VZCZCXRO1160
PP RUEHAST RUEHCI RUEHLH RUEHPW
DE RUEHBI #0480/01 2821140
ZNR UUUUU ZZH
P R 081140Z OCT 08
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 6630
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 7875
RUEHBI/AMCONSUL MUMBAI 1782
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 MUMBAI 000480 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ECON IN
SUBJECT: MAHARASHTRA SEED COMPANIES CLAIM THAT GM CROPS ARE 
INCREASING FARMING YIELDS AND FOOD SECURITY 
 
MUMBAI 00000480  001.2 OF 003 
 
 
Summary: 
--------- 
¶1.  (U) Maharashtra-based seed companies told Congenoffs that 
Bt-cotton seeds are "beneficial" to farmers and "necessary" to 
raise the yield of cotton.  They also stated that despite being 
more expensive, the use of Bt-cotton seeds results in 
considerable savings to the farmers due to reduced pesticide 
treatments.  Admitting that the opposition to genetically 
modified (GM) food crops will be even greater than the present 
agitation against Bt-cotton, these seed companies are 
nonetheless pressing forward with their research into other 
types of genetically-modified technology that can be used across 
the spectrum of India's food crops.  These Bt-boosters claim 
that with shrinking cultivable land acreage, growing 
environmental concern about the use of pesticides, and the 
increasing pressure of population and livestock on land, GM 
crops are the only answer to assure food security not only for 
India but also for the world.  End Summary. 
 
Bt-Cotton: The "Popular" Choice Despite the Higher Price 
--------------------------------------------- ----------- 
 
¶2.  (U) Bacillus thuringiensis (Bt) cotton or genetically 
modified (GM) cotton refers to cotton seeds loaded with a gene 
which protects the cotton crop from the American bollworm. 
(Note: Historically, the American bollworm has been one of the 
most damaging cotton pests in India, reducing both cotton yield 
and quality.  The Bt gene synthesizes proteins that kill the 
insect when it feeds on the cotton plant.  End Note).   India's 
regulatory body for biotech crops, the Genetic Engineering 
Approval Committee (GEAC), has approved five types of 
genetically engineered events (gene transfer technology) for 
Bt-cotton in India.  The Maharashtra Hybrid Seed Company 
(MAHYCO) has commercialized two events sourced from U.S.-based 
Monsanto Chemical Co, Nath Biogene developed and commercialized 
a Bt-cotton event on gene technology sourced from China, J.K. 
Seeds has indigenously developed and commercialized an event for 
Bt-cotton and recently the Central Institute of Cotton Research 
indigenously developed a Bt event.  The seed companies, in turn, 
charge a royalty and sub-license the Bt-gene technology to other 
seeds companies to introduce in their own cotton hybrids.  Based 
on these five Bt events, around 279 independent Bt-cotton 
hybrids are currently manufactured and marketed in India, 
depending on geographical location. 
 
¶3.  (U) As compared to the introductory price of around USD 40 
per 450 gram packet, Bt-cotton seeds now sell at USD 14-16 a 
packet due to the "price ceiling" imposed by several state 
governments.  (Note:  The Andhra Pradesh government mandated 
that Bt-cotton seeds be sold at USD 16 per packet in 2006, and 
most other states followed suit.  Other cotton-growing states in 
India are also demanding that Bt-cotton seeds be sold at these 
prices.  End Note).   F. Patil, Director (Technical) of Ajeet 
Seeds, noted that the upside of price regulation is that the 
incidence of spurious Bt-cotton seeds has declined.   According 
to government statistics, less than 6 percent of the samples of 
Bt-cotton seeds tested in 2007-08 were spurious as compared to 
69 percent of seeds tested in 2003-04 when Bt-cotton seeds were 
sold at USD 40 per packet. 
 
¶4.  (U) Even with price controls, Bt-cotton seeds are two to 
three times more expensive than non-Bt non-hybrid cotton seeds. 
Notwithstanding the higher price, Bt-cotton currently accounts 
for around 85 percent of the total acreage under cotton 
production.  This is a clear indication of the farmer's 
"preference" for Bt-cotton, Patil argued.  S.U. Baig, Technical 
Director of Nath Biogene, explained that the Bt gene in the 
cotton which protects against infestation by the American 
bollworm reduces the number of insecticide and pesticide 
treatments required to 5 sprayings vis-a-vis 15-20 treatments 
required to protect non-Bt cotton crops.  Each pesticide 
treatment costs around USD 22 per hectare, so this technology 
saves the farmer around USD 222 per hectare, he claimed. 
Contrary to media reports that the high price of Bt-cotton 
forced farmers into debt and compelled them to commit suicide, 
Bt-cotton accounts for over 70 percent of the cotton grown in 
Vidharbha (the region in Maharashtra with the largest number of 
farmer suicides), he continued; if the farmers were not 
benefiting from GM seeds then why would purchase it when non-GM 
seeds can be purchased in the market at a cheaper price, he 
asked.  Ajeet Seeds' Patil said that the belief that the Indian 
farmer is "price sensitive" is a misconception.  He believes 
that the farmer is willing to "purchase a technology at any 
price once he is convinced about its potential." 
 
 
MUMBAI 00000480  002.2 OF 003 
 
 
GM Crops Are a Key to Raising Productivity Yields 
--------------------------------------------- ---- 
 
¶5.  (U) Patil noted that India has just two percent of the 
world's land and receives just one percent of the total rainfall 
but has to support 16 percent of the world's population. 
Despite this, India achieved self-sufficiency in food grains 
mainly due to high yielding dwarf varieties of wheat introduced 
following the "Green Revolution."  GM crops are now "required" 
to raise the agricultural productivity level in India to the 
world level, he argued.  Cotton production and productivity has 
nearly doubled since the introduction of Bt-cotton in India in 
¶2002.  According to the Cotton Corporation of India, cotton 
production in India has increased from 15.8 million bales in 
2001-02 (before Bt cotton was introduced in the market) to 31.5 
million bales in 2007-08.  During this period cotton acreage has 
not undergone a significant change; it increased to 9.5 million 
hectares in 2007-08 from 8.7 million hectares in 2001-02.  But 
yields have nearly doubled from 308 kg per hectare in 2001-02 to 
560 kg per hectare in 2007-08.  This proves the efficacy and 
effectiveness of GM crops, Patil argued. 
 
¶6.  (U) However, Patil admitted that the yield of cotton in 
India is still lower that the world productivity level of 660 kg 
per hectare, even with Bt-cotton.  Nevertheless, he noted that 
the yield for non-Bt crops is much lower than the world average; 
for rice and wheat it is 2.6 tons per hectare and 2.4 tons per 
hectare respectively, far below the world average of 8.8 tons 
per hectare for rice and 7.5 tons per hectare for wheat.  In a 
separate discussion, Nath Biogene's Baig echoed Patil's views 
and pointed out that India and China -- the two countries most 
in need of GM crops to support their large population -- are the 
only two countries in the world to introduce Bt-cotton. 
 
Other GM Crops in the Pipeline 
----------------------- 
¶7.  (U) Most of the major seed companies in India are 
researching the commercialization of other GM crops like 
eggplant, okra, cauliflower, tomato, cabbage, and paddy (rice). 
MAHYCO is expected to be the first Indian company to 
commercialize Bt- eggplant using Monsanto's gene technology to 
protect against the fruit and shoot borer which attacks the 
eggplant crop.  Bt-eggplant, which is expected to be launched in 
2009, will be the first genetically engineered food crop to be 
propagated and sold in India using GM seeds.  Bharat Char, 
Biotechnology Research Lead of MAHYCO, explained that farmers 
spray eggplant with insecticides and pesticides 70-80 times 
during the six month growing period to prevent infestation by 
the fruit and shoot borer.  Introducing the Bt gene to prevent 
infestation will reduce the number of pesticide sprayings and 
save the farmer an estimated USD 356 per hectare, he maintained. 
 GM crops enable "economic threshold level-based spraying." 
Farmers need to spray GM crops only if pests grow beyond a 
certain level, he explained. 
 
¶8.  (U) Char noted that the Bt gene only addresses a single 
problem -- pest infestation in most cases -- and the gene has to 
therefore be combined with crop technology to address other 
problems like drought resistance, virus attacks and salinity 
tolerance.  MAHYCO's research work encompasses all these issues, 
he said.  For example, the company has tied up with Arcadia 
Biosciences of the U.S. to gain access to their technology which 
improves the nitrogenous efficiency of soil which will 
consequently reduce the fertilizer requirement of crops.  The 
company is separately also working on technology to improve the 
phosphate uptake of crops.  (Note: MAHYCO scientists explained 
that irrigation or excessive rainfall depletes the efficacy of 
fertilizers as the nitrogen in fertilizers is soluble in water 
and phosphate forms a dense mass so neither can be efficiently 
absorbed.  Gene technology to address both of these issues will 
improve plant growth and productivity yield and also decrease 
the need for fertilizers, they continued.  End Note).   Ajeet 
Seeds' Patil believes that the current fertilizer crisis was 
because farmers realized that fertilizer was needed to exploit 
the true potential of BT-cotton.  They, therefore, increased 
their demand for fertilizer and existing supply could not keep 
pace, creating a temporary shortage, he said.  (Comment:  In 
contrast to Patil's comments, FAS Delhi notes that cotton 
requires less fertilizer as compared to other crops.  The 
fertilizer shortage in India was more due to the high price of 
urea and the government's poor distribution program than due to 
the increased demand by Bt-cotton farmers.  End Comment). 
 
¶9.  (SBU) Nath Biogene's Baig admitted that anti-GM countries in 
Europe posed a threat to the pace of commercialization of edible 
 
MUMBAI 00000480  003.2 OF 003 
 
 
GM crops in India.  The EU has threatened to ban imports of rice 
if the government permits GM rice cultivation in India, he 
explained.  Nevertheless, seed companies are researching Bt rice 
and will wait until the government approves commercialization 
and marketing.  All interlocutors agreed that opposition to 
edible GM crops would be even greater than the present agitation 
against Bt-cotton.   They contended that anti-GM opposition is 
"baseless" and is spearheaded by an "interested" party with deep 
pockets although they did not specify who that may be. 
Nevertheless, they emphasized that the Indian government has no 
choice but to approve the commercialization of GM food crops 
given India's low productivity yields, shrinking farm acreage 
and one billion-plus population to feed.  Patil stressed that 
advocacy for GM seed technology should be through multiple 
agencies and cautioned multinational corporations against 
lobbying the Indian government by themselves to popularize this 
technology. 
 
Comment: 
------- 
 
¶10.  (SBU) People are still divided and undecided about whether 
a "gene revolution" should follow the green revolution of the 
1960's to ensure food security worldwide.  While GM-boosters 
dismissed the opposition to GM crops based on the belief that 
the Indian government would act rationally, the experience in 
other countries indicates that anti-GM opposition may pose a 
major hurdle.  The EU is the second largest export market for 
Indian basmati rice and the Indian government is not likely to 
jeopardize its export revenues by ignoring anti-GM opposition. 
These seed companies, perhaps naively, have underestimated the 
ability of organized and dedicated NGOs to delay or derail 
projects that they oppose.  Companies may regret not actively 
laying the groundwork for GM food acceptance, instead of waiting 
to see what happens.  Nevertheless, there is one undisputed 
fact: yield productivity has to improve in the face of shrinking 
cultivable land and the increasing pressure of population and 
livestock on land.  Crop biotechnology appears to be one 
solution to the need to improve farm yields in the face of these 
challenges.  End Comment. 
FOLMSBEE