Argentina's government is about to change the rules that determine how farmers pay for genetically modified, or GMO, seeds, the Agriculture Secretariat said Tuesday, according to a Dow Jones report.



The new rules, set to take effect before farmers plant the 2005-06 harvest, aim to ensure that seed makers are rewarded for the research and development of new seed technologies, said Daniel Balmaceda, the secretariat's spokesman.



The rules will allow seed makers like Monsanto Co. to collect royalties on new seeds for up to seven years after they are first introduced in the market. Moreover, the government will fine farmers who don't pay royalties. Fines will total five times the original commercial value of the seed, according to Hugo Biolcati, vice president of Argentina's Rural Society.



The Secretariat will also limit repeated use of legally bought seeds to three years, Biolcati said. Currently farmers face no limit on the repeated use of seeds. In addition, farmers will be allowed to plant older seeds on only 65 hectares worth of crop.



But Monsanto may not be very happy with the new rules. "These rules were not designed to satisfy Monsanto," Balmaceda said. "They were designed to make sure we have an efficient system that allows for royalties to be paid."



The company has said it wants a new royalties collection system in place by March, when farmers start to harvest the 2004-05 soybean crop. But the new system won't take effect by then. Moreover, it is unclear that the new rules will even allow Monsanto to collect royalties on any of its soybean seeds.



Genetically modified seeds like those made by Monsanto are used to produce around 95 percent of Argentina's soybean crop, expected to total at least 35 million metric tons this year. However, Monsanto first began selling the seeds here in 1996, meaning that they have already been in the market for more than seven years.



"It's not clear how this will apply to Monsanto," Biolcati said. "They have had distinct germoplasms in the market. We'll have to see how this applies in the case of Roundup Ready soy."



Monsanto actually stopped selling soybean seeds in Argentina about a year ago, saying it was no longer a profitable business. The company says many farmers use the seeds without ever paying for them. Instead, some farmers use seeds that were bought illegally in a vast underground market. Others pay for the seeds once, then use the seeds year after year without paying additional royalties for repeated usage.



As a result, the U.S.-based company recently said it plans to charge a 2 percent per-ton licensing fee on soybean exports. At current prices, this would amount about $3 a ton. Argentina's Rural Society estimates that Monsanto would collect around $100 million annually with such a fee.



Farmers oppose the plan, saying it is unfair and without legal merit. Monsanto says it already charges similar licensing fees in Brazil and Paraguay.