UPDATE - Brazil farmers make first legal GM soy planting
Friday September 26
By Marcelo Teixeira

(Adds agriculture lobby comments)

SAO PAULO, Brazil, Sept 26 (Reuters) - Farmers from the southern state of Rio Grande do Sul on Friday symbolically made a first legal planting of genetically modified soybeans, which until this week had been outlawed in Brazil.

The planting, at an agricultural trade fair in Julio de Castilhos, 350 km (217 miles) from Rio Grande capital Porto Alegre, followed a government decree on Thursday allowing the planting of GM soybeans until the end of 2003.

"Farmers are pleased with the (government's) decision. Nobody likes to break the law," said Thiago Van Hoogstraten, head of the Julio de Castilhos Rural Union.

He said that Julio de Castilhos was one of the first districts to start planting GM soybeans six years ago.

"Farmers had heard of good yields of GM soy in Argentina. A group went there and brought back some GM seeds to test," he said.

Van Hoogstraten said that yields were excellent and GM seeds spread to cover practically all the district's 66,000 hectares (163,000 acres) soy area in 2002/03 (Oct/Sept) and will do so again next year.

"It's very efficient. We use less herbicide but have a clean crop," he said.

Farmers in Rio Grande do Sul have for several years planted seeds genetically engineered by Monsanto (NYSE:MON - News) to resist its Roundup ready herbicide because they can cut costs due to the need of only one spraying.

About 80 percent of the soy crop in Rio Grande do Sul, Brazil's No. 3 soy producer, is estimated to be planted with Monsanto's Roundup Ready soybeans, smuggled in from neighbouring Argentina.

However, farmers are concerned about Monsanto's intention to demand royalty payments for planting its Roundup Ready soybeans.

Article 9 of the decree signed on Thursday by Brazil's Vice President Jose Alencar says that farmers planting soy must respect the eventual financial rights of third parties, such as royalty payments to Monsanto.

"They accept that it's right to make a payment, but it should be at an appropriate level," Van Hoogstraten said.

Antonio Ernesto de Salvo, head of the National Confederation of Agriculture, the powerful farm lobby group, said he did not support payment of royalties for genetically modified seeds brought into Brazil illegally.

"We support a royalty for certified seeds...but we are not ready to pay for seeds without certification, which nobody knows where it is from or how it was transported," Salvo said. He said there have been instances when farmers bought GM seeds which turned out to be conventional seeds.

In a statement on Friday, Monsanto said it would seek royalty payments for its GM soybean seeds planted for the 2003/04 harvest, even though they were smuggled into Brazil.

"It's in Monsanto's interest to offer the market the best possible product at a fair price and to continue satisfying the consumer in the long term," Monsanto Brail's public relations director, Lucio Mocsanyi, said in a statement.

Monsanto's GM soybeans could account for most of the transgenic seeds sold in Brazil over the next few years. No other biotech companies have tried to enter the Brazilian market.

Environmental groups protested against the government's move.

"We are studying what action to take, but consider it wrong to allow cultivation without an environmental impact study, as demanded by the law," said Greenpeace transgenics campaigner Tatiana Carvalho.