country.
Monsanto’s experience is part of a broader backlash against genetically engineered crops from a mix of environmentalists, consumer groups and nationalism thwarting the technology’s expansion after years of growth. Biotech-crop opponents say they can damage the environment, burden poor farmers with high-price seeds and potentially harm health.
Monsanto joined India's Maharashtra Hybrid Seeds Co., or Mahyco, to develop biotech crops for India. Plants grow in tubes at this Mahyco laboratory in Jalna, India.PHOTO: KARAN DEEP SINGH FOR THE WALL STREET JOURNAL
GMO proponents reject such assertions, and the U.S. Food and Drug Administration, World Health Organization and European Commission have concluded GMOs are safe to eat.
Yet pushback has swept the world. More than half of European Union countries have moved to bar GMO cultivation. Russia hasn’t approved any biotech crops. China, which allows cultivation of some, isn’t expected to approve new ones soon. In the U.S., where GMO crops are widespread, some food brands are stripping GMOs from their products.
The backlash has slowed global-sales growth of genetically modified seeds. Sales grew 4.7% to $21 billion in 2014, compared with 8.7% growth in 2013 and average annual growth of 21% from 2007 through 2012, according to research firm PhillipsMcDougall Ltd.
Monsanto, a top global seller of biotech seeds, in 2015 made an unsuccessful $46 billion bid for Syngenta AG, a top pesticide seller, partly for access to more countries’ fields than biotech seeds give it. Syngenta last month agreed to a $43 billion takeover by China National Chemical Corp.
Biotech seeds have nearly saturated major markets where approved, said Mike Mack, who retired in October as chief executive of Syngenta, also a GMO-seed seller. “Show me the new markets or the new crops that are going to bring the sort of wave that we saw in the last decade,” he said in September. “I don’t see how it’s going to pick up in a material way anytime soon.”
India appeared fertile ground for Monsanto two decades ago. Once a pesticide giant, the company had introduced the world’s first genetically modified cotton in the U.S. in 1996.
India cultivated the world’s largest cotton-growing area, yet produced among the fewest bales per acre. Four million Indian cotton farmers battled many of the same pests that U.S. farmers did—pests resisted by a gene Monsanto created with a bacterium called Bacillus thuringiensis, or Bt, that lets plants secrete a bug-killing protein. Monsanto in 1997 formed a joint venture with Maharashtra Hybrid Seeds Co., or Mahyco, to pair its biotechnology with Mahyco seeds suited to India’s soil.
After a decade of effort by Mahyco, Monsanto and other companies to win government approval for genetically engineered food crops in India, the seeds remain stuck in regulatory limbo. PHOTO: KARAN DEEP SINGH FOR THE WALL STREET JOURNAL
When Mahyco won permission to sell India’s first biotech cottonseed in 2002, scientists and staff threw a party at its research center in Dawalwadi, said Mr. Char, who joined Mahyco in 1999.
“It was like India winning the cricket world cup,” said Monsanto Treasurer D. Narain, its India unit’s chief financial officer in the late 1990s.
Monsanto’s success seemed to augur well for GMOs in India, which boasts the most arable land of any country and is projected to surpass China as the world’s-most-populous by 2023.
India had a history of pioneering agricultural methods. The so-calledGreen Revolution in the 1960s and 1970s revamped Indian farms with high-yielding wheat and rice supported with fertilizers, pesticides and irrigation. Government officials credited it with saving millions from starvation.
By late 2006, Monsanto’s Bt genes blanketed about 40% of India’s cotton fields, according to the International Service for the Acquisition of Agri-Biotech Applications, or Isaaa, a nonprofit funded by governments and companies that tracks and promotes agricultural biotechnology.
“I had gravitated to Bt cotton because my yields used to be poor,” said Dheeraj Chhaganbhai Wadodariya, a farmer in India’s Gujarat state. Genetically modified seeds increased his earnings so much, he said, he can now buy cattle, do up his home and occasionally travel.
Bharat Yadav, a cotton farmer from Jalna in Western India took to genetically-modified seeds for better yield. PHOTO: KARAN DEEP SINGH FOR THE WALL STREET JOURNAL
But clouds were gathering over the field. Fears that India’s government relied too heavily on biotech companies to research safety and that GMO plants would mix with wild versions prompted nutritionist Aruna Rodrigues to seek out independent scientists and compile data to challenge the government over its handling of biotech crops.
In 2005, she filed a petition with India’s Supreme Court seeking a moratorium on GMO field trials, arguing that such crops would damage the nutritional qualities of the food. The court accepted her petition, which is still winding its way through India’s notoriously slow judicial system.
As public pushback increased, India in 2010 placed a surprise moratorium on an insect-resistant brinjal, or eggplant, which had been set for approval.
India’s potential nevertheless persuaded Monsanto to continue research here and it continued to get approvals for trials, including biotech corn. Other companies pursued rice, mustard, peanuts, potatoes and sorghum.
“We never lost hope that things were moving,” said Mr. Narain, who led its India business from 2010 to 2013.
Globally, pushback was spreading. In America, where the Agriculture Department says GMOs represent more than 90% of corn, soybeans and cotton acres, opponents launched state-by-state efforts to require GMO-food labeling. Following the USDA’s 2015 approval of genetically modified apples and potatoes, companies includingMcDonald’s Corp. and Wendy’s Co. said they didn’t plan to use them, saying they were happy with non-GMO suppliers.
The EU unveiled a new opt-out program in 2015. Ukraine and Russia have also ruled out using GMO seeds. China, which permits some biotech cotton, papaya, sweet peppers and tomatoes, isn’t expected to approve new GMO crops until the domestic seed industry shows it can compete against Western rivals, the USDA and seed-industry officials said. Chinese government officials didn’t respond to inquiries.
Cotton farmer Dheeraj Chhaganbhai Wadodariya says genetically modified seeds increased his earnings so he could buy cattle, do up his home and occasionally travel.PHOTO: KARAN DEEP SINGH FOR THE WALL STREET JOURNAL
Cotton, the only genetically modified crop approved in India—rapidly came to dominate its farm fields since its introduction in 2002, helping India become a top exporter of the fiber. PHOTO: KARAN DEEP SINGH FOR THE WALL STREET JOURNAL
India’s food-security concerns may lead it to soften its stance, seed industry officials say. The country is a big importer of edible oil and lentils—protein sources for many mired in poverty—and has high child-malnutrition rates. GMO proponents say biotech seeds would increase production of protein-rich crops on India’s mostly small farms, which the United Nations numbers at 138 million.
The 2014 election of Prime MinisterNarendra Modi, who supported GMO crops as chief minister of Gujarat state, encouraged biotech-seed makers. India has since approved field tests for biotech crops, although state governments can block trials.
India’s Supreme Court is expected to rule soon on the petition to bar GMO-crop cultivation. But Monsanto faces more immediate challenges in cotton, after India’s agriculture ministry this month imposed a 70% cut in the royalty fees that Monsanto and Mahyco had charged for their crop genes. The companies also face an inquiry from India’s antitrust enforcer over pricing of their pest-resistant cotton genes, and some Indian seed companies have withheld tens of millions of dollars in royalty payments, according to Monsanto.
The price controls on crop biotechnology -- which Monsanto and Mahyco license to about 50 Indian seed companies -- may force the companies to reassess all aspects of their joint venture in India, they say. Officials for India’s Ministry of Agriculture said in a court document that Monsanto and Mahyco’s dominance in supplying biotech cotton genes requires curbs on royalties, which ministry officials called “exorbitantly high.”
“We need innovation in agriculture in the country,” said Shilpa Divekar Nirula, chief executive of Monsanto’s India unit. “The government seems intent on promoting innovation…but something like this is at cross-purposes with what the government is seeking to do.”
