St. Louis, Missouri
May 21, 2003

To promote a more equitable playing field for U.S. soybean producers, the American Soybean Association (ASA) is urging international grain and oilseed traders to adopt a new royalty collection system for exports of Brazilian soybeans and soybean meal derived from illegally obtained Roundup Ready® Soybean (RRSB) seed. Brazilian farmers presently have an unfair competitive advantage over U.S. farmers in the global soybean market because they are receiving all of the cost-saving and yield-enhancing benefits of Monsanto's Roundup Ready soybeans without paying for the right to use the technology.

"ASA has long been concerned about the theft of Roundup Ready soybean technology in Brazil
because of the competitive advantage this illegal use gives Brazilian growers over U.S. growers who are paying to use the technology," said Dwain Ford, a soybean farmer from Kinmundy, Ill. "Since the Brazilian government has been unable or unwilling to stop the piracy of Roundup Ready soybean seed, ASA has repeatedly urged Monsanto to do something to correct this inequity."

Despite Monsanto's efforts to obtain approval to commercialize RRSB seed in Brazil each of the last five years, it remains illegal under Brazilian law for growers to plant RRSB seed. Although the Brazilian government has threatened to destroy illegally planted Roundup Ready soybeans, Brazil hasn't done so, and is finalizing Provisional Measure 113, which allows Roundup Ready soybeans in the current Brazilian harvest to be legally sold for consumption in Brazil or exported overseas.

"According to our calculations, U.S. growers are paying a premium of $9.30 to $15.50 per acre for Roundup Ready Soybean seed, while Brazilian growers are paying nothing for the technology on seed smuggled into Brazil," Ford said. "This gives Brazilian growers an ill-gotten $9.30 to $15.50 per acre competitive advantage over U.S. growers just from the failure to pay for patented seed technology. Using national average yields, this translates into a 24 to 41 cent per bushel unfair competitive advantage over U.S. growers and U.S. soy exporters."

Following numerous discussions with Monsanto over the past year, ASA leaders recently learned from company officials about Monsanto's plans to implement a royalty collection system based upon the enforceability of intellectual property rights in the European Union, Japan, and other countries where Monsanto has patent protection. Approximately 70 to 75 percent of Brazil's total soybean production is exported as whole soybeans or soymeal, and of that amount, approximately 70 to 73 percent is shipped to the European Union and Japan.

"It is ASA's position that the program outlined is a giant step forward toward leveling the playing field for U.S. soybean producers," Ford said. "Although it is not a perfect solution, the program does present a viable option given the lack of planting authorization in Brazil, which currently prevents Monsanto from collecting royalties on its patented seed."

ASA is supporting the royalty collection system announced by Monsanto because it begins to address the problem by offering a workable solution, and sets an important precedent for the crop
biotechnology industry. ASA supports the protection of intellectual property rights and a company's right to enforce its patents for seed technology. Given the present lack of planting approval and patent enforceability within Brazil, this external collection system provides a "next best" approach to fairness.

"It is essential that Monsanto and the grain traders work together to reach a successful agreement," Ford said. "ASA encourages grain traders to engage in negotiations and to work in partnership with Monsanto for prompt implementation of this system to allow for royalty collection on Brazilian exports of Roundup Ready soybeans and soybean meal processed from Roundup Ready soybeans."

Under this system, Monsanto will not be able to collect royalties on soybeans grown in Brazil for domestic consumption, which represent about 25 to 30 percent of total Brazilian production, until RRSB is legalized for planting by the Government of Brazil, nor on soybeans destined for export to countries like China that do not currently enforce patent protection for seed technology.

Implementation of the program is set for July 1, 2003, to give the Government of Brazil, Brazilian farmers, and Brazilian soy processors and traders advance notice prior to planting and pre-planting commercialization contracts between growers and traders for the 03/'04 Brazilian crop. The source of the funds paid to Monsanto, ultimately, will be generated from the discounted prices paid to Brazilian producers who deliver soybeans grown from RRSB seed.

"Not cooperating in the implementation of the royalty collection system perpetuates the competitive disadvantage U.S. growers and the entire U.S. soy industry face because of the ongoing theft of Roundup Ready technology by some Brazilian farmers," Ford said. "In addition, traders and processors who do not cooperate will be assisting in the continued piracy of a patented product, and confronted with inspection and testing for the presence of RRSB in Brazilian shipments arriving in the European Union, Japan, and other countries where Monsanto has patent protection and can utilize its legal patent status."