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SAO PAULO, Brazil — Brazil, with an agricultural potential rivaling the United States, is about to legalize genetically modified (GMO) crops, before its black market in the coveted farm technology gets any bigger.

Over the last decade, environment and consumer groups have successfully won in the courts against biotech seed companies, the scientific community, farming interests and even the government, thus keeping Brazil the world's largest food exporter still to ban GMOs.

But this prohibition is coming to an end.

"The ban on GMOs has hobbled Brazil agriculturally, undermined its advantages as a leading world producer and researcher," Ivo Carraro, executive director of Brazil's farm research cooperative Codetec, said.

So sought after is the cost-cutting technology on the black market that over a third of Brazil's massive soybean crop — the main farm export worth 10% of total trade revenues — is seen planted with pirated GMO seeds. And nearly all the country's cotton seed has been contaminated by GMOs.

"There is strong demand, industrially and scientifically, for biotechnology in Brazil," Jorge Guimaraes, president of Brazil's CTNBio biotechnology regulator, told Reuters.

In 2003, faced with cracking down on the entire No.3 soy producing state of Rio Grande do Sul and thousands of other producers in other states, the government of President Luiz Inacio Lula da Silva after taking office opted to push for legalization and regulation of GMOs.

A bill that defines a regulatory framework for commercial use of GMOs, and should clear the way for GMO soybeans first, is expected to pass a final lower house vote in the coming weeks, if not days, after the Senate approved it in late 2004.

"I'm certain that the black market will shrink once this new law passes and our seed industry will recover," Ywao Miyamoto, president of Brazil's Seed Producers Association Abrasem, said.

Soybean seeds

In anticipation of the new law, biotech seed companies are already ramping up their multiplication of GMO soybean seeds, which are based on Monsanto's Roundup Ready soy technology, for the October planting season.

Four companies — Codetec, the state crop research agency Embrapa, Monsoy (the local firm of Monsanto) and Pioneer — are currently harvesting 54 varieties of GMO soybeans, designed for all tropical and subtropical growing regions in Brazil, to be sold as seed.

"There should be about 5 million (40-kg) bags ready for sale by October," Carraro said, whose Codetec should account for 60% of these seeds. "I'm not sure that will be able to meet market demand initially though."

Agronomists estimate one bag will seed a little more than a hectare. Brazil has 22 million hectares planted to soy.

As the biosafety bill worked through Congress, the government began issuing yearly decrees that allow producers to sell GMO soy without prosecution, if they registered their black market biotech soy with the agriculture ministry.

In initial government estimates, registered GMO soy plantings grew 11% to 92,875 producers this season, but final numbers are expected to come in over 100,000 and there are believed to be still many unregistered GMO soy producers.

But the sale of GMO soy as seed has been strictly forbidden. Producers have had to rely on GMO soy from their previous crop. Monsanto and local GMO seed developers, such as Embrapa and Codetec, haven't been able to sell GMO soy seeds.

Since soy producers began planting GMOs about a decade ago, and more recently cotton producers, certified seed producers have seen sales of certified conventional seeds fall yearly to the internal black market.

It is now estimated that nearly all of the cotton seed on the market has been contaminated by some form of GMO variety. The government was recently forced to accept less than 1% GMO contamination in conventional seeds samples.

"Once GMOs are freed up, Brazil's seed producing industry and its crop research industry will recover and our scientists are likely to become important in the development of new biotech products," Carraro said.

Brazil's cotton producers have a lot to gain.

Currently, conventional growers in the cotton belt can spray crops as many as 16 times to control the pesky boll weevil, inflating production costs and stressing the surrounding environment with agrochemicals.

Current Bt varieties of cotton would vastly reduce their operating costs and level the playing field with U.S. producers, the world's leading producers, against which Brazil recently won a World Trade Organization subsidy challenge.

GMO soy varieties not based on Monsanto technology, GMO corn, cotton and other crops such as GMO papaya, eucalyptus and castor bean, some locally developed, are also in line to enter the Brazilian market but will take longer than Monsanto's RR GMO soy.