This article is the second part of a series of four articles by Paramjeet Singh. Find the first part here.

By Paramjeet Singh

Philosophy Behind The Dispute

The government is obviously required to intervene in the free market operations for various reasons; especially for correcting market failures and removing social inefficiencies. In the present case also, since 2005, Trait value fixed by Monsanto has always been alleged to be very high.

For Bollgard I, the trait value fixed by MMBL, in 2005, was Rs.1250/- per packet and the maximum retail price of the Bt cotton seeds was, resultantly, in the bracket of Rs.1700/- to 1800/- per packet. The straight variety of cotton seeds was available for Rs. 300/- per packet.

Was it a ‘good’ market scenario, keeping in view the larger public interest as well as the IP protection regime and the farmer oriented claims of Monsanto? As Monsanto decides Trait Value on the Maximum Retail Price, the same is ultimately borne by the financially constrained farmers.


The government is in a constant struggle to keep the balance between free trade and the interests of common men. | Source: Flickr

Various governments of cotton producing states sought to regulate it by fixing the Maximum Sale Price of Bt cotton seeds following complaints by farmers’ associations. Monsanto challenged these attempt and the appeals are still pending before the courts.

The government uses the law as an instrument to strike a balance between conflicting priorities. This exercise represents the adopted hierarchy of various priorities.

In a society, there exists different priorities that might not be coherent with each other but, regardless, are equally important for the achievement of societal goals. The government uses the law as an instrument to strike a balance between conflicting priorities. This exercise represents the adopted hierarchy of various priorities. But, what happens when there is no such hierarchy and an issue with dimensions hailing from conflicting priorities comes for the consideration of adjudicating authorities?

Monsanto’s Bt cotton case is one such issue. It has various dimensions attached thereto – GM technology related moral issues, food security, intellectual property rights, competition concerns, promotion of domestic R&D and business, protection of international investments, protection of farmers’ livelihood, compliance with international obligations etc.

Power Dynamics

Aristotle once said, “the rule of law is better than that of any individual”. However, E. P. Thompson, rightly put forth that law, “is clearly an instrument of the de facto ruling class: it both defines and defends these ruler’s claims upon resources and labour-power- it says what shall be property and what shall be crime- and it mediates class relations with a set of appropriate rules and sanctions, all of which, ultimately, confirm and consolidate existing class power. Hence the rule of law is another mask for the rule of a class.” 

The same argument finds support in a study conducted by Princeton University Prof. Martin Gilens and Northwestern University Prof. Benjamin Page that proves that it really is the economically affluent people who influence the law-making.


The Union Minister for Agriculture and Farmers Welfare, Shri Radha Mohan Singh addressing at the release of the National Conference on Agriculture for Kharif Campaign, in New Delhi on April 11, 2016. | Source: EconomyIndia

In the present case also, the power of the corporate lobbying was so strong that the government withdrew the order passed in the interest of farmers and the domestic R&D. The withdrawal came also long after the Union Agriculture and Farmers Welfare Minister made the following statements: “based on the representations, this department also made a reference to the Competition Commission of India for investigation of dominance of MMBL and abuse of monopoly in Bt cotton technology so as to ensure competition in the market” and “in order to safeguard the interests of the farming community, this department issued the Cotton Seed Price (Control) Order, 2015, under section 3 of the Essential Commodities Act, 1955, to regulate Bt cotton seed prices”.

More than 95% of the cotton grown in India uses Bt technology. More than 8 million farmers and 20 million farm labourers are already engaged in the production of cotton. However, when the trait value was increased by Monsanto, the domestic seed companies felt the pain as their profit margins began narrowing down. In order to avoid a decline in profits and paying heed to the bad economic conditions of the farmers, there was no other way left for the domestic seed companies except to challenge the stance of Monsanto.

In The Name Of Public Interest

The Constitution of India makes it mandatory for the government to take into consideration larger public interest. The same happened in the case of Monsanto Bt Cotton. Whether public interest is really being served or not is a different question; especially when a paternalistic approach is being followed in the field of social welfare.

A peculiar feature of the Indian public discourse is that the majority should be taken into confidence – actions are not necessary, words do suffice. In the case of Bt cotton also, the Indian seed companies and politicians are indulging into farmer-centric political discourse and made it a plank for passing the subordinate legislation.

Farmers regardless of contributing the most to the development of Indian economy have been made to suffer the most.

There is no doubt that farmers are affected by high seed prices. Also, the share of farmers in the retail price paid by the consumers of the concerned product is the least and much lower than what others involved in the value chain receive. The cost of doing agriculture is increasing because of rising prices of fertilisers, GM seeds, etc.  Farmers regardless of contributing the most to the development of Indian economy have been made to suffer the most. Various studies show that the condition of farmers is getting worse.

Following the Order and the related notifications, Monsanto threatened to leave India. It also withdrew from before GEAC its application seeking regulatory approval for its next generation GM cotton seed technology called ‘Bollgard-II Roundup Ready Flex technology’. Though Monsanto is likely to suffer huge temporary loss because of this step, still going ahead with it shows the company’s tendencies to exploit its dominant position and an effort to exercise monopoly. The company’s Chairman, in a 2005 Letter to Shareholders, wrote, “we succeed when farmers succeed”. The step, however, indicates that the company puts profits before people.

Paramjeet Singh is a lawyer practising before the Supreme Court of India.

Featured Image: Passel

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Posted by The Indian Economist