Monsanto Company (NYSE: MON) and leading grower organizations in Brazil announced today that they have reached an agreement that will support the introduction of next-generation products like INTACTA RR2 PRO™ soybeans.
The agreement represents an important next step towards the commercial introduction of INTACTA RR2 PRO™ soybeans in the country. It demonstrates strong support by the Agriculture and Livestock Confederation of Brazil (CNA), a leading national grower organization, as well as ten state agriculture federations in the soybean-production regions of Brazil. The agreement recognizes the important role of technology providers that invest in new technologies for farmers as well as for a value collection system that ensures technology providers are duly compensated for technology each time it is used on farm.
"Importantly, this agreement reflects the support of key grower associations and provides a mechanism to allow all parties to focus on the long-term solutions that will support the Brazilian agriculture industry and its growing demands," said Rodrigo Santos, Monsanto Brazil president.
Under the agreement, participating Brazilian farmers will secure a new license that will allow them to purchase soybeans containing the new INTACTA RR2 PRO™ technology, expected to be available in the 2013-2014 growing season. The agreement also underscores the grower associations' support for continuing a royalty collection approach, which ensures that growers pay royalties each time they use the technology.
The agreement also provides clarity on first-generation Roundup Ready soybeans for participating farmers. Those farmers will be released from payment of technology royalty fees for first-generation Roundup Ready soybeans for this and next season, while waiving all potential legal claims for payments previously made for this first-generation technology. Farmers who elect to not participate will continue to pay royalties on that technology through the term of Monsanto's intellectual property rights in Brazil that cover the first-generation Roundup Ready soybeans.
Monsanto had previously excluded the contribution related to the company's first-generation Roundup Ready soybean business in Brazil from its earnings per share (EPS) and free cash flow guidance, reflecting an estimated historical annual range of $0.20 to $0.25.
Monsanto and the leaders of these grower groups recognize that innovation in agriculture is one of the critical paths towards delivering value to Brazil's farmers and its economy and meeting the demands of our growing planet. The parties also agree and recognize the value that intellectual property rights and the associated royalties can play in stimulating new investments made by the agriculture industry.