In a move designed to encourage Monsanto to sell its second generation transgenic soybean seed in the country, Argentina is developing a new seed law that would protect intellectual property rights for agricultural biotechnology.

Monsanto has already received a patent for the soybeans in the country, but the company doesn’t plan to introduce them to Argentina until 2014. The patent for the first generation soybean seeds runs out in 2014.

Argentinian farmers and Monsanto were recently in a lawsuit over transgenic corn royalties. The farmers refused to pay the royalties and the courts backed up their position. Argentina’s move to develop this new law is an attempt to smooth things over with Monsanto to pave the way for the introduction of the second generation soybean seeds. Monsanto is working with officials to reach an agreement on paying royalties before introducing the new soybean seeds. Although Monsanto holds the patent on the soybeans in the country, under current local law, farmers are not required to pay royalties on any seeds they hold back and use for the next planting season.

Argentina ranks third behind the United States and Brazil in soybean exports and is the world’s top exporter of soymeal and soyoil. In order to compete with other South American countries to meet the demand for more soybeans, primarily by Asia, Argentina will need to boost yields.

Monsanto’s new seeds have shown a yield increase of up to 15 percent, which would translate into up to 5 million metric tons for Argentina.

The company will not be turning its back on Argentina any time soon since it plans on investing more than $355 million to build a massive new corn-seed-production plant in the heart of the country’s corn belt.